The Green Ammonia Boom Is Coming

By Felicity Bradstock - Jul 09, 2022, 

• Green ammonia is emerging as a major contender to become a vital emissions-free fuel for the world. 
• The renewable fuel is also gaining major attention from energy giants such as Exxon.
• Greater investment in the energy source could support innovations in technologies to reduce production costs as well as support countries in meeting their climate targets.

Green ammonia is a little-known contender to become a major renewable fuel over the coming decades. It has around nine times the energy of lithium-ion batteries and its denser nature makes it easier to transport than liquid hydrogen. As oil majors race to find innovative renewable energy alternatives, green ammonia is gaining more international attention for its potential as an emissions-free fuel.  Despite being little-talked-about compared to hydrogen, ammonia is catching the eyes of energy firms worldwide for its potential as a clean fuel. Ammonia is a compound of hydrogen and nitrogen that can be used as fuel. Just like hydrogen, there are several different types of ammonia, depending on the energy used for its production.

Green ammonia is becoming the most preferable form of the fuel as it is carbon-free, whereas one tonne of conventional (brown) ammonia emits around two tonnes of CO2. It is produced using wind, solar, or hydropower to provide electricity which runs an electrolyzer that in turn extracts hydrogen from water as nitrogen is separated from air using an air separation unit. Why the production of green ammonia is not new, recent innovations in technology have made it easier to produce, making energy firms more prone to invest in the energy source. 

One of the industries considering the use of ammonia to decarbonize is the maritime sector, which could use the fuel to help meet its climate targets. It could also be used as a means of storing renewable energy for delayed use, as well as transported to be cracked for its hydrogen content. 

Ammonia is now being produced and shipped around the world as companies recognize its potential. Last month, the Abu Dhabi National Oil Company (ADNOC) sold ammonia, produced using natural gas, to the Japanese oil company Inpex. It was deemed ‘clean ammonia’ as the CO2 emitted during its production was sequestered using carbon capture and storage (CCS) technology, to be injected into onshore oil fields in Abu Dhabi.

This is the first time the renewable fuel has been transported between the Middle East and Japan, thanks to the IHI Corporation and Mitsui O.S.K. Lines (MOL) connection between the regions. INPEX is hoping to establish three or more ammonia projects by the end of the decade to produce around 100,000 tonnes of hydrogen/ammonia annually to help meet its climate targets. It also hopes to establish a resilient supply chain between Japan and Abu Dhabi, recognizing the emirate as a core business area.

Other regions are also seeing the potential for green ammonia as countries explore a variety of renewable sources to decarbonize their transport and other sectors. Experts believe that green ammonia could be key to the success of the European Commission’s REPowerEU strategy, which aims at 20 million tonnes of renewable hydrogen. At present, the ammonia sector in the E.U. region uses around 10 billion cubic meters of natural gas a year, predominantly as a feedstock for fertilizers. This demonstrates the potential for new renewable energy projects to power the production of ammonia.  

Joel Moser, CEO of First Ammonia, believes that a shift to green ammonia could help Europe meet about 30 percent of its 35BCM reduction target by 2030. European Commission Vice-President Frans Timmermans has already stated the potential for green ammonia as a renewable hydrogen carrier, encouraging energy firms to invest in the sector. As well as helping to decarbonize the European energy sector, if the region can develop a strong green ammonia industry it could quickly become an export hub for the renewable fuel. At present, there are about 270 ammonia sea terminals globally, with 30 in the E.U., offering the potential for shipping green ammonia for the fertilizer industry and for other uses.

Related: IEA Warns World Is Vulnerable To Chinese Solar Dominance

In Ireland, two groups – the Killybegs Fisherman’s organization and Sinbad Marine Services – are recommending the construction of a floating offshore wind farm to power green ammonia and hydrogen production. They recently signed a memorandum of understanding (MoU) with Swedish wind energy company Hexicon for a 2 GW development, which would power renewable fuel operations, to be used in marine vessels, with excess power going to the local grid. The engagement of fishermen in the project is expected to help get the project off the ground with little pushback from the local community. 

Meanwhile, in Norway, ExxonMobil, Grieg Edge, North Ammonia, and GreenH have signed an MoU to conduct studies for the potential production and distribution of green hydrogen and ammonia as marine fuels. Operations would be based at ExxonMobil’s Slagen terminal in Norway and would use hydroelectricity produced at the terminal to power the production of around 20,000 metric tonnes of green hydrogen and 100,000 metric tonnes of green ammonia annually. Matt Duke, CEO of Grieg Maritime Group explained, “Slagen is an exceptionally suitable location as a central hub for hydrogen and ammonia to the maritime sector”. He added, “With the complementary expertise amongst the MOU partners, we have now taken an important next step in our efforts to achieve emissions reductions in the maritime sector.”

With clear demand from the maritime sector and the potential for use in other industries, mainly as hydrogen, green ammonia is gaining increasing attention from governments and companies looking to shift away from fossil fuels to renewable alternatives. Greater investment in the energy source could support innovations in technologies to reduce production costs as well as support countries in meeting their climate targets. 

By Felicity Bradstock for Oilprice.com

Soaring Energy Exports Send Russia’s Account Surplus To Record High

By Julianne Geiger for Oilprice.com- Jul 11, 2022

Russia’s account surplus reached a new record for the second quarter, according to data released by the central bank cited by Bloomberg.

The surplus, now more than $70 billion, comes on the back of surging oil and gas—and other commodities as well—exports, which outweighed the sanctions placed on the country by Western powers.

The surplus was also bolstered by high prices and decreasing imports—to $72.3 billion in Q1 from $88.7 billion in Q2—thanks to the sanctions, which have a greater effect on imports than on exports.

The sanctions on Russia’s energy exports have made scant progress in restricting funds flowing into Russia that it could use to carry on its aggression in Ukraine. India, for one, is purchasing record amounts of Russian crude oil—to the tune of nearly a million barrels per day as of June—this is about one-fifth of India’s total crude oil imports, according to Reuters.

China has also been importing record amounts of cheap Russian crude during June, even in the midst of Covid lockdowns. Russia is China’s main supplier of crude oil, and neither India nor China is showing signs of reluctance in snapping up Russian crude—a sanctioned commodity by Europe and the United States.

It’s not just oil. Russia is also said to be close to a deal with Brazil to supply the South American country with cheap diesel, Reuters reported on Monday. Brazilian President Bolsonaro, facing a tough reelection in October due to high fuel prices, has enjoyed an amicable relationship with Russian President Vladimir Putin.

Russian exports were $153.1 billion in the second quarter after reaching $166.4 billion in the first quarter.

The United States has plans to discuss a possible oil price cap on Russian crude with major crude oil purchasers like India to garner support for such a plan—a plan that would seek to allow buyers to continue purchasing Russian crude but cap the revenues that Russia receives for those purchases.

Another Alaskan Oil Project Could Be Shelved Over Environmental Concerns

By Charles Kennedy for Oilprice.com- Jul 11, 2022

ConocoPhillips' Willow project in Alaska might end up shelved after the release of a highly anticipated environmental analysis of the project by the federal government.

In its analysis, the Bureau of Land Management outlined five alternative paths for the project, which Conoco acquired in the early 1990s. One of the alternatives involved setting up five drilling sites and constructing various infrastructure. Another alternative suggested fewer drill sites and less infrastructure, with a more limited impact on the environment.

The option that would be the worst news for Conoco is the BLM withholding approval for the project as a whole, which was another of the five options laid out by the agency.

The Bureau of Land Management approved Conoco's project for the development of the Willow prospect in 2020, during the Trump presidency. The project could deliver 160,000 bpd of crude, the BLM said at the time, with reserves estimated at between 400 and 750 million barrels. The lifetime of the project was estimated at up to 30 years in 2019.

Last year, however, an Alaska District Court judge vacated the BLM's approval of Conoco's project on the grounds that the BLM had overlooked the greenhouse gas emission footprint of foreign oil consumption in its environmental review of the project.

The Willow project will be a fine balancing act for the Biden administration as it seeks the middle ground between its emission reduction ambitions and the immediate need for hydrocarbons to secure the country's energy supply.

Environmentalist organizations have been outspoken in their criticism of the Willow project, noting its proximity to sensitive ecosystems and endangered species habitats. After the BLM released its latest analysis of the project, one Alaska conservationist summed up the challenge for the Biden administration as "an unparalleled climate and biodiversity threat that puts President Biden's climate legacy at risk."

Exxon CEO Says All New Cars Will Be Electric By 2040

By Julianne Geiger for Oilprice.com - Jul 11, 2022

All new passenger cars sold will be electric by 2040, ExxonMobil’s CEO Darren Woods told CNBC on Monday—not just in one country, but in the whole world.

For comparison’s sake, last year, only 9% of the world’s passenger car sales were electric vehicles, including plug-in hybrids. While that’s a 100% increase from the year before, it’s l00% of a relatively small figure.

Exxon Mobil isn’t just a large oil producer—it also owns three of the United States’ top ten refiners—two of which boast a capacity of over a million barrels a day each, according to the EIA. According to Woods, Exxon will need to focus on chemicals to keep the company profitable during the transition.

“That change will not make or break this business or this industry, quite frankly,” Woods said.

Exxon is forecasting that by 2040, oil demand will be what it was in 2013 or 2014.

According to a new poll by Consumer Reports, 36% of Americans said they would consider buying or leasing an electric car—the highest positive response rate to a Consumer Report electric car poll ever. However, it should be noted that the poll revealed that only 14% of Americans polled said they definitely are getting an electric vehicle next. Still, that figure is up from the 4% who answered they would “definitely” buy an EV next in Consumer Report’s 2020 EV survey.

Another 57% of those polled had lingering concerns with charging, range, and cost—with a bit less than half completely unaware that EV incentives exist. 

With 83% of Americans reporting that they had never ridden in or driven an EV, Wood’s forecast for all new EVs by 2040 will be a serious challenge.

Other countries, however, such as Norway, Iceland, and Sweden, already have an extensive EV presence. 

Unipec Trading Arm To Get 1 Million Barrels Of SPR Oil

By Michael Scott for Oilprice.com- Jul 12, 2022, 

Major oil traders and refiners have been awarded contracts for the purchase of crude oil from the U.S. Strategic Petroleum Reserve (SPR), including the U.S. wholly-owned subsidiary of Unipec, the trading arm of China's oil giant Sinopec.

Unipec America, Inc was awarded a contract for the purchase of nearly one million barrels, 950,000 barrels from the SPR, as part of the massive emergency oil release announced by President Joe Biden at the end of March this year.

Back then, President Biden announced the release of 180 million barrels of oil over the following six months. The announcement sent oil prices below $100 per barrel for a brief period of time, before the market started fretting about more losses of oil supply from Russia due to sanctions and embargoes.

As part of this SPR release, the largest release of oil reserves in history, as the White House said, the U.S. Department of Energy (DOE) announced this week it had awarded contracts to 14 companies that had responded to a sale notice from mid-June. 

Contracts were awarded to Atlantic Trading & Marketing, BP Products North America, Chevron USA, Equinor Marketing & Trading, ExxonMobil Oil Corporation, Glencore, Macquarie Commodities Trading US, Marathon Petroleum Supply and Trading, Motiva Enterprises, Phillips 66 Company, Shell Trading (US) Company, Unipec America, Inc, Valero Marketing and Supply Company, and Vitol.

Those companies submitted 68 bids for oil from the four SPR sites.

Crude oil deliveries will take place from each of the SPR storage sites between August 16, 2022, and September 30, 2022, the Department of Energy said.

Oil released from the SPR has been sent to Europe and Asia in recent months, including to China, according to ZeroHedge.

At the end of June, Amos Hochstein, Senior Advisor for Energy Security, said that the United States would reassess additional releases of crude oil from the nation's Strategic Petroleum Reserves as the Administration struggles to rein in high prices at the pump.

Rising Oil-Fired Power Generation In Saudi Arabia Could Weigh On Global Supply

By Tsvetana Paraskova for Oilprice.com- Jul 13, 2022

Direct crude and product burn at power generation plants in the two largest OPEC producers has accelerated as the summer approaches, which could leave lower available crude supply for international markets, analysts say.

So far this year, oil-fired power generation has rebounded to meet strong power demand, commodity analyst Giovanni Staunovo said on Wednesday, citing data from the International Energy Agency (IEA).

In Saudi Arabia and Iraq, OPEC’s largest and second-largest oil producer, respectively, burning of fuel oil and direct crude oil use for power generation jumped by 270,000 barrels per day (bpd) in April compared to March, Staunovo added.

Saudi Arabia, the world’s largest crude oil exporter, relies on crude and fuel oil for electricity generation and cranks up direct crude and fuel burns during the scorching summer months.

After OPEC+ decided to accelerate the rollback of the cuts and have those completely unwound by the end of August, some analysts pointed out that the direct crude burn in Saudi Arabia’s power plants could consume a large part of the increase in production.

The higher OPEC+ production targets for the months of July and August coincide with the peak summer heat in Saudi Arabia, which typically increases significantly the volumes of crude and products burned at power plants.

At the same time, the ten OPEC producers in the OPEC+ pact pumped 24.8 million bpd of crude oil in June, OPEC data showed on Tuesday, with production falling 1 million bpd short of the target levels.

Saudi Arabia naturally raised its crude oil production by the most in June compared to May. Yet, per OPEC’s secondary sources, even the Saudis were lagging behind their quota for June. Saudi Arabia’s oil production rose by 159,000 bpd to 10.585 million bpd, OPEC said. To compare, the Saudi target was 10.663 million bpd, so the Kingdom was 78,000 bpd below its quota last month using secondary source figures. But Saudi Arabia self-reported to OPEC that its production figures were indeed in line with its target—10.646 million bpd.

UK Approves 25% Windfall Tax On Oil And Gas Producers

By Josh Owens for Oilprice.com  - Jul 12, 2022

British lawmakers have officially approved a 25% windfall tax on oil and gas producers that will earn the government nearly $6 billion in one year to put towards surging consumer energy bills.

Now that the bill has been approved by parliament, it will have to pass the House of Lords to become law.

The windfall tax legislation, originally proposed in May, has now been amended according to Reuters to list 2025 as the end date of the tax. The newer version of the legislation also makes it possible for energy firms to offset the cost of decommissioning oilfields as well as the cost of investing in the electrification of producing fields. 

Oil and gas giants operating in the British North Sea have warned that the windfall tax will undermine efforts to attract investment to the UK and slow oil and gas production growth in the North Sea. 

Equinor is set to decide on a new oilfield development in the North Sea next year, but its officers in June expressed doubt as to whether the company should forge ahead with more energy investments in the UK. 

In the midst of an energy crisis that is engulfing Europe due to Russia’s war on Ukraine and subsequent Western sanctions, the UK windfall tax is meant to ease the cost of living for British residents. 

The windfall tax will not be extended to electricity companies, the BBC quoted a spokesman for Prime Minister Boris Johnson as saying on Monday. 

While shares of oil and gas companies have tanked in anticipation of the windfall tax, shares of electricity producers rose Monday after the announcement. 

The windfall tax surfaced shortly after BP and Shell reported large profit increases, and as soaring profits for oil and gas companies have come under scrutiny amid surging inflation and fuel prices that consumers are forced to pay.

Hungary has also implemented a windfall tax, and even Russia’s Gazprom is not immune. Last week, Russia’s lower house of parliament approved tax code amendments that would levy a $20-billion windfall tax on Gazprom from September to November this year.