France’s Power Sector Further Strained By Extended Outages And Repairs

By Julianne Geiger - May 13, 2022

France's nuclear power plants are undergoing repairs and extended outages, leading to a 25% decrease in nuclear power plant output this winter, an analysis from Baringa Partners LLP said, according to Bloomberg.

France, Europe's largest power exporter, could be left scrambling to import power this winter. France typically sends power to the UK, Germany, Italy, and Spain—and could soon find those countries rivals in its quest to purchase power to sustain itself through the demanding winter months.

France generates more than 70% of its total electricity from nuclear power.

The extended outages and repairs will create a strain in the market that is in addition to the strain caused by Russia's invasion of Ukraine and the resulting energy- and financial-related sanctions on the aggressor.

This winter, Bloomberg said, the winter electricity flows to the nations France typically supplies is set to be reversed, as power prices within France are pushed higher amid less supply. The upcoming winter is what Phil Grant, Partner at Baringa Partners, has called "fascinating".

In February, prior to the Russian invasion, French President Emmanuel Macron called for 13 new nuclear reactors in what he called a "renaissance" of the country's nuclear power industry.

At the time, the announcement created turmoil within Europe, with nuclear power's green label creating tension, specifically with Germany.

Germany had openly chastised the European Commission for its decision to classify nuclear investments as climate-friendly. Germany has plans to shutter all of its nuclear plants by 2022, whereas France sees nuclear power as a necessary step that will allow the country to move away from fossil fuels.

France's EDF stopped operations at two nuclear power plants at the end of last year after finding a fault at one during routine maintenance. This brought the total number of nuclear plants out of operation in December to four, which accounted for 13 percent of the current power availability in France.

By Julianne Geiger for Oilprice.com

MAYBE YES, MAYBE NO

California Reconsidering Closure Of Its Last Nuclear Power Plant

By Charles Kennedy - May 16, 2022, 

As another summer threatens the stability of California’s power grid, Governor Gavin Newsom has said that he would keep all options on the table to ensure the reliability of the grid as heatwaves, drought, and wildfires are expected to create problems for California’s power supply this summer, too.

One of the options could be to keep the last remaining nuclear power plant in the state, Diablo Canyon, open beyond its original date of closure, 2025.

Governor Newsom supports “keeping all options on the table” in order to ensure a reliable grid until the state transitions away from fossil fuels. Yet, analysts say that a plan to extend the Diablo Canyon life beyond 2025 would face numerous technical and financial challenges.

The Diablo Canyon nuclear power plant accounted for 8.53% of California’s in-state power generation in 2020, data from California Energy Commission show. Nuclear power represented 9.33% of California’s total power mix if imports from other states are included.

California decided in 2016 to close down Diablo Canyon in 2025, with one reactor closing down in 2024 and the other in the following year. The state was planning to have the nuclear power generated from Diablo Canyon replaced by solar and wind sources.

However, faced with another year of challenges to the state’s grid stability, the Governor is reconsidering the 2025 end date for the last remaining nuclear power plant in California. Diablo Canyon owner Pacific Gas & Electric is preparing to close down the plant in 2025, but Governor Newsom told the L.A. Times editorial board last month that California might look to apply for federal funds to help it keep nuclear plants open. 

“The requirement is by May 19 to submit an application, or you miss the opportunity to draw down any federal funds if you want to extend the life of that plant,” Newsom told L.A. Times. “We would be remiss not to put that on the table as an option,” he added.  

According to Katie Tubb, research fellow at the Heritage Foundation, “It is very, very hard at this point, to turn this battleship around,” Tubb told The Daily Wire.

A LITTLE BIT OF HOODOO

Shell’s Brazil Wells Come Up Dry

By Irina Slav - May 17, 2022

Three exploration wells that Shell has drilled in Brazil in hopes of making the next big discovery have come up dry, Bloomberg has reported, citing an analyst with Wood Mackenzie.

This latest turn of events adds to bad news for Brazil and supermajors’ plans to turn it into the next hot spot in oil.

Shell and several partners paid $1 billion for drilling rights for three offshore blocks in Brazil and spent three years drilling exploratory wells. None of them turned up commercially viable volumes of oil, Marcelo de Assis, chief of Latin America upstream research at Wood Mackenzie, told Bloomberg.

Exxon previously suffered even greater losses, of about $1.6 billion, when its own exploratory wells drilled in Brazilian waters over the past three years turned out unviable.

These developments are casting a thick shadow over the expected boom of crude oil production in Brazil thanks to its prolific presalt offshore zone. However, some believe all the big discoveries have already been made.

“In Santos and Campos, the big discoveries have already been made,” Adriano Pires, who was one of the candidates for new chief executive of Petrobras, told Bloomberg. “In the Equatorial Margin, we could still have surprising discoveries.”

Meanwhile, Petrobras is also drilling. Earlier this month, BNAmericas reported the Brazilian state-owned oil major planned to drill three offshore wells this year in two offshore blocks.

According to the Bloomberg report, however, since the discovery of fields such as Mero and Buzios in the Santos Basin, all of Petrobras’s finds have been relatively minor. The almost 100-percent success rate in discoveries that the Brazilian company boasted a decade ago is now long gone. Now, the success rates have fallen to what appears to be the average for the industry, at a little over a quarter of all wells drilled.

Insurers Are Suffering Major Losses Due To Climate Change

By City A.M - May 18, 2022

Insurers are now suffering 3.6 times more losses from natural catastrophes than they were three decades ago, according to new research, which suggests insurance companies are being hit by the impacts of climate change.

Natural catastrophe events are costing insurers around the world 250 percent more than they were 30 years ago, due to an increase in events such as flooding, storms, and wildfires.

In 2021 alone, storms in the US cost insurers $60bn, while floods in Germany cost $9bn and wildfires in Australia cost insurance firms another $63bn.

The costs associated with climate change events are also set to rise in coming decades, as current policies are set to see 2.4°C of warming by 2100, the report from French consulting firm Capgemini and the European Financial Management Association (EFMA) says.  

However, the report says climate change also poses an opportunity for insurers, as it claims climate risks are set to account for around 30-40 percent of the $2.5trn increase in global insurance premiums over the next two decades.

Major investment of $3trn- 6trn per year into the roll out of renewables and other sustainable technologies could also create opportunities for insurers, the report says.  

"Fossil Fuels Are A Dead End," UN Secretary-General Says

By Tsvetana Paraskova - May 18, 2022

Fossil fuels are a dead end and the only sustainable future for the planet is accelerating the energy transition, UN Secretary-General António Guterres said on Wednesday, launching the State of the Global Climate 2021 report, which showed that four key climate change indicators set new records last year.

The UN presented a five-point plan to jump-start the renewable energy revolution, which, Guterres says, has received a wake-up call following the Russian war in Ukraine and the immediate effects on energy prices.

According to the World Meteorological Organization's State of the Global Climate 2021 report, four key indicators of climate change – greenhouse gas concentrations, sea level rise, ocean heat, and ocean acidification – set new records in 2021.  

"The key to tackling this crisis is to end our reliance on energy generated from fossil fuels - the main cause of climate change," the UN said.

Guterres outlined five critical actions that the UN believes the world needs to prioritize now in order to accelerate the shift to renewable energy. These include making renewable energy technology available to all; improving global access to components and raw materials; leveling the playing field for renewable energy technologies; shifting energy subsidies from fossil fuels to renewable energy; and tripling investments in renewables as the world needs investments of at least $4 trillion a year until 2030 if it has any chance of reaching net zero by 2050.

"Fossil fuels are a dead end — environmentally and economically. The war in Ukraine and its immediate effects on energy prices is yet another wake-up call. The only sustainable future is a renewable one. We must end fossil fuel pollution and accelerate the renewable energy transition, before we incinerate our only home," Guterres said.

"But most of all, it's time for leaders — public and private alike — to stop talking about renewables as a distant project of the future.

Because without renewables, there can be no future," he added.

Just last week, the International Energy Agency (IEA) warned that renewable power capacity additions could lose momentum next year unless new and stronger policies are adopted soon. Growth in renewables would have been faster without the current supply chain and logistical challenges, the IEA said. Increased commodity and freight prices will keep costs for renewable technology higher compared to pre-pandemic levels this year and next, reversing a decade of cost declines.

Oil, Gas Employment Will Take Five Years To Recover From Covid: Rystad

By Julianne Geiger - May 18, 2022

Oil and gas sector employment is on the road to recovery in the United States after the significant job shedding that took place during the pandemic era. But a full recovery won't be seen for another five years, a new analysis from Rystad Energy showed on Wednesday.

The U.S. oil and gas industry lost 200,000 jobs during the pandemic, according to Rystad calculations. This represented 20% of the total workforce in the sector. In 2020 alone, 100,000 oil and gas jobs were lost in the United States—mostly in the drilling tools and services segment.

Now, as demand for oil and gas has recovered—and oil and gas prices along with it—more than half of those jobs have since been added back. But the remainder of the recovery is set to be slower, based on Rystad Energy's oil price scenario where WTI averages $106 this year, $70 per barrel next year, and $50 per barrel in 2025.

This year, US oil and gas employment is set to grow by 12.5%, Rystad said, finishing the year with 971,000 O&G jobs. By 2027, that figure is set to reach 1.09 million—up from 1.07 million pre-Covid.

Rystad also noted that while the number of jobs is expected to increase by 12.5% this year, wages are only set to grow 2.9% this year, as inflation hits oil and gas company bottom lines.

By 2024, however, this wage growth is expected to increase by 10%.

"Fueled by a rapid rise in oil prices amid a better-than-expected demand recovery and the supply constraints brought on by Russia's invasion of Ukraine, the US labor market seems poised to benefit and continue on a growth trajectory," Sumit Yadav, an analyst with Rystad Energy said in Wednesday's press release.

STILL A BAD IDEA

Japan Nuclear Regulator Greenlights Radioactive Water Release From Fukushima

By Irina Slav - May 19, 2022

The Japanese Nuclear Regulator Authority has given its initial approval to Tepco to start releasing irradiated water from the Fukushima plant that collapsed during a massive earthquake and tsunami in 2011.

Plans were revealed last year to pour the water from Fukushima into the sea after an assessment that would check whether there were any safety issues with such a plan. According to the Nuclear Regulator Authority, there are none. Final approval will be granted in a month after the public has had the opportunity to comment on the issue.

The UN’s International Atomic Energy Agency will also carry out safety reviews of the water release.

There are about a million tons of contaminated water from Fukushima that Tepco, the operator of the nuclear plant, has been looking for ways to dispose of for several years now. Releasing the water into the ocean has emerged as the most viable solution to the problem despite opposition both from inside Japan and its neighbors.

Despite the absence of viable options, environmental groups and fishing industry organizations are against the release of the liquid into the sea, even with assurances from scientists that the risk of contamination is low.

The water will be first filtered and then diluted to reduce the concentration of radioactive material 40 times, according to some of the reports from last year that were confirmed this year as well. The release is scheduled to begin this year if the Nuclear Regulator Authority gives its final go-ahead to Tepco.

Back in 2018, official calculations by the Nuclear Damage Compensation and Decommissioning Facilitation Corp pegged the cost of decommissioning the Fukushima nuclear power plant at some $75 billion, which was a sum four times larger than the initial estimate of how much it would cost to put Fukushima out of commission.