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Oil’s Rebound Continues As Crude Inventories Decline

WTI oil has recently made several attempts to settle above the $70 level but failed to gain additional upside momentum and pulled back. However, WTI oil remains close to this psychologically important level and has a good chance to get back to yearly highs in the remaining months of this year.

It is already clear that coronavirus-related concerns have failed to put big pressure on oil as many traders were ready to buy any significant pullback. As a result, WTI oil has quickly rebounded from the $62 level to the $70 level.

While the situation with coronavirus remains a big concern for oil traders, recent data suggests that the number of new daily cases in the world has started to decline.

Importantly, the number of daily deaths has began to decline as well. Watching this grim data may be more important to the analysis of potential coronavirus-related restrictions around the world as governments will likely focus on critical cases and deaths rather than on total caseload as vaccination progresses.

Meanwhile, recent inventory reports indicated that crude inventories continued to decline. According to the latest EIA Weekly Petroleum Status Report, U.S. commercial crude inventories declined by 7.2 million barrels from the previous week. U.S. domestic oil production increased from 11.4 million barrels per day (bpd) to 11.5 million bpd but it will take a hit in the upcoming reports due to the negative impact of Hurricane Ida.

OPEC+ has recently decided to stick to its plan to raise oil production by 0.4 million bpd per month as the organization believed that demand recovery was strong despite challenges presented by the spread of the Delta variant of coronavirus.

In fact, OPEC+ increased its demand growth outlook for 2022 to 4.2 million bpd. The economic rebound continues at a robust pace thanks to the strong support from the world’s central banks and governments, and demand for oil looks strong as well.

The key question for the oil market is whether the world will have to deal with another wave of the virus at the beginning of the flu season in the Northern Hemisphere.

More coronavirus-related restrictions may put pressure on demand growth, but governments’ desire for new lockdowns appears limited except for countries like Australia and New Zealand, which are located in the Southern Hemisphere.

In case developed countries manage to get through the beginning of the flu season without new restrictions, oil demand will continue to grow while crude inventories will remain under pressure. In this bullish scenario, WTI oil will have a good chance to test yearly highs near the $77 level.

Let’s start with the weekly chart. WTI oil failed to get to the test of the 50 EMA as it received strong support near the $62 level. The rebound was very strong, and WTI oil has quickly managed to get back above the 20 EMA which is located at $67.60.

Currently, WTI oil is stuck between the support at the 20 EMA and the resistance at the psychologically important $70 level. RSI is in the moderate territory, and there is plenty of room to gain additional upside momentum in case the right catalysts emerge.

In case WTI oil manages to get back above the $70 level, it will head towards the next resistance at the $74 level. A move above this level will open the way to the test of the resistance which is located at yearly highs at the $77 level.

On the support side, a move below the 20 EMA will push WTI oil towards the recent lows near the $62 level. Oil ignored technical levels during the recent moves in the $62 – $67 range, but it remains to be seen whether it will be able to gain strong downside momentum and quickly get to the test of the recent lows near $61.75 as the oil market looks ready to buy strong pullbacks.

As usual, more levels can be found on the daily chart. However, it should be noted that the road to yearly highs still looks rather easy in case oil manages to settle above the resistance at the $70.

Most likely, the market will attract more speculative traders once oil settles above $70, and oil may quickly get to the test of the next resistance at $72.50. A move above this level will push oil towards the above-mentioned resistance at $74.

On the support side, a move below $67.60 will open the way to the test of the support level at $66. In case oil declines below this level, it will head towards the next support at $64. If oil manages to settle below the support at $64, it will move towards the support at the recent lows at $61.75.

YahooFinance by Vladimir Zernov, September 13, 2021

BTMS is a platform that integrates, upgrades or completely replaces existing systems. The primary purpose is supervising and managing Terminals, Tank farms and loading/unloading trucks, ships and rails.

BTMS was developed by engineers who have more than 30 years of experience in the oil & gas industry.  BTMS has the task of combining the functionalities necessary for the entire Monitoring and Management System to work in a way acceptable to operators, dispatchers and other business entities. Its task is to enable the exchange of data between SCADA, Tank System, Metering stations and other business and technological processes.  

Also, this software is responsible for inspecting all authorized business entities in the condition of the tank, active and inactive batches and transports (completed and planned) and the preparation and distribution of the necessary business reports, all in accordance with their assigned access rights. 

BTMS is made for: 

• Tank storages
• Terminals

Benefits: 

• Respect legacy

Maximal utilization of existing software’s and hardware’s 

• Open and flexible

Various connectivity options. 

Unlimited number of clients 

• Modular

Customer buys what he needs and when he needs it 

Clients can run on exiting computers 

• Cybersecurity 

Certified methods for cybersecurity, especially for plant and process data 

The BTMS platform can be divided into several modules: 

• Scheduler
• Planner
• Terminal Management
• Infrastructure
• Reports
• Control house (Laboratory)
• KPI

The system architecture follows four main guidelines that allow modularity and scalability of the system: 

• Component-based design – separation into specific independent sections
• Multi-level architecture – allows flexibility and reusability
• Distribution – allows easy scaling 
• Service Oriented Architecture – eases integration with other Systems

Cybersecurity 

BTMS is implemented in companies of strategic value and requires compliance with all network and application security levels. BTMS can be implemented in network infrastructures where the separation of process and business data networks is required. BTMS retains the existing task and functionality in such systems as well, and communication between these networks takes place via data diodes intended for one-way data flow. 

Terminal Management System 

Terminal Management System ensures efficient, accurate, safe, and secure material transfers for tank storage facilities/terminals. This module will help operators to manage and supervise tank farms, loading/unloading trucks, ships and rails. Terminal Manager also offers real-time data monitoring and connection to existing systems. Terminal Manager is a scalable, highly reliable solution that is appropriate for terminals of all sizes. 

Contains a real-time load / unload scheduler. 

Systematically enforces your schedule for accurate and reliable offloads and automatically triggers sample capture. 

Possibility of connecting with quality control laboratories. 

Berth monitoring: 

– sampling system management 

– manage the arrival / departure of ships 

– connection of measuring stations for loading/unloading ships 

Automation from entry to exit allows a facility to operates completely unmanned with site access to product offload handled by drivers. 

Accurate inventory tracking provides the information needed for planning and operations and customer position reporting. 

Easy-to-use, reliable system provides flexibility and supports additional growth as a terminal expands. 

Alarms, reports and balancing 

For more information, please contact us. 

Luvis Projekt d.o.o. 
Phone: +385 1 644 8222 
E-mail: info@luvis-pro.com 
www.luvis-pro.com  

U.S. oil major Exxon Mobil Corp, along with Chevron Corp, is seeking to bulk up in the burgeoning renewable fuels space by finding ways to make such products at existing facilities, sources familiar with the efforts said, as reported by Reuters.

The two largest U.S. oil companies want to produce sustainable fuels without ponying up billions of dollars that some refineries are spending to reconfigure operations to make such products. Renewable fuels account for 5% of U.S. fuel consumption, but are poised to grow as various sectors adapt to cut overall carbon emissions to combat global climate change.

Both Chevron and Exxon have massive refining divisions that contribute heavily to their overall carbon emissions. The companies have been criticized for a less urgent approach to renewable investments than European rivals Royal Dutch Shell Plc and TotalEnergies, and have generally spent a lower percentage of their capital than those companies on “green” technologies.

The companies are looking into how to process bio-based feedstocks like vegetable oils and partially processed biofuels with petroleum distillates to make renewable diesel, sustainable aviation fuel (SAF) and renewable gasoline, without meaningfully increasing capital spending.

Commercial production of renewable fuels is costlier than making conventional motor gasoline unless coupled with tax credits.

A task force was created at Exxon’s request within international standards and testing organization ASTM International to determine the capability of refiners to co-process up to 50% of certain types of bio-feedstocks to produce SAF, according to the sources.

Exxon says it will repurpose its existing refinery units among other strategies to produce biofuels. It aims at more than 40,000 barrels per day of low-emission fuels at a competitive cost by 2025.

“We see the potential to leverage our existing facility footprint, proprietary catalyst technology and decades of experience in processing challenging feed streams to develop attractive low-emission fuels projects with competitive returns,” spokesperson Casey Norton said in an e-mailed response.

Chevron is looking into how to run those feedstocks through their fluid catalytic crackers (FCC), gasoline-producing units that are generally the largest component of refining facilities.

“Our goal is to co-process biofeedstocks in the FCC by the end of 2021,” a Chevron spokesperson told Reuters, to supply renewable products to consumers in Southern California.

The company is partnering with the U.S. Environmental Protection Agency (EPA) and California Air Resources Board (CARB) to develop a path to produce fuel that would qualify for emissions credits.

A source familiar with the matter said if approved by the EPA and CARB, Chevron would be able to produce and generate credits for renewable gasoline. That product is not yet commercially available, but can reduce carbon dioxide emissions by 61% to 83%, depending which feedstock is used, according to the California Energy Commission.

Chevron said on its earnings call earlier this month that in the second phase of its process, it would be the first U.S. refiner to use the cat cracker to produce renewable fuels.

“We did it this way, in part, because it’s very capital-efficient … It’s literally just a tank and some pipes,” Chevron Chief Finance Officer Pierre Breber said on the call.

Congress is considering legislation for tax credits that would further spur refiners to process sustainable aviation fuel commercially.

Some refiners, like San Antonio-based Valero Energy Corp and Finland-based Neste, have ramped up production of renewable fuels from waste oils and vegetable oils to cash in on lucrative federal and state financial incentives. Several U.S. refiners are in the midst of partially or totally converting plants to produce certain renewable fuels, particularly diesel.

If approved, new methods of producing renewable fuels at refineries could allow refiners to avoid lengthy environmental permitting processes. Many of these processes are still undergoing further testing to see which can make renewable fuels commercially, but without damaging refining units.

By BIC Magazine, September 16, 2021

Oil and gas companies have long delivered the fuels that form the bedrock of today’s energy system, but against a backdrop of persistently high global emissions, they are coming under increasing pressure to deliver solutions to climate change.

While these may sound like binary choices, most companies will likely try to do both. In practice, the two are closely interlinked, as most of the financial resources for diversified spending, at least initially, will come from traditional investments in oil and gas supply.

While individual company approaches to the energy transition vary, capital expenditure on clean energy is seeing an increasing share of overall investment. Companies — most notably the large European players — are now actively seeking to ramp up their transition to renewables.

BP says it will increase its annual clean energy investment from USD 500 Mn in 2019 to USD 5 Bn per year by 2030, with an interim goal of USD 3-4 Bn per year by 2025. Total has announced that some USD 2.5 Bn of its planned total investment of USD 12-13 Bn in 2021 will go into renewables and electricity (including gas-fired power). Shell is targeting a 25% share of investment on clean energy capital expenditure by 2025. Eni’s

strategic plan for 2021-24 targets 20% of average yearly capex of EUR 7 Bn to clean energy projects. Additionally, several companies including Saudi Aramco and ADNOC, are exploring possibilities to develop low-carbon hydrogen production, as well as investments in CCUS.

The IEA’s World Energy Investment 2021 report suggests that these commitments are already starting to have an impact. If the current trajectory is maintained for the full year, the share of capital investment going to clean energy investments could rise to more than 4% in 2021 from 1% in 2020.

The Oil and Gas Industry’s Eye for Hydrogen

According to a survey of over 1,000 oil and gas executives by consulting firm DNV GL, the proportion of oil and gas companies intending to invest in the hydrogen economy doubled from 20% to 42% in 2020. Half of senior oil and gas professionals expect hydrogen to be a significant part of the energy mix by 2030, with a fifth of surveyed oil and gas companies already active in the hydrogen market.

For over a century, oil companies have spent tremendous sums of money to deliver fuel to the power and industrial sectors. If hydrogen is supposed to replace petroleum in that equation, no one could reasonably be expected to have better expertise than Big Oil.

As of the end of June 2021, there were 244 large-scale green hydrogen projects planned, according to the Hydrogen Council, an industry group, up more than 50% since the end of January. It estimates tens of billions of dollars have already been earmarked for hydrogen projects.

BP, Shell and Total are all pursuing multimillion-dollar hydrogen projects themselves, often with government support, as they seek to redefine their future role in a world less reliant on fossil fuels.

BP is exploring the use of hydrogen to replace natural gas in industries such as steel, cement, and chemicals, and also as a substitute for diesel in trucks. Overall, BP forecasts hydrogen could account for about 16% of the world’s energy consumption by 2050–if net-zero carbon emissions goals are to be achieved–up from less than 1% today. However, BP doesn’t expect green hydrogen to be a material part of its business until the 2030s, and it has yet to make a final investment decision on any new hydrogen projects.

Shell also is grappling with high costs. This month, the company started up what it said is Europe’s largest green hydrogen plant, to supply its Rhineland refinery in Germany. But that hydrogen is between five and seven times more expensive than the fossil-fuel-based product it predominantly uses.

Shell hopes it can reduce costs by building hydrogen projects in strategic locations alongside customers’ plants, like at ArcelorMittal’s steel mill in the German port of Hamburg, where it can also add hydrogen refueling stations for trucks.

The industry is also getting government support. The European Union paid half the roughly $23 Mn cost of Shell’s Rhineland project and has earmarked funding for hydrogen as part of its pandemic recovery program.

Notably, The EU’s proposed ~$558 bn plan to switch to hydrogen by 2050 is dwarfed in comparison to the typical spending of the oil and gas sector (~US$500 bn) in developing new fields every year. Shifting just a small share of the sector’s spending into hydrogen could be enough to drastically increase the technology’s scale and economics.

Another key expected area of overlap between the current petroleum economy and a hydrogen future is likely to be in midstream infrastructure: pipelines, ships, and storage facilities.

Salt caverns – artificial caves already widely used to store oil and gas, including the U.S. strategic petroleum reserve – are likely to be critical nodes in the hydrogen network. A few are already in use for industrial hydrogen, but many more will be needed. One study conducted in 2020 estimated a capacity to store about 7.3 PWh (1 PWh = 1 billion MWh) of hydrogen in salt caverns near Europe’s coasts, equivalent to nearly two years of the continent’s electricity demand. Depleted oilfields can play a similar role in areas where salt formations aren’t available. No industry understands this geology better than the oil and gas sector.

Engineered infrastructure will also be key. In the Netherlands, a consortium including Shell is planning to put green hydrogen produced by a giant 10 GW offshore wind farm through pipelines serving the declining Groningen gas field, which would otherwise be scrapped. At the port of Rotterdam, another group is hoping to spend about EUR 2 Bn re-powering the local industrial cluster with blue hydrogen instead of conventional fuel.

Critics of Big Oil’s push towards hydrogen

Consultants and oil company executives argue that an interim step to reaching large-scale green hydrogen production is to capture and store carbon generated by making hydrogen from natural gas to reduce emissions–making what is known as blue hydrogen.

Critics contend that the fossil fuel giants have been heavily talking up hydrogen as most of the world’s hydrogen supply is currently produced from natural gas. Blue hydrogen may offer an intermediate step towards green hydrogen. However, it may also end up like coal power with CCS: previously hailed as a promising way of reducing emissions but now seen as a costly dead-end that provided cover for the last burst of coal investments in Asia.

Others argue that oil and gas companies are pouring money into lobbying efforts to direct public investment towards building a hydrogen economy (with considerable success notable in Canada, Germany, and the UK) to delay the transition to electrification. These companies will be key players embedded in the hydrogen value chain if the fuel “works”, and will have slowed the shift to electricity if it does not.

Either way, the scale of the challenge before us is vast. The world will need to produce 80 exajoules (or 660 million tons) of hydrogen a year by 2050, according to the Hydrogen Council. Doing that with electrolyzers, the only viable zero-carbon pathway, would require more electricity than the entire world produced in 2019. That will need about nine times more wind and solar generators than exist worldwide to date.

Whether Big Oil’s advance into the hydrogen economy will help or hinder the global effort to decarbonize the planet remains to be seen.

Power-eng by Danyel Desa, September 1, 2021

Is a barren year for oil industry deal activity finally coming to an end?

So far there’s been $86 billion of takeovers announced, pending or completed, according to data compiled by Bloomberg. If things continue at those rates through December, it will be one of the most lackluster years for energy deal-making in two decades.

Hope is on the horizon. Saudi Arabian Oil Co. is finally growing close to an equity swap with Reliance Industries Ltd. after years of gestation, people with knowledge of the matter told Bloomberg this week.

Meanwhile, BHP Group announced plans Tuesday to merge its oil and gas business with Woodside Petroleum Ltd. in a share-based deal that would see the mining company quit the petroleum sector and roughly double Woodside’s output. With the first valued at an estimated $20 billion to $25 billion and the latter worth about $15 billion at Woodside’s current share price, that would instantly increase the year’s tally by almost half.

Don’t take that for a sign that animal spirits are picking up in the industry. Although crude prices touched a three-year high last month and cash is once again flowing freely, this wave of deal activity doesn’t suggest an industry gearing up for a rally in demand.

With the Intergovernmental Panel on Climate Change last week predicting a world where global warming is advancing faster than previously expected and the International Energy Agency forecasting that renewable power investment will exceed that in oil and gas production for the second year running, this merger boom has a distinctly end-of-an-era feel about it.

Take the Reliance-Aramco deal, which is expected to see the world’s largest oil company swap between 1% and 2% of its equity for a 20% share in the largest refinery. This is hardly the sort of transaction that Saudi Arabia might have made in the past, when it was able to reach into its bottomless cash pile to buy assets at a keen price from needy, low-margin refiners. Instead, Asia’s richest man, Mukesh Ambani, holds all the cards.

The estimated deal value would be double the $10 billion that Reliance reportedly expected for a 25% stake when it was first being offered around in 2019, although the balance-sheet value of the Jamnagar refinery and its earnings haven’t really improved since then. Meanwhile, a Saudi Inc. that was once so cash-rich that it thought little of splashing greenbacks on soccer teams and Leonardo da Vinci paintings is instead having to part with equity so precious that it wasn’t even offered to the kingdom’s own subjects until two years ago.

As a financial transaction, the deal does little for either party. Shares in Indian and Saudi companies aren’t much use as an alternative form of cash, since they’re locked up on illiquid local exchanges. Strategically, though, Aramco gets itself a seat at the table of a company that’s made no secret of its planned turn away from petroleum and toward renewables and a fast-growing telecoms unit.

Jamnagar isn’t going to stop buying crude any time soon, but Aramco’s enthusiasm for a tie-up at any price suggests it’s keen to keep an eye on the situation before it starts to cause problems.

The BHP-Woodside deal isn’t happening on quite such a grand scale. While a combined company would have produced about 649 million oil-equivalent barrels a day in 2019 — enough to put it in the top 30 listed oil producers by volume — Aramco pumps about that amount every hour.

It makes a different sort of sense for the players, though. Every company with assets less spectacular and owners less involved than Aramco has to care about the views of its shareholders and lenders. For BHP, that’s become a problem as the cost of capital for fossil fuel businesses rises and shareholders look to decarbonize their portfolios.

Arch-rival Rio Tinto Group quit its last fossil-fuel assets several years ago and Anglo American Plc sold out of its last thermal coal business in June. While the coking coal used in steelmaking is still a core business for BHP (not to mention iron ore, which can’t be turned into steel using existing commercial technology unless some coal-derived coke is thrown into the mix), selling out of a petroleum business that was always an odd fit for a mining company is a good way to project a cleaner image.

Woodside gets a different sort of benefit. At present it sits toward the lower end of investment grade at major ratings companies, an uncomfortable position at a time when the interest costs on junk energy debt are at a higher premium relative to higher quality bonds than they’ve been in years. By roughly doubling in size, it will get the cashflows and balance sheet to become more self-sufficient in its spending, an important consideration in a market where lenders are increasingly being asked to scrutinize the climate impact of their loan books.

For energy dealmakers looking to expand the fee pool, the signs of green shoots in the energy M&A market will be welcome after a year of drought. Just don’t mistake it for the start of a harvest. With its best years in the past, this field is looking more and more barren.

Washington Post by David Fickling, September 1, 2021

Saudi Arabia’s state-owned oil asset Aramco is on track to consummate an all-stock deal for a stake in the oil refining and chemicals arm of Mumbai-based multinational conglomerate firm Reliance Industries Limited, Bloomberg reported on Monday, citing insiders.

Aramco is holding talks of a buyout in the neighbourhood of 20 per cent interest in the Reliance unit in exchange for $20 billion to $25 billion in its own shares, according to the people who asked not be named given the sensitivity of the subject.

Reliance, backed by Indian billionaire magnate Mukesh Ambani, could close a deal with Aramco in the coming weeks, said the insiders. A jump in Reliance’s share price by 2.6 per cent in Mumbai followed the news.

Reliance will be enabled by the deal to lock in a constant crude oil supply for its enormous refineries and become a stockholder in Aramco, the world’s fifth biggest public company according to Forbes.

If the transaction succeeds, it will take a stake of approximately 1 per cent in Aramco, considering the latter’s market valuation of around $1.9 trillion, making it the biggest energy company in the world.

The terms are still under discussion, and the negotiation could be prolonged or fall apart, said the sources.

A Reliance representative said its firm does not have further comments apart from Ambani’s reaction at a June shareholders’ meeting during which the company appointed Yasir Al-Rumayyan, Aramco’s chair, to the board. The tycoon had hinted at the possibility of entering an investment pact with Aramco this year.

Last week, the Saudi oil producer said it was conducting due diligence on the deal, adding it should be delivered this year

PremiumTimes by Ronald Adamolekun, August 26, 2021