Hapag and Gasum Set Bio-LNG Supply Contract for Rotterdam-Singapore Route

Hapag-Lloyd is taking delivery on its LNG-fueled ULCVs and will have a supply of bio-LNG to reduce emissions (Hapag-Lloyd)

Published Sep 2, 2024 7:58 PM by The Maritime Executive

 

A unique supply agreement has been set for the Nordic energy company Gasum to provide Hapag-Lloyd with bio-LNG to fuel containerships sailing between Singapore and Rotterdam in 2025 and 2026. The supply that will meet Hapag’s obligation under its contract with the cargo owners project, ZEMBA, is also seen as a key stepping stone toward the carrier’s goal to be net-zero carbon by 2045.

Bio-LNG is growing in favor among the shipping industry as an alternative that can reduce greenhouse gas emissions by up to 90 percent. Hapag will have one of the first large-scale supply contracts while Maersk also recently said it is also working on securing offtake agreements for liquified bio-methane (bio-LNG) as part of its fleet modernization program to ensure that its planned new dual-fuel gas vessels provide greenhouse gas emissions reductions in this decade. Bio-LNG is gaining due to the concerns for supply and cost of methanol as a marine fuel.

Hapag-Lloyd was announced in April 2024 as the winner of the first buyers’ agreement from ZEMBA (Zero Emission Maritime Buyers Alliance). The first-of-its-kind buyers alliance unites major shippers including Amazon, Patagonia, Bauhaus, New Balance, Nike, REI, and others which collectively agreed to purchase over one billion TEU miles on the route between Singapore and Rotterdam in 2025 and 2026. Hapag as the winner of the tender has agreed to provide an independently certified and exclusive waste-based biomethane service that can achieve at least a 90 percent reduction in greenhouse gases on a lifecycle basis relative to fossil fuel-powered shipping.

ZEMBA’s concept was by pooling demand they believe they can spur the fuel transition in shipping. Carriers bid for the contract assured of volumes and demand to help support the cost of the effort.

Gasum will bunker Hapag-Lloyd’s containerships with a total amount of 20,000 mt of bio-LNG during 2025-2026. The vessel will be operating on the Singapore-Rotterdam route effectively launching a long-distance green corridor. 

“This agreement demonstrates that the green transition in the maritime transport sector is picking up speed”, said Jacob Granqvist, VP of Maritime for Gasum. “We need all-hands-on-deck to drive the effort, and using bio-LNG to fuel maritime transports is an effective way to reduce emissions already today, rather than in a distant future.”

Gasum’s liquefied biomethane (bio-LNG) fuel is produced from waste feedstocks such as biowaste, sewage sludge, manure, and other industrial and agricultural side streams. On average, it will provide 90 percent lower emissions when compared with fossil fuel and the company highlights it can be used in all the same applications as natural gas, including as a road and maritime transport fuel and as energy for industry. The residual solids and liquids created in the biogas production process are also further processed and used as, for example, fertilizers in agriculture or raw material in industrial processes.

Gasum produces biogas in its own 17 biogas plants in Finland and Sweden and has supply contracts from other partners. The company says its goal is to offer seven TWh of renewable gas by 2027, including biomethane and e-methane. Achieving this goal would result in a combined CO2 reduction of 1.8 million tonnes per year.

EU imports from Russia drop to record lows but signs of sanctions circumvention persist


By Thomas Moller-Nielsen | Euractiv
Aug 28, 2024


Shutterstock/Darunrat Wongsuvan
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While EU imports from Russia slid to record lows in the second quarter of 2024, signs persist that Brussels’ sanctions on Moscow are being circumvented via trade with third countries.

Data published by the EU’s official statistics office on Wednesday (28 August) showed that the bloc’s imports from its eastern neighbour slid 16% from the first to the second quarter of 2024.

In June, the total value of imported goods dropped to €2.47 billion—the lowest monthly amount since Eurostat, the EU’s official statistics office, began collecting data in January 2002.

This followed April and May, which saw the second and third lowest recorded monthly imports, at €2.66 billion and €2.89 billion, respectively.

Exports registered a similarly steep decrease, dropping 9.5% in the second quarter to reach €2.43 billion in June, the lowest amount since January 2003 and the third-lowest ever recorded.

EU imports from Russia fell dramatically in the immediate aftermath of Moscow’s full-scale invasion of Ukraine in February 2022 but have declined at a more gradual pace since the second quarter of 2023.

Exports, meanwhile, experienced a steep – albeit less dramatic – decline following Russia’s invasion but have fallen at a similarly steady rate since the middle of 2022.

Philipp Lausberg, analyst at the European Policy Centre (EPC), told Euractiv that one likely reason for the trade quasi-stabilisation is that the more recent rounds of Brussels’ 14 packages of sanctions against Moscow have placed much less emphasis on banning the purchase of specific goods, such as oil and coal.

“The last two sanctions package […] focussed more on enforcement and preventing circumvention,” he said. “So I think it makes sense that we’ve reached a low that is more-or-less constant.”

Alexander Kolyandr, non-resident senior fellow at the Centre for European Policy Analysis (CEPS), suggested that another potential reason for the trade “equilibrium” is the relative stabilisation in commodities prices – especially energy prices – since the beginning of 2023.

“Russia is selling LNG [liquefied natural gas], there is no way for Russia to increase [supply], Europe doesn’t want to decrease [purchases of] whatever is coming from Russia – and so the bottom line figure basically depends on the market price of the commodities,” he told Euractiv.
Circumvention trend persists, but costs to Kremlin may be ‘significant’

The Eurostat data comes amid persistent concerns over sanctions circumvention, with trade between European countries and those in Asia, the Caucasus and the Middle East experiencing a steep increase since February 2022.

Kolyandr noted that, from 2021 to 2023, EU exports to Uzbekistan almost doubled from (€2.30 billion to €4.35 billion), sales of goods to Armenia nearly tripled (€757 million to €2.16 billion), and exports to Kyrgyzstan rose more than tenfold (€263 million to €2.73 billion).

“Russia has been proven to be able to circumvent sanctions by trading with third countries,” the analyst said, adding that non-former-Soviet countries such as China and Turkey could also represent key circumvention routes.

Lausberg, meanwhile, said that, although circumvention remains a major problem, “If Russia has to sell via a third country, that third country makes some cash with it that Russia loses.”

“And when Russia buys stuff like high-technology [products] and electronics, it’s more expensive than it used to be,” he added.
Russian economy overheated

Meanwhile, the two analysts noted that the EU and Russia seem to have embarked on diverging economic trajectories, with the latter enjoying much healthier economic growth – though that is not necessarily good news for the Eastern country.

According to the International Monetary Fund, Russia’s economy is expected to grow three times faster than the EU economy this year (3.2% vs 1.1%) after expanding six times more last year (3.6% vs 0.6%).

The country’s manufacturing sector has also experienced a significant boom since the beginning of the Ukrainian conflict, while Europe’s industrial sector remains mired in stagnation or decline.

Lausberg, however, noted that Russia’s strong economic performance is the result of a “rebound” from its steep economic slump in 2022, in no small part thanks to hefty increases in military expenditures – which he said have not only “distorted” the country’s economy but do not represent “an investment in the long run.”

He also pointed out that Russia is still grappling with severe economic problems, including profound labour shortages and elevated prices for high-tech imports.

“In the long [term], you can’t really run an economy with high-cost imports of technology [or] if you don’t have a labour force that can actually deliver what you want to produce,” the analyst said.

Kolyandr also noted the Russian economy continues to show signs of “overheating” (a process whereby supply falls short of meeting heightened demand, generating strong inflationary pressures).

He said virtually every economic metric corroborates the trend, with unemployment currently hovering at about half its historical average and real salaries rising more than two times faster than the country’s GDP.

Echoing what he previously argued about the country’s recent economic patterns, Kolyandr added, “In my view, the Russian economy is mortgaging its future.”

[Edited by Anna Brunetti/Alice Taylor-Braçe]

Fracking and the Green New Deal: What is Kamala Harris's track record on climate change?

Euronews Green
Fri, August 30, 2024


Kamala Harris has said her "values have not changed" on key issues such as climate change during her first major TV interview of this election campaign.

The US vice president is hoping to see off Republic contender Donald Trump in the election on 5 November. President Joe Biden endorsed her when dropping out of the race in July.

As the world’s largest historical contributor to climate change - still the second largest today after China - America’s political direction has huge ramifications for the rest of the planet.

Unsurprisingly this means the vice president’s track record on climate and environmental matters is in the spotlight.

What is Kamala Harris's position on climate change?

With only a few months to go until the election, Harris is unlikely to move far from Biden’s platform.

In an exclusive interview with CNN this week, she said that, despite shifts in her position on topics like fracking during her political career, her values have not changed.

In 2019, Harris said there was "no question" that she was in favour of banning fracking. But during her time in the Biden administration that position changed.

She told the US news channel on Thursday that she has seen that the US can grow and can "increase a thriving clean energy economy without banning fracking", adding that she had made clear in 2020 that she wouldn't ban the practice.

Harris also pointed to the Inflation Reduction Act - which pledged hundreds of billions of dollars in tax subsidies and grants for renewable energy projects - as an example of her climate record. Biden promised it would boost green jobs, support communities on the frontlines of pollution and more.

"You mentioned the Green New Deal. I have always believed - and I have worked on it - that the climate crisis is real, that it is an urgent matter to which we should apply metrics that include holding ourselves to deadlines around time. We did that with the Inflation Reduction Act," Harris said.

Her running mate, Tim Walz, also has a record of climate action in his home state. Last year, as Governor of Minnesota, he signed a law requiring all of the state's power plants to use 100 per climate-friendly energy, such as wind and solar power, by 2040.
A history of climate legislation

Harris would be taking over from a president who is proud of his climate record - and rightly so according to many experts.

In his letter to the nation on 21 July, Biden emphasised that on his watch, America “passed the most significant climate legislation in the history of the world” - referencing the Inflation Reduction Act.

“Biden will leave office with the strongest climate record of any president - making the largest ever investment in clean energy, regulating to reduce pollution from cars & power plants, bolstering clean energy supply chain resilience, & reasserting US global climate leadership,” says Jason Bordoff, founding director of Columbia's Center on Global Energy Policy.

On his first day as president in January 2021, Biden rejoined the Paris Agreement that his rival and predecessor Trump had taken the country out of.

President Joe Biden raises the hand of Vice President Kamala Harris after viewing the Independence Day fireworks in Washington, 4 July 2024. - Evan Vucci/AP

Harris was right there with him (that’s the vice president’s job) and has suggested she will take this green legacy forward. As the US’s top representative at the UN climate conference in Dubai last year, she said the world “must do more” on this vital issue.

At the same time, climate campaigners have criticised Biden’s administration for not doing more.

During his term, the US extended its lead as the world’s largest oil producer, and became the biggest exporter of liquefied natural gas (LNG).

Many environmentalists want to see the Democrats go much further in halting fossil fuel extraction. But are agreed that another four years with Trump at the helm - beside climate sceptic running mate JD Vance - is worth uniting against.
Previous Kamala Harris climate policies

This isn’t the first time Harris has run for president, and her short-lived 2019 bid provides some insights into her thinking - as does her record as California attorney general from 2011-2017.

In that role, she investigated ExxonMobil for misleading the public about climate change. Harris also prosecuted a pipeline company, Plains All-American Pipeline, over an oil spill off the California coast in 2015. And she secured an $86 million (€79 million) settlement for the state from car company Volkswagen for allegations of cheating on diesel emissions tests.

Prior to that, as San Francisco’s district attorney from 2004-2011, Harris created what she called the country’s first environmental justice unit to address environmental crimes (like hazardous waste dumping) against the district’s poorest residents.

"Crimes against the environment are crimes against communities, people who are often poor and disenfranchised," Harris said in 2005. "The people who live in those communities often have no other choice but to live there."

Commentators hope this impressive CV, and framing of pollution as crime, indicates a willingness to get tougher with the fossil fuel industry than Biden has.

Harris’s 2019 presidential bid supports this optimism too.

Back then, she called for a climate pollution fee that would "make polluters pay for emitting greenhouse gases into our atmosphere.” Harris also indicated that America would strengthen its enforcement and prosecution of fossil fuel companies under her leadership.

Another notable milestone on Harris’s climate CV: while serving as a California senator in 2019, she threw her support behind the Green New Deal as an early co-sponsor.


This ambitious blueprint for a green economy, first introduced by AOC and senator Edward Markey, proposed transitioning to 100 per cent clean energy within a decade.

Climate campaigners still believe in this agenda for a just transition and endorsements for Harris have rolled in from groups that see her as a potential ally on issues like climate change.

“We would fall out [of] a coconut tree for someone who ran on this,” Sunrise Movement, a coalition of young climate activists, posted on Instagram, referencing a Harris quote about everyone coming from somewhere rather than simply falling from a coconut tree.

She has so far picked up support from groups including the Sierra Club, the League of Conservation Voters and the Green New Deal Network alongside backing from former US climate envoy John Kerry.

Up next

Polls: Harris leads Trump in post-DNC afterglow

Faith E. Pinho

Fri, August 30, 2024 at 5:11 p.m. MDT·5 min read

Former President Trump on Thursday in La Crosse, Wis. Vice President Kamala Harris speaks that same day in Savannah, Ga. (Charlie Neibergall, Stephen B. Morton / Associated Press)

With just over two months left until Election Day, Vice President Kamala Harris has taken a slight lead over former President Trump in national polls and has made advances in several swing states that previously seemed locked up for Trump.

Poll after poll shows the race essentially tied, with leads for either Trump or Harris often within the margin of error.

Harris would take 45% of the nationwide vote, compared with Trump's 41%, according to a Reuters/Ipsos poll of registered voters, released Thursday. Her margin widened to 13 percentage points over Trump among women and Hispanic voters, the survey found.

Harris leads Trump 48% to 47% in a head-to-head matchup, according to a Thursday poll conducted by the Wall Street Journal, which noted the vice president holds a 2-point lead when independent and third-party candidates are factored into the survey.

And in a USA Today/Suffolk University survey, also released Thursday, Harris holds a 48%-to-43% lead over Trump.

The spate of new polls, released after the pro-Harris blitz at the Democratic National Convention wrapped up, reflects a dramatic shift in the state of the race since President Biden dropped out just over a month ago.

Read more: New promise, awkward moments: 5 takeaways from Harris and Walz’s first interview

The Trump campaign anticipated the post-DNC bump of support for Harris, saying in a statement before her acceptance speech Aug. 22, "These bumps do not last." The campaign noted that it had also predicted a "honeymoon" period of positive polling and good press after Harris' nomination, adding that it blamed the media, which it said had "decided to extend the honeymoon for over 4 weeks now."

Narrow margins in swing states

Both the Trump and Harris campaigns have been zeroing in on the swing states likely to determine the election. Harris and her running mate, Minnesota Gov. Tim Walz, campaigned in Georgia and North Carolina this week and announced a "reproductive freedom bus tour" across several battleground states, beginning next week. Meanwhile, Trump and his running mate, Ohio Sen. JD Vance, visited Michigan, Wisconsin and Pennsylvania.

The Reuters/Ipsos poll found that Trump led Harris 45% to 43% among registered voters across the seven battleground states of Wisconsin, Pennsylvania, Georgia, Arizona, North Carolina, Michigan and Nevada. But a Bloomberg News/Morning Consult poll showed Harris either leading or tied with Trump in the same states.

A Fox News poll conducted over the weekend showed Harris leading by 1 percentage point in Arizona, and by 2 points in Georgia and Nevada. Trump was up 1 point in North Carolina, according to the Fox News poll.

The Fox News polling finds Harris keeping pace with the support that won President Biden the election in 2020; he eked out leads in Arizona, Georgia and Nevada while Trump won North Carolina. In the 2024 campaign, Trump previously held a commanding lead in the four Sun Belt states before Biden dropped out, according to Fox News polls conducted earlier this year.

Read more: Trump asks federal court to intervene in hush money case in bid to toss conviction, delay sentencing

Harris maintained a 1-point lead across the four states even when third-party candidates such as Chase Oliver, Jill Stein and Cornel West were included, the Fox News survey found.

Issues voters care about

More Americans trust Harris on the issues of abortion, healthcare, uniting the country, fighting for the people and bringing needed change, according to the Fox News poll. But Trump is the go-to candidate for border security and immigration, the economy and the Israel-Hamas war, it found.

Voters who spoke to Reuters/Ipsos pollsters agreed that Trump would have a better approach to managing the U.S. economy — 45% compared with 36% for Harris. But they preferred the vice president at a 47% to 31% advantage on the issue of abortion policy.

Read more: As parents of Israeli American hostage address DNC, critics ask: Why no pro-Palestinian speakers?

On the topic of democracy and election integrity, 68% of voters in a poll conducted by ABC News/Ipsos said that Harris was likely to accept the election results, compared with just 29% who said the same about Trump. As for the voters themselves, 81% said they would accept the outcome no matter who won.

Pro-Palestinian voters continue to show discontent

Harris' numbers are not all so bright, however. The Council on American-Islamic Relations found in a poll released Thursday that 29.4% of American Muslims intend to vote for Harris — nearly tying with their support for Green Party candidate Stein at 29.1%. The findings reveal that American Muslims continue to press their complaints about the Biden-Harris administration's policies on Gaza.

Trump voters made up 11.2% of those polled, with small percentages for West and Oliver. About 16% said they were undecided.

During the spring's Democratic primaries, many Muslims and pro-Palestinian voters showed their discontent with Biden by casting ballots marked "uncommitted." This was especially true in Michigan, a swing state where Biden won by less than 3% of the vote in 2020 and home to the largest population of Arab Americans in the nation. More than 13% of voters cast "uncommitted" ballots in the state's February primary.

Stein, a long-shot third-party candidate, frequently runs in presidential elections without notching much support countrywide. But CAIR's survey shows that she provides an outlet for disgruntled Americans to register their discontent. Still, Harris' prospects among American Muslims are an improvement over Biden's. In a previous survey of 2,500 Muslim Americans, CAIR found that they supported Biden at 7.3%, compared with Trump at 4.9%. Overwhelming support went to third-party candidates Stein at 36% and West at 25.2%.

The RFK Jr. effect

When Robert F. Kennedy Jr. dropped out of the race last week and endorsed Trump, pundits were aflutter with questions about how his decision would affect the leading two candidates. Early polling shows that the remaining support for Kennedy — which had diminished after Biden dropped out and Harris became the Democratic nominee — is turning toward Trump.

The Fox News poll found that 3 in 4 voters who had a favorable view of Kennedy now support Trump.

Get the L.A. Times Politics newsletter. Deeply reported insights into legislation, politics and policy from Sacramento, Washington and beyond, in your inbox three times per week.

This story originally appeared in Los Angeles Times

 

What is Natural Gas Flaring and What Can We Do About It?

By Michael Kern - Aug 30, 2024

• Natural gas flaring is a significant contributor to greenhouse gas emissions and environmental concerns.
• 
  
• Innovative ways to reduce natural gas flaring include the use of microturbines, GTL technology, pipelines, carbon capture technology, and bitcoin mining.
• 
  
• These solutions provide alternative uses for excess natural gas while promoting sustainable practices within the oil and gas industry.
• 
  

In the heart of oil and gas operations lies a practice as old as the industry itself: Natural gas flaring. This process, which involves the controlled burning of excess natural gas produced during oil extraction, has been a mainstay for decades. While it might appear as an unavoidable byproduct of oil production, natural gas flaring casts a long shadow of environmental consequences that demand our attention.

From contributing to climate change through the release of potent greenhouse gases to impacting local air and water quality, the repercussions of flaring are far-reaching. It's a practice that not only squanders a valuable energy resource but also poses risks to human health and ecological balance. As the world grapples with the urgent need to transition towards cleaner energy sources and mitigate climate change, the spotlight on natural gas flaring intensifies. It begs the question: is it truly a necessary evil, or can we find sustainable alternatives?

What is Natural Gas Flaring?

Natural gas flaring is the deliberate combustion of natural gas that is deemed uneconomical or impractical to capture and utilize. This excess gas, often found alongside crude oil deposits, poses a challenge due to its gaseous state, making it difficult to store and transport compared to liquid oil. In the absence of adequate infrastructure or viable markets for this gas, flaring becomes the default solution.

The process typically involves igniting the gas at the wellhead, creating a towering flame that illuminates the night sky. While seemingly simple, this act releases a cocktail of pollutants into the atmosphere, including carbon dioxide, methane, and other harmful substances.

As we delve deeper into this complex issue, we'll explore the environmental and economic impacts of flaring, the ongoing efforts to reduce its prevalence, and the innovative solutions that offer a glimmer of hope for a cleaner energy future.

How Does Natural Gas Flaring Happen?

Natural gas is often found alongside crude oil deposits. When drilling for oil, natural gas is also extracted from the ground. However, unlike crude oil, which can be stored and transported easily, natural gas is more difficult to transport and store due to its gaseous state. This is where natural gas flaring comes in.

During oil drilling operations, natural gas that cannot be captured or transported is burned off at the well site. This process involves igniting the natural gas as it exits the wellhead, resulting in a bright flame that can be seen from miles away.

Environmental Impact of Natural Gas Flaring

Natural gas flaring has a significant environmental impact. The most obvious is the release of greenhouse gases into the atmosphere. Methane, the primary component of natural gas, is a potent greenhouse gas, significantly contributing to climate change. According to the World Bank, global gas flaring resulted in the emission of approximately 400 million tons of CO2 equivalent in 2022, contributing to global warming and climate change.

Flaring also impacts air and water quality. It releases pollutants such as carbon dioxide, nitrogen oxides, and sulfur dioxide, which can harm human health and the environment. Additionally, flaring can contribute to light and noise pollution, affecting wildlife and ecosystems in the surrounding areas.

Economic and Social Impacts

Besides the environmental concerns, gas flaring represents a substantial waste of valuable energy resources. The World Bank estimates that the value of gas flared annually is around $40 billion. This wasted gas could be used to generate electricity, provide heat, or be utilized as feedstock for various industries.

In developing countries where flaring is prevalent, the economic and social impacts can be particularly severe. The loss of potential revenue from gas utilization can hinder economic development, while the environmental pollution from flaring can disproportionately affect vulnerable communities.

Reducing Natural Gas Flaring

There are several solutions being implemented around the world aimed at reducing or eliminating natural gas flaring. 

Build More Pipelines

One solution involves capturing and transporting excess natural gas instead of burning it off at the wellhead. This requires building new infrastructure, such as pipelines or liquefied natural gas (LNG) plants.

Use Microturbines To Produce Power

Another approach is the use of microturbines, which can generate electricity from excess natural gas that would otherwise be burned off. These small turbines are highly efficient and can provide power for various applications such as remote oil rigs or pipeline operations. This solution not only reduces greenhouse gas emissions but also provides a cost-effective way to produce electricity in areas where traditional grid connections may not be available.

 

Flare-gas-to-liquids (GTL) technology: This innovative technology presents a groundbreaking solution to mitigate gas flaring and foster a greener energy landscape. By transforming waste gases generated from flaring into valuable liquid fuels like diesel, gasoline, or jet fuel, GTL provides a practical and sustainable use for excess natural gas. This process not only significantly reduces greenhouse gas emissions but also contributes to a circular economy by repurposing a previously wasted resource.

 

Carbon Capture and Storage Technologies

Some oil companies are using carbon capture technology to capture carbon dioxide emissions from natural gas flaring and store them underground. This approach not only reduces greenhouse gas emissions but also promotes carbon sequestration, which can help mitigate climate change impacts.

Bitcoin Mining

Bitcoin mining has been a controversial topic due to its high energy consumption and potential environmental impact. However, some bitcoin miners are using their operations to help reduce natural gas flaring. These miners are taking advantage of the excess natural gas that is often burned off at oil drilling sites by using it to power their mining rigs.

By using this excess natural gas, bitcoin miners are not only reducing greenhouse gas emissions from flaring but also providing an alternative use for a resource that would otherwise go to waste. This practice has gained traction in areas where natural gas flaring is common such as Texas and North Dakota, where bitcoin miners have partnered with oil companies to access excess natural gas.

Success Stories

While the challenges posed by natural gas flaring are undeniable, success stories from around the world demonstrate that progress is possible. These examples highlight the power of innovation, collaboration, and effective policymaking in driving flaring reduction and promoting a more sustainable energy future.

Let's explore two such stories that illuminate the path towards a world with minimal gas flaring.

The United States: A Model of Progress

The United States stands as a testament to the potential for significant flaring reduction through concerted efforts. A combination of technological advancements, regulatory measures, and market-driven initiatives has spurred remarkable progress in curbing flaring, particularly in regions like the Permian Basin.

Historically, the Permian Basin in Texas and New Mexico was notorious for its high levels of flaring due to a lack of adequate infrastructure to capture and transport associated gas. However, recent years have witnessed a dramatic shift. The expansion of pipeline networks, coupled with the adoption of innovative technologies such as microturbines and mobile gas processing units, has enabled the capture and utilization of a greater proportion of associated gas, significantly reducing flaring intensity.

Regulatory measures have also played a crucial role. State-level regulations, coupled with voluntary industry initiatives, have incentivized companies to minimize flaring and invest in gas capture and utilization projects. This multi-pronged approach has yielded impressive results, showcasing the potential for substantial flaring reduction even in challenging operational environments.

Nigeria: Leading the Way in Africa

Nigeria, once plagued by rampant gas flaring, has emerged as a leader in flaring reduction efforts on the African continent. The Nigerian government has demonstrated a strong commitment to tackling this issue through a combination of regulatory measures, policy reforms, and collaborative initiatives with industry stakeholders.

The Gas Flare (Prevention of Waste and Pollution) Regulations 2018, a landmark piece of legislation, imposes stricter penalties for non-compliance and encourages companies to invest in gas utilization projects. Additionally, the government has fostered partnerships with international organizations and oil companies to develop infrastructure and facilitate gas utilization projects.

These efforts have translated into tangible progress. Nigeria has witnessed a significant decline in flaring volumes, contributing to improved air quality, reduced greenhouse gas emissions, and enhanced economic opportunities. The Nigerian experience serves as an inspiration for other countries grappling with flaring challenges, highlighting the importance of strong political will, effective regulatory frameworks, and collaborative partnerships in achieving sustainable solutions.

Conclusion

Natural gas flaring remains an issue for both industry stakeholders and environmentalists alike, given its negative impacts on climate change through GHG emissions, among others. 

The good news, however, lies in global efforts towards reduction through innovations like micro-liquefaction technology while regulatory measures continue playing their role towards environmentally sustainable practices within this sector. 

Many countries and companies are taking action to reduce flaring and implement sustainable practices. As technology continues to advance, we can expect even more innovative solutions. It's important that everyone plays their part in protecting the environment and reducing greenhouse gas emissions. With continued effort and collaboration, we can create a cleaner, greener future for generations to come.

By Michael Kern for Oilprice.com 

ExxonMobil's Guyana Oil: A Trillion-Dollar Opportunity?

By David Messler - Aug 30, 2024,

ExxonMobil's Guyana oil production is rapidly expanding, with the potential to reach 2 million barrels per day by the early 2030s.

• The company's Permian Basin assets are also poised for growth, with production expected to reach 2 million barrels of oil equivalent per day by 2027.

• ExxonMobil is involved in a high-stakes dispute with Chevron over the latter's proposed acquisition of Hess, which could have significant implications for ExxonMobil's Guyana operations.

There are two main drivers for ExxonMobil, (XOM), in the face of crude’s relatively tight pricing band-low $70’s to low $80’s, for the most the past year. The first is the Guyana, Stabroek production ramp, and the related kerfuffle with Chevron, (CVX) over the nature of their proposed acquisition of Hess, (NYSE: HES). The second is the ongoing digestion of Pioneer assets and acceleration of Permian output toward 1.2 mm BOEPD.

XOM is a huge company with a lot of irons in the fire-LNG, chemicals, carbon capture, refining, biofuels, and heck, they’re even dabbling in lithium. None of these really matter to the stock in the near term. XOM moves with higher or lower oil and gas prices and is likely to perform in lockstep with these commodities well into the future. Darren Woods, CEO let loose with a pithy comment in the Q-2 call that reveals the firm priorities of this company, regardless of what other “ponds” into which, they dip their oars-

“Later this month, we'll publish our global outlook, which projects global energy demand 15% higher in 2050 than it is today. We see oil demand holding steady at around 100 million barrels per day in 2050, while demand for renewables and natural gas grows considerably.”

Let’s give Mr. Woods his due. As the CEO of a company producing ~4.3 mm BOPD of crude oil, it is fair and reasonable for us to assign a solid probability of his being right. In this article we will cover a tight focus on what we believe to be the key needle-movers for the company.

Guyana

As was noted in the early August, Bloomberg piece by Kevin Crowley the 2015 Liza discovery well almost didn’t happen. Guyana’s waters were a minefield of 40+ dry holes accumulated over the years and XOM management wasn’t convinced that this prospect met their capital allocation criteria. Even more critical was the fact that XOM’s concession was about to expire, if they were going to do it, it had to be then. Read Crowley’s piece for more of the back story, but the success of Liza changed the company and the country. Quoting Crowley from the article-

“Today, Liza is the world’s biggest oil discovery in a generation. Exxon controls a block that holds 11 billion barrels of recoverable oil, worth nearly $1 trillion at current prices. The find has transformed Guyana from one of South America’s poorest countries into one that will pump more crude per person than Saudi Arabia or Kuwait by 2027. Guyana is on track to overtake Venezuela as South America’s second-largest oil producer, after Brazil.”

Now with more than 30 discovery wells, 6-sanctioned projects, current daily production of ~650K BOPD rising to 750K in 2025 with the commissioning of Yellowtail, 1mm+ BOPD in 2027 with the commissioning of Whiptail, and up to 1.5 mm BOPD with the startup of the 7th project- Hammerhead, the company is growing Guyana production at a rate of about 20% annually. The “Guyana Effect” shows up in total return comparisons with key competitors and the overall S&P 500 index, as noted in the Crowley article.

Guyana appears to have a long ramp for future development in Stabroek, as reporting indicates that another two fields, Fangtooth-now under delineation drilling, and the  Haimara discovery-new appraisal wells planned for later this year, could take reserves well beyond the 11 bn BOIP now booked.

If the company can continue the pace of announcing a new project for Guyana every eighteen months or so, it’s not hard to imagine daily production hitting the 2.0 mm BOPD level in the XOM graph below in the early 2030’s.

As a final point on Guyana, low cost of supply is everything in long-term oil production. With supply costs of less than $35 per barrel, Stabroek fits nicely in the low-cost category assuring profitable production at any likely Brent prices.

The XOM, CVX, Hess kerfuffle

Chevron-CVX has lagged Exxon in reserves replacement over the last few years, as this OilNow article points out. Although down from 2018’s peak of ~24 bn bbls, XOM is comfortably ahead of Chevron with 16.9 bn bbls compared with 11.1 bn for CVX. Chevron’s motivation for its takeout offer for Hess, (HES) is pretty clear. With HES’ 30% stake in Stabroek, CVX saw an easy way to tack on several bn barrels on reserves with its $53 bn offer for HES. Shareholders for both companies approved the deal, but roadblocks began to crop up.

In late December of 2023, the FTC filed a request for more information on the deal but delayed any action pending the outcome of ExxonMobil’s objection to the merger. With the three-judge panel only recently confirmed recent reporting has a timeline well into 2025 for any resolution.

The core of the dispute lies in the interpretation of the Joint Operating Agreement-JOA, which contains a section on the Right of First Refusal-ROFR that governs the disposition of assets run by the consortium. XOM feels that the HES share should be offered to it under the ROFR language in the JOA. Chevron disagrees, and took pains in setting up the deal to provide for HES’ survival as an entity, effectively eliminating the “change of control” provisions of the JOA. Analysts feel the outcome will come down to the arbitration panel’s interpretation of the “intent” of the CVX/HES agreement as regards the asset. M&A expert, James English at law firm Clark Hill Law was quoted as saying-

"The crux here is whether a change of control even occurred. The three-person arbitration panel that will make the call must decide in part whether to focus on the language in the contract or to delve into Chevron's intent. “A plain language approach would be very favorable to Chevron, while if you go with the intent, Exxon may have a case," English said.”

There is no downside for XOM in this process, in my view. The valuation of the stake held by HES is a closely guarded secret, but we can make some assumptions and arrive at an estimate. 

A trillion dollar valuation has been put on the 11 billion worth of reserves already booked, implying a Brent price of $90-not out of line, but aspirational from current levels. That would put HES’ 30% share at ~$335 bn or so, 6X+ above the $53 bn takeout price. Depending on which estimate you use for the percentage ascribed to HES’ 30% as part of the CVX bid -60-80% according to experts cited in the Reuters article, it’s not hard to imagine a significant payday for XOM.

ExxonMobil is in the catbird’s seat in this scenario. They could make a counter offer for the HES stake, bid for a fraction of it, or take compensation from Chevron, if they prevail in arbitration. If it gets too pricey CVX would just walk away, accepting a $1.72 bn break-up fee from HES.

There’s no way to handicap the outcome of this dispute. As I noted there is no downside for XOM. A lot will come down to how the single word-intent, is interpreted.

The Permian

As the first full quarter of Pioneer assets operating under XOM’s umbrella approaches as Q-3 wraps we will get a peek at how efficiently this merger is being implemented. The company has put a big number on the bulletin board-$2 bn, in cost savings that will accrue from the merger annually. In a Bloomberg article, CEO Darren Woods noted that these savings will come from improved technology and extraction-fracking and cube development techniques, as well as the logistics advantages the merger provided in terms of lateral lengths and materials sourcing. XOM projects costs of supply at $35 per barrel from the Permian.

For full year 2024, XOM projects daily Permian production of 1.2 mm BOEPD across their 1.4 mm acre position in the basin. The company has a target of increasing Permian production to 2.0 mm BOEPD by 2027, implying a growth rate of 20% a year.

Your takeaway

XOM is trading at some fairly rich multiples at current prices. The EV/EBITDA is 7.65X, and the flowing barrel stat is $116K per barrel. Analysts rate the stock as Overweight with price targets ranging from $110-157.00 per share. The median is $130.00.

For those looking for well-covered shareholder returns, XOM is generating free cash of about $26.5 bn annually on a TTM basis. The company distributed $8.1 bn in dividends and repurchased $16.3 bn in stock for a modest free cash yield of ~5%. The company beat EPS estimates by ~5% in Q-2, and estimates have been raised for Q-3 to $2.14 per share. If they come in with a beat we could certainly see a move higher toward the midpoint of estimates. The inverse is also true.

XOM should be a part of every long-term energy investor’s portfolio for growth and income. Currently, it is trading near the top of its one-year range-$97-$123.00. Recent weakness in oil and gas prices would certainly argue for a judicious entry point that might come when Q-3 earnings are released in November.

By David Messler for Oilprice.com