Energy Week

Top official says asking China to do more on climate is "not very realistic"
https://www.axios.com/china-climate-change-226c9e50-243e-44e6-a4bf-e1fb1522bb19.html
Do we want to partner with China on how they regulate things at all?
China probably won’t institute what we can China to do on climate change?
China commits to peak emissions by 2030, which is totally unrealistic unless they totally stop manufacturing steel.
What about border adjustments for climate taxes

India may build new coal plants due to low cost despite climate change
https://www.reuters.com/world/india/exclusive-india-may-build-new-coal-plants-due-low-cost-despite-climate-change-2021-04-18/
75% of India’s annual power output comes from coal
In 2019 and 2020 coal’s contribution to electricity actually fell, but this trend doesn’t seem to be continuing.

Earthquake in southern Iran disrupts oil production: state media
https://www.spglobal.com/platts/en/market-insights/latest-news/natural-gas/041821-earthquake-in-southern-iran-disrupts-oil-production-state-media
Iran is now exporting over 1.5 million bpd of oil anyway, and they only want to get up to 2.3 million bpd
Could this earthquake impact that? Perhaps. What about the Vienna talks?
For more on Iranian oil situation, read: https://www.investing.com/analysis/oil-lifting-sanctions-on-iran-might-have-unexpected-repurcussions-200573196

Historic oil glut amassed during the pandemic is almost gone
https://www.worldoil.com/news/2021/4/16/historic-oil-glut-amassed-during-the-pandemic-is-almost-gone
Is potential risk baked in?
Does this mean the price is over-inflated now?

Dr. Dean Foreman and API Monthly Statistical Report
- economic recovery driving demand NOT just seasonality
- especially rural gasoline demand picked up
- but rig activity hasn’t picked up nearly enough to EIA production estimate by the end of this year. EIA saying 900,000 bpd increase but not happening yet.
- What are the issues: lack of personnel, budgets already set, capital isn’t there
- Jet fuel: more cargo going by air than before but still lower due to lack of people traveling. But supply of jet fuel has gone way down to only 4% of a barrel of oil. Jet fuel has been converted.
- petrochemicals are still leading because demand for personal plastics and PPE is continuing. Still high. Usually its 25-27%, but now its up to 30%
- Propane also had a winter element to it
- Propane demand picked up over the winter but it’s ALSO a contributor to propalyne which is used to make medical plastics. Will it normalize?
- Propane distribution has been disrupted a big.
- Are we really back down to “normal” inventory? Well, it can be sketchy. API data says we’re still a little high on crude oil, especially with refining disruptions.
- We’re not back up to 85% refinery utilization which is really good.
- From a 5 year range perspective, US petroleum deliveries are at the top of the 5 year range, which is a very bullish sign. But weekly data have a lot of variation in them.
- Market could remain slightly short but as OPEC puts more barrels back on the market will cap prices. But resumption in US supply of 900,000 bpd by end of year is baked into this and might not happen. Will be lucky to meet half that, and if you don’t get 900,000 bpd, opens door for OPEC but also for higher prices given growth in world economy.
- Investment isn’t in place to meet demand next year.
- Breakeven estimates for Bakken and Denver have risen from $60 to $80 per barrel making them un-producable. State regulation and also impact of DAPL potentially being taken offline.
- Biden admin policies are “quietly tectonic”
- Tax provisions in infrastructure bill would put upward pressure on consumer gasoline prices.
- Sandwich of federal and state regulations could push prices up.

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Blackout Hits Iran Nuclear Site in What Appears to Be Israeli Sabotage
https://www.nytimes.com/2021/04/11/world/middleeast/iran-nuclear-natanz.html
- read this as a message to the Biden administration
- What about relationship to China? Is this activity pushing Iran into the arms of China?
- pushing the Iranians towards China - is that really what we want?

Total signs key deals for Uganda's Lake Albert project
https://www.argusmedia.com/en/news/2204271-total-signs-key-deals-for-ugandas-lake-albert-project
- What does this say about the future of oil and gas development in Africa? Which firms will be doing the development?
- Should African countries join OPEC?

Higher gasoline margins may cut China’s fuel oil output
https://www.argusmedia.com/en/news/2204212-higher-gasoline-margins-may-cut-chinas-fuel-oil-output
- how will this impact China’s oil demand

Saudi Arabia meets May crude supply for most Asian buyers
https://www.reuters.com/article/saudi-oil-asia-int/saudi-arabia-meets-may-crude-supply-for-most-asian-buyers-sources-idUSKBN2BZ0RJ
- India cuts back on oil purchases from Saudi Arabia by 36%

Tesla set to 'attack and conquer' trillion-dollar energy market, Canaccord says
https://financialpost.com/commodities/energy/electric-vehicles/tesla-to-conquer-trillion-dollar-energy-market-canaccord-says

Grant Strem, CEO of Proton Technologies - Calgary, Alberta
https://proton.energy
- Need to separate hydrogen from its bonded elements and that takes a lot of energy.
- hydrogen can be low cost but with high carbon footprint or high cost with low carbon footprint.
- hydrogen can be used with any system we use electricity for through hydrogen turbines and/or fuel cells. Also most transportation fuels can be replaced with hydrogen. No air pollution. Nothing except water comes out, reduces air pollution.
- Hydrogen is flexible. Can store just like hydrocarbons. Element on on-demand use.
- Can divert extra energy from systems into hydrogen system.
- Baseload reliability as opposed to wind and solar which are intermittent.
- Go to large, existing oil fields and oxidize hydrogen in place. Thermal energy is trapped, trigger reactions that give us hydrogen in the process. Use a filter to bring hydrogen up to the surface.
- Can oxidize remaining oil from old aging oil fields right where it is.
- Can you move hydrogen with existing natural gas pipelines? Some can! But there are regulatory challenges.
- Clean hydrogen vs. green hydrogen vs. blue hydrogen? The color schemes are meaningless. But has worked its way into border adjustments and tariffs. Can be significant quantifiable mechanism to tax imports. Calculate the carbon intensity and apply offset.

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On this episode of the Energy Week Podcast Ryan Ray and Ellen Wald discuss the recent OPEC meeting, Iranian output, and Janet Yellen's global tax plan.

Saudis Hike Oil Prices for Key Asia Market in Sign of Confidence
https://finance.yahoo.com/news/saudis-hike-oil-prices-key-095420230.html

Saudi Aramco raises all Asia-bound May OSPs, cuts most US and Europe OSPs
https://www.spglobal.com/platts/en/market-insights/latest-news/oil/040521-saudi-aramco-raises-all-asia-bound-may-osps-cuts-most-us-and-europe-osps
- Saudis and OPEC+ saying demand is coming back, so prices rose after the meeting
- Past few times Saudis cut and this was a signal demand was soft.

Oil Declines After OPEC+ Wagers Market Can Absorb Extra Barrels
https://finance.yahoo.com/news/oil-drops-opec-decides-gradual-232011239.html

Oil drops below $64 as rising OPEC+, Iranian output weighs
https://www.reuters.com/article/global-oil/update-5-oil-drops-below-64-as-rising-opec-iranian-output-weighs-idUSL1N2LY012

- Are rising rig counts in the US enough for oil production in the US to increase?
- Oil rigs are down everywhere year on year except for Canada, which is up.

Iran to seek removal of sanctions during Vienna talks
https://www.spglobal.com/platts/en/market-insights/latest-news/electric-power/040521-iran-to-seek-removal-of-sanctions-during-vienna-talks
- Likely more Iranian oil than this is on the market

Exclusive: Janet Yellen to call for global minimum tax rate
https://www.axios.com/janet-yellen-global-minimum-tax-rate-51c7395b-e46a-4a5c-b18b-bdcf5d8bd352.html
- Is this a PR stunt? How could this possibly be a serious idea?
- Are they trying to protect the dollar as the reserve currency rate?
- Creates a barrier of entry into the global space. Makes it harder to enter and will be cutting out bottom level competition.

Fracking titan is bulking up with $6.4 billion acquisition as oil prices recover
https://www.cnn.com/2021/04/02/energy/pioneer-natural-resources-doublepoint-acquisition/index.html
- recently bought Parsley Energy recently
- Pioneer CEO is thinking/acting like a “big oil” company.
- Acquisitions are to enlarge itself to get the political heft of big oil
- What would we be saying about the Anadarko/Oxy acquisition if it had happened during Covid?

Biden will push through infrastructure plan if no Republican support - energy secretary says
https://www.reuters.com/article/us-usa-biden-infrastructure-idUSKBN2BR0FV

Satellite images show huge Russian military buildup in the Arctic
https://edition.cnn.com/2021/04/05/europe/russia-arctic-nato-military-intl-cmd/index.html
- Apparently the “climate crisis” is causing the ice to recede and now Russia is building more military bases there.

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Biden’s ‘BackDoor’ Climate Plan
https://www.wsj.com/articles/bidens-backdoor-climate-plan-11616020338?
-Can the EPA force states to regulate C02 regulations under current ozone laws?
-It is possible and this is something the EPA may be working toward if Biden Admin climate legislation doesn’t work
-And what about federalism?

Oil Investors Hunt for Cash Gushers
https://www.wsj.com/articles/oil-investors-hunt-for-cash-gushers-11616151615
-Where the Saudis right?
-Why isn’t Texas producing more? Banks aren’t interested in lending to frackers when Saudis could change their mind about production any month?

Saudi Aramco to prioritise China for next 50 years
https://www.argusmedia.com/en/news/2198029-saudi-aramco-to-prioritise-china-for-next-50-years

Column: China’s five-year plan focuses on energy security
https://www.reuters.com/article/us-column-china-energy-kemp/column-chinas-five-year-plan-focuses-on-energy-security-kemp-idUSKBN2BB1Y1
-China says it wants carbon neutrality by 2060, peak carbon emissions 2030
-COuld China unpeg oil from the dollar?

Interview with API Chief Economist, Dr. Dean Foreman
How are we doing a year later? Rebounding?
- pretty remarkable rebounding
- Both in January and February oil demand is within 1.2% and 2% of where it was a year ago
- Baker Hughes rig counts aren’t coming up despite the fact that we had $65 WTI. Will take more for the industry to come back.
- Global oil demand recovery in 2021 and 2022 could become the largest 2 year increase on record since 1950.
- Need to have a lot more investment into capex and drilling activity in US.
- US LNG exports have increased to Europe, but with Nordstream 2 coming online soon, will this hurt US LNG exports? Demand is so strong there’s room for both!
- Europe will probably get a better deal out of this, but US cost effectiveness is good.
- More agreements for LNG
- US liquid fuel consumption could return to 2019 levels but he second half of 2021
- Passenger traffic is down by over 50% year on year but flights are only down 13%. Still substantial decline in jet fuel use.
- Refinery utilization in Feb dropped to 56% (lowest point ever seen) at one point due to Texas Freeze.
- Inventory build aren’t actually that bad because we do have demand and it should normalize. Lingering impacts in data through March but then should be fully normalizing.
- Have stimulus checks impacted demand?

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Brent crude slips from $70 as outlook brightens but inflation weighs
https://www.reuters.com/article/us-global-oil/brent-crude-hits-70-as-china-energy-demand-outlook-brightens-idUSKBN2B703D
- China buying from allies and enemies in the Middle East
- Will China reshape foreign policy in the Middle East
- Iranian oil sales to China saved Iran during sanctions
- We are still 20,000 flights under where we were pre-pandemic

Crude to $100: Trader makes the case for a spike in oil prices
https://www.cnbc.com/amp/2021/03/13/crude-to-100-trader-makes-the-case-for-a-spike-in-oil-prices.html
- Consumer couldn’t withstand this
- OPEC+ monthly meeting prevents this
- It’s not like we can’t increase the drilling. We can.
- Consumers don’t have the same wealth to withstand higher oil prices

U.S. becomes India's second biggest oil supplier, Saudi plunges to No. 4
https://www.reuters.com/article/india-oil-imports/u-s-becomes-indias-second-biggest-oil-supplier-saudi-plunges-to-no-4-idUSKBN2B70LR

US picks up pace of drilling permit approvals
https://www.argusmedia.com/en/news/2195167-us-picks-up-pace-of-drilling-permit-approvals
- Is Biden now the oil President?
- What’s going to happen between the end of the 60 day moratorium and when they issue their report on the entire process in “early summer”?

Cobalt prices soar as China stockpiles metal used in smartphones, electric car batteries
https://www.scmp.com/news/china/diplomacy/article/3125373/cobalt-prices-soar-china-stockpiles-metal-used-smartphones
- Is this how Tesla ends? Tesla has a factory in China and either Elon Musk will say something bad or China will say we don’t need you anymore
- Battery life and grid resiliency is not the only limiting factor in EV adoption here — so is Cobalt, 70% of which is transported between DRC and China through South Africa

Three ships carrying U.S. ethanol head to China - sources
https://www.reuters.com/article/us-usa-ethanol-china-exclusive/exclusive-three-ships-carrying-u-s-ethanol-head-to-china-sources-idUSKBN2B02JN

To go electric, America needs more mines. Can it build them?
https://www.reuters.com/article/us-usa-mining-insight/to-go-electric-america-needs-more-mines-can-it-build-them-idUSKCN2AT39Z
- No, because flowers and thirsty squirrels. Really.

Check out How a Fake Saudi Prince Stole $8M from Investorsryan
https://www.vanityfair.com/video/watch/true-crime-how-a-fake-saudi-prince-stole-$8m-from-investors

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The World For Sale, interview with authors Javier Blas and Jack Farchy
Inspiration for the book? People know very little about who these commodity traders are. After 20 years covering the industry, decided to write the book about these people themselves. Tell the story of how a few commodity trading houses moved commodities and became influential in the market.
Technology- today you couldn’t do what the commodity traders were doing in South Africa with oil because of satellite tracking. Traders won’t take these risks because they know people are watching.
Reaction has been pretty good from industry but not entirely so. In general, reviews consider book fair to industry.
Oil companies themselves are seeing the benefits of getting into oil trading - especially Aramco and Adnoc. Why should they leave money on the table when they can make money? Not clear whether the national oil companies have the risk appetite that the trading houses do.
Concerns about disproportionate influence of China in trading market - Western commodities traders say Chinese traders are willing to take risks even they aren’t. Willing to operate in places western traders can’t or won’t go. Only traders left to interact with Iran are Chinese.

Saudi crude exports normal following missile attacks
https://www.spglobal.com/platts/en/market-insights/latest-news/oil/030821-saudi-crude-exports-normal-following-missile-attacks

Brent falls below $70 after Saudi attack as inflation worries mount
https://www.reuters.com/article/us-global-oil/oil-slips-after-hitting-pandemic-high-above-70-after-saudi-attack-idUSKBN2B001J

Is there a risk premium baked into oil prices?

Saudi Arabia Is Playing Chicken With U.S. Shale
https://www.bloomberg.com/opinion/articles/2021-03-07/u-s-oil-rally-saudi-arabia-plays-chicken-with-shale-as-prices-rise

OPEC+ Surprise Sends Oil Past Gulf Budget-Balancing Levels
https://www.yahoo.com/now/opec-surprise-sees-oil-soar-113001476.html

Is “Drill baby drill” really over? Does that mean we have to get 13 million bpd? Would 12 mbpd suffice?

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Is the oil market actually as tight as people think it is?
- China incentivized to release from SPR to keep prices low.
- Saudi and Russia should want to keep lid on prices so that China and India (consumers) stay happy
- US production hasn’t increased much beyond 11 mbpd but it could

OPEC oil output falls in February on Saudi additional cut - survey
https://www.reuters.com/article/us-oil-opec-survey/opec-oil-output-drops-in-february-as-saudi-makes-further-cut-survey-idUSKCN2AT2CK

UAE says OPEC adding 1.5 mil b/d in April hinges on vaccine rollout, demand recovery
https://www.spglobal.com/platts/en/market-insights/latest-news/oil/022821-uae-says-opec-adding-15-mil-bd-in-april-hinges-on-vaccine-rollout-demand-recovery

India's daily gasoline sales in February rise 1.5% y/y, diesel sales fall 5.3%
https://www.reuters.com/article/india-oil-sales/indias-daily-gasoline-sales-in-february-rise-15-y-y-diesel-sales-fall-53-prelim-data-idUSKCN2AT1Y4
- India has a lot of potential new drivers
- Driving, plastic purchases, flying - all areas where oil demand can increase

U.S. report on Khashoggi weighs on Saudi shares
https://www.reuters.com/article/mideast-stocks-int/u-s-report-on-khashoggi-weighs-on-saudi-shares-idUSKCN2AS0ER

For the Biden Administration, Saudi Arabia Is Both an Ally and a Problem
https://www.haaretz.com/us-news/.premium-for-the-biden-administration-saudi-arabia-is-both-an-ally-and-a-problem-1.9578780

- Report didn’t show anything revelatory, probably just a political release

China’s Oil Reserves Are Close to Reaching Storage Capacity
https://news.yahoo.com/china-oil-reserves-close-reaching-034719436.html

COLUMN-Asia's physical crude oil isn't as tight as Brent pricing suggests: Russell
https://www.reuters.com/article/column-russell-oil-asia/rpt-column-asias-physical-crude-oil-isnt-as-tight-as-brent-pricing-suggests-russell-idUSL2N2KZ0BX

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On this episode of Inside the War Room, Ryan Ray interview US Senator Ted Cruz. You can support the show here ->https://warroommedia.substack.com/837a6912

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thewarroomnewsletter.com

Bay Area Cities Go to War Over Gas Stoves in Homes and Restaurants https://www.usnews.com/news/cities/articles/2021-02-10/bay-area-cities-go-to-war-over-gas-stoves-in-homes-and-restaurants
- when the power goes out, gas powered stoves, fireplaces, etc. can be very helpful for cooking, etc. when electricity is out.
- people who think gas is bad refuse to hear any other perspective

After Texas Crisis, Biden’s Climate Plan Hangs on Fragile Power Grid
https://news.yahoo.com/texas-crisis-biden-climate-plan-100003694.html
- Of all the people/things to blame for Texas power crisis, Biden certainly isn’t.
- Is wind power to blame? Should Texas have paid to winterize its wind turbines?
- What’s the responsibility of the power company to provide power to residents? Or is it a disaster preparedness issue?
- More nuclear needed?

Discussion of API Monthly Statistical Report
- demand, despite fuel switching is very close to where it was pre-Covid
- How do we balance inflation with oil prices?
- Global demand is exceeding supply, inventories drawing down, investment isn’t at what it needs to be to even replace what is being used.
- Question of when not if supply is short. Investment pace will impact prices
- Every is typically 6.5% of a household’s expenses. Over last decade energy went down, but now its going up. Biden proposals could raise energy cost and could also raise housing and vehicle costs, especially for lower-income households.
- What are we using all of the petrochemicals for? Naphtha, gas oil, propane —> winter and single use plastics. 33.1% of total US petroleum demand. Also exports. Potentially a permanent shift.
- Demand in first half of February was up a lot, up 5.5% year on year in US for first half of February. But second half of February will look different because of disruptions.
- Home prices are up, used vehicle prices are rising too.
- Production trends continue to “defy gravity.” + or minus 11 million barrels of oil a day which is huge considering how much drilling is down. Decreases in global drilling as well. How fast do you eat through OPEC + Russia’s ability to put barrels back on the market? Between 8 and 9 barrels, but that’s demand growth alone over the next two years.
- Gasoline prices? Chance of upward pressure and if you overlay Biden admin official policies on top of that we could see national average of gasoline price going up to $3/gallon.
- 4Q capex spending for oil companies is only marginally more than it was in Q3. Notion that continued output growth will continue without investment is just not going happen.

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https://www.wsj.com/articles/chinese-regulators-summon-tesla-on-quality-issues-11612788928
- Tesla Shanghai is only foreign car company to own its plant, maybe China wants a piece?

Amazon orders hundreds of trucks that run on natural gas
https://www.reuters.com/article/us-amazon-engines-natural-gas-exclusive/exclusive-amazon-orders-hundreds-of-trucks-that-run-on-natural-gas-idUSKBN2A52ML
- Makes sense to convert diesel trucks to natural gas instead of EV
- Ordered 700 compressed natural gas trucks

Alaska seeks to build natgas pipeline from North Slope to Fairbanks
https://www.reuters.com/article/usa-alaska-lng/update-1-alaska-seeks-to-build-natgas-pipeline-from-north-slope-to-fairbanks-idUSL1N2KB2B8
- logical because it would bring down heating costs in Fairbanks and emissions
- Will the federal gov want to fund this project, which will include a pipeline to an LNG plant?

Tightening Oil Supplies Inject New Momentum Into Price Rally
https://www.wsj.com/articles/tightening-oil-supplies-inject-new-momentum-into-price-rally-11612693802
- Saudi Arabia and Russia are thrilled with Biden, especially Russia because it didn’t have to make any production cuts like Saudi Arabia did.
- Saudi Arabia should have gotten out of Yemen while they were ahead, while Trump was president so they looked good. Now the world has turned against that war.
- Oil market was softer last year at this time but the economy was so much better. So can we go to $80?

Pipe laying for Nord Stream 2 restarts in Danish waters
https://www.reuters.com/article/us-russia-nordstream2-gas-pipes-idUSKBN2A60OT
- Germany’s position is that this is a commercial project
- No sympathy for leadership of EU

A Super Bowl Ad That the Biden Presidency Made Possible
https://www.theatlantic.com/science/archive/2021/02/why-gms-super-bowl-ad-for-electric-cars-is-so-important/617958/
- Oatly? What was that?
- GM is saying Norway has better EV adoption than the US, but really its about trying to get subsidies from the Biden admin.

Massachusetts climate official proposes targeting regular people who heat their homes: 'We have to break your will'
https://www.washingtonexaminer.com/news/climate-official-regular-people-break-will

Chinese solar group blasts US calls to avoid supplies from Xinjiang
https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/chinese-solar-group-blasts-us-calls-to-avoid-supplies-from-xinjiang-62496859
- Significant issue that needs to be addressed by ESG investors. Is the E worth endorsing slave labor in China?

Elon Musk pledges $100 million for new X Prize carbon removal competition
https://www.theverge.com/2021/2/8/22245100/elon-musk-100-million-carbon-capture-removal-x-prize-competition
- What about trees?
- Competition rules will officially be announced on April 22 (Earth Day)

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