Chevron Warns of $4 Billion Impairment to U.S. Oil and Gas Assets

By Charles Kennedy - Jan 02, 2024,

Chevron flagged on Tuesday that it would take an up to $4 billion impairment in the fourth-quarter results, due to impairments to U.S. upstream assets in California and the Gulf of Mexico.  

The continuing regulatory challenges in California have made Chevron revise down its planned investments in the state, the U.S. supermajor said in an SEC filing on Tuesday. In addition, Chevron will also impair a portion of previously sold oil and gas production assets in the U.S. Gulf of Mexico because some of the buyers of those assets have since filed for Chapter 11 bankruptcy protection and part of the decommissioning obligations may revert to Chevron.

Most of the impaired assets are in California, “due to continuing regulatory challenges in the state that have resulted in lower anticipated future investment levels in its business plans,” Chevron said, adding that it expects to continue operating the impacted assets for many years to come.

Last month, Chevron said in comments with the California Energy Commission that it has cut its spending in the state by “hundreds of millions of dollars since 2022,” due to “adversarial” policies toward fossil fuels.

In the U.S. Gulf of Mexico, Chevron “will be recognizing a loss related to abandonment and decommissioning obligations from previously sold oil and gas production assets in the U.S. Gulf of Mexico, as companies that purchased these assets have filed for protection under Chapter 11 of the U.S. Bankruptcy Code, and we believe it is now probable and estimable that a portion of these obligations will revert to the Company.”

Chevron expects it would undertake the decommissioning activities on these assets over the next decade.

Chevron expects to treat the non-cash, after-tax charges of $3.5 billion to $4.0 billion as special items and exclude them from adjusted earnings in the fourth-quarter results.

In October, Chevron reported lower-than-expected earnings for the third quarter of 2023, as international downstream weakness and maintenance at both the upstream and downstream operations weighed on profits.

PETRO IMPERIALI$M

“Oil Five” Sovereign Wealth Funds Pass $4 Trillion Mark

By Charles Kennedy - Jan 03, 2024

The sovereign wealth funds of the Gulf Cooperation Council members topped $4 trillion last year, which was an all-time high.

Called the “Oil Five”, the group of top sovereign wealth funds includes three entities from the United Arab Emirates, one from Saudi Arabia, and the Qatar Investment Authority. The five invested a total $75.6 billion last year, which was a decline on 2022 investments, the Khaleej Times reported, citing data from a report by Global SWF.

The Saudi Public Investment Fund and the Qatar Investment Authority were the most active investors, accounting for the bulk of the five’s total, at some $68 billion. The Saudi sovereign wealth fund was also the biggest investor globally last year, deploying $31.6 billion across 49 deals.

The amount was a 33% increase on 2022 and a record for any sovereign wealth fund. The total spend of sovereign wealth funds last year reached $123.8 billion. The five oil funds from the Gulf were the most active investors during the year.

The increase in investments for the Gulf oil kingdoms’ sovereign wealth funds comes amid lower oil prices and also lower production for Saudi Arabia. Based on their assets under management, however, it appears the effect of the oil price rout last year will manifest with a delay.

The UAE, meanwhile, launched a new investment fund at the COP28 climate conference in December. The entity will have a size of $30 billion and will be a partnership between the Emirates, BlackRock, TPG, and Brookfield, the Financial Times reported in late November, citing sources in the know.

A day later Reuters confirmed the news citing the official announcement of the UAE’s President, who said the fund, dubbed ALTERRA, will seek to raise up to $250 billion by the end of the decade, to invest in in climate-related initiatives.

By Charles Kennedy for Oilprice.com

Protestors Shut Down Libya's Sharara Oil Field

By Tom Kool - Jan 03, 2024,


After false rumors of the closure of the giant Libyan Sharara oil field on Tuesday, a letter from Libya’s National Oil Company on Wednesday confirms the shutdown of one of Libya’s most important oil fields.

According to Libya’s Al-Ahrar disgruntled protestors took to the field on Wednesday morning stating that the field would not be re-opened until their demands and those of the entire region of Fezzan in Southern Libya would be met.

In talks with Libya’s Al-Ahrar TV, spokesman Abu Bakr Abu Shreya of protest group the Fezzan Gathering Association demanded better services and development of Southern Libya.

Fears are that the protests may spread to the nearby 60,000 bpd El Feel field.



The 300,000 bpd Sharara field saw a short disruption for the last time in July of 2023 when protests erupted following the arrest of an official who tried to become the boss of Libya’s central bank.

During a period of relative stability following the truce between the rivaling parties in 2020, Libya’s crude oil production has risen to around 1.2 million barrels per day, and Libya’s state oil firm has plans to ramp up production to 2 million bpd by 2030 according to Minister of Oil and Gas Mohamed Oun.

By Tom Kool for Oilprice.com

 

Grid connection for second Shin Hanul Reactor unit

02 January 2024

Unit 2 of the Shin Hanul nuclear power plant in South Korea has began supplying its first electricity to the grid, Korea Hydro & Nuclear Power (KHNP) announced. The unit is the second of two APR-1400 reactors at the site, with a further two planned.

Shin Hanul units 1 and 2 (Image: KHNP)

In a LinkedIn post, KHNP said the 1350 MWe pressurised water reactor was connected to the grid on 21 December. "Grid connection means connecting the electricity generated at the nuclear power plant to the transmission line and sending it to general households and industrial sites," it noted.

The company added: "Shin Hanul unit 2 is the 28th nuclear power unit in Korea, and plans to contribute to the winter power peak with the power generated from today."

Workers celebrate the grid connection of Shin Hanul 2 (Image: KHNP)

Ground breaking for the first two units at the Shin Hanul (formerly Shin Ulchin) site took place in May 2012. First concrete for unit 1 was poured two months later, with that for unit 2 following in June 2013. Shin Hanul 1 achieved first criticality on 22 May 2022 and was connected to the grid on 9 June last year.

Shin Hanul 2 received an operating licence from the Nuclear Safety and Security Commission on 7 September, after which it completed a preliminary inspection by the regulator. The loading of 241 fuel assemblies into the reactor's core was carried out between 11 and 18 September. High-temperature functional tests were subsequently conducted.

Unit 2 reached first criticality - a sustained chain reaction - on 6 December.

After major tests at each power output stage, it is scheduled to begin full-scale commercial operation in the first half of 2024.

Shin Hanul 2 becomes south Korea's fourth operational APR1400 - after Saeul units 1 and 2 (formerly Shin Kori 3 and 4) and Shin Hanul unit 1. Two further APR1400s are under construction as Saeul units 3 and 4, with two more units planned as Shin Hanul units 3 and 4.

Four APR1400 units have been built at the Barakah nuclear power plant in the UAE, three of which are now in operation, with the fourth currently in its commissioning phase.

Researched and written by World Nuclear News

 

NuScale SMR meets Polish safety requirements, says regulator

02 January 2024

NuScale Power's NPM-20 small modular reactor (SMR) technology is compliant with Polish nuclear safety and radiological protection standards, the president of the National Atomic Energy Agency (Państwowa Agencja Atomistyki PAA) said in a general opinion.

A model of a NuScale SMR (Image: KGHM)

The PAA President assessed, among others: assumptions of the design of the reactor control room, reactor core, as well as the following systems: electrical power supply, command and control, fire protection, reactor cooling, auxiliary systems, radioactive waste and used nuclear fuel management, and the reactor containment used in the NuScale NPM-20 reactor with a power of 77 MWe.

Aspects related to the design and operation of a multi-module nuclear facility, the methodology for classifying the safety of systems and elements of the structure and equipment of a nuclear facility were also analysed.

According to the PAA, a general opinion, "as a pre-licence instrument, may apply to any solutions planned by the investor, including design, technological and organisational solutions, which will have a direct impact on the issues of nuclear safety and radiological protection". The opinion aims to determine whether the planned organisational and technical solutions comply with the requirements of nuclear safety and radiological protection resulting from the provisions of the country's Atomic Law Act, or whether the investor should make appropriate modifications.

In an opinion issued on 22 December, the PAA president concludes that the assumptions adopted in the design of the NuScale technology are correct and meet the requirements of Poland's Atomic Law and selected regulations on the safety of nuclear facilities. The conclusions published by the PAA will be taken into account in the standard and detailed design process of the NuScale reactors that are planned to be constructed in Poland.

In July last year, Polish copper and silver producer KGHM Polska Miedź SA's plan to construct a power plant based on NuScale's SMR was approved by the country's Ministry of Climate and Environment. The decision-in-principle issued by the ministry is a general opinion on selected conditions enabling the construction of a VOYGR modular nuclear power plant with a capacity of 462 MWe consisting of six modules, each with a capacity of 77 MWe.

The decision-in-principle represents official state approval for the planned investment in accordance with the assumptions and concept presented by the company. It is the first decision in the process of administrative permits for investments in nuclear power facilities in Poland that an investor may apply for. Obtaining it entitles KGHM to apply for a number of further administrative arrangements, such as a siting decision or construction licence.

In February 2022, KGHM signed a definitive agreement with NuScale to initiate work towards deploying a first NuScale VOYGR SMR power plant in Poland as early as 2029. In July last year, KGHM submitted an application to the PAA to evaluate NuScale's SMR technology and prepare a site study. Under a task order signed in September, NuScale will continue to support KGHM's application to the PAA through activities including drafting additional preliminary safety analysis reports and coordinating with the PAA. The task order also sets the stage for the subsequent tasks in the Early Works Agreement as proposed by NuScale to KGHM.

NuScale's SMR technology was the first to have gained approval from the US Nuclear Regulatory Commission, in August 2020. NuScale offers VOYGR plants in four, six and 12-module configurations.

Researched and written by World Nuclear News

Fortescue says iron ore cars derailed at Western Australia operations

Reuters | January 2, 2024 

Eliwana project, Pilbara, Western Australia. Credit: Fortescue Metals Group

Australia’s Fortescue Ltd said on Wednesday that multiple iron ore cars had been derailed from the company’s tracks on Saturday at its Western Australia operations.


Local media earlier reported that the Fortescue rail line into Port Hedland, Australia’s iron ore export epicentre, remained out of action on Tuesday.

“The incident did not impact December or H1 shipped tonnes. Normal rail operations will be up and running tomorrow (Thursday),” a Fortescue spokesperson told Reuters.

Shares in the world’s fourth-largest iron-ore maker dipped 1.1%, at A$29.06, by 2315 GMT in tandem with a nearly 1% fall in the broader mining sub-index.

The mining giant did not say how many wagons were involved in the derailment.

The company said it had started an investigation into the cause of the incident.

No injuries were reported, Fortescue added.

(By Roushni Nair; Editing by Jonathan Oatis, Mark Potter and Pooja Desai)

Ionic Rare Earths granted mining licence in Uganda

Staff Writer | January 2, 2024 

The license clears the way for mining at the Makuutu Rare Earths Project and marks the first large-scale mining license to be awarded in Uganda. (Image: Ionic Rare Earths)

Australia’s Ionic Rare Earths Ltd (ASX: IXR) has been provisionally granted a mining licence for its Makuutu project in Uganda, marking the first large-scale mining licence to be awarded in the African nation.


The Stage 1 mining licence covers approximately 44 square kilometers of the project’s near 300 square kilometers of tenements at Makuutu.

“This is an important step forward for Ionic Rare Earths in mining, refining and recycling the heavy rare earths critical for the energy transition, advanced manufacturing and defense,” Ionic Rare Earths managing director Tim Harrison said in a news release.

“This reinforces the Makuutu heavy rare earth project as one of the world’s largest and most advanced development-ready heavy rare earth element assets.”

Currently, the company’s greater Makuutu mineral resource estimate is estimated at 532 million tonnes grading 640 parts per million (ppm) total rare earth oxide (TREO) with a cut-off grade of 200 ppm TREO minus cerium oxide (CeO2).

In March 2023, Ionic announced a positive Stage 1 definitive feasibility study (DFS) for the first of six tenements to progress to a mining licence application, which is pending in Uganda.

The Makuutu Stage 1 DFS defined a 35-year life initial project producing a 71% rich magnet and heavy rare earth carbonate product basket and the potential for significant scale-up through additional tenements, according to the company.

Pan Asia Metals to buy large Chilean lithium project

Cecilia Jamasmie | January 2, 2024 | 

Evaporation ponds in Atacama’s Salt Flat, Chile. (Image courtesy of SQM.)

Shares in Pan Asia Metals (ASX: PAM) jumped on Tuesday after the Australian lithium miner said it had entered into binding option agreements to buy the Tama Atacama lithium project in Chile.


The asset, the company said, is one of the largest lithium brine projects in South America, covering about 1,200km2 across three salt flats. It comprises the Dolores North, Dolores South, Pozon and Pink projects, but Pan Asia is also acquiring the northern half of the nearby Ramatidas project.

Managing director Paul Lock said that surface assays for lithium are extremely high at the project, which has an “enviable” strategic positioning with all infrastructure requirements satisfied.

The purchase of Tama Atacama follows a string of acquisitions in Chile by multinational mining and chemical companies, including France-based Eramet SA, and moves by Australian and Chinese processors to build lithium conversion plants in the South American country.

The deal will hand Pan Asia a 100% interest in the Dolores North and South project over three years — plus an additional year by mutual agreement with vendor Rajo Partnership — by making a $100,000 option payment by December 2024, a $100,000 option payment by the end of 2025, and a final $2 million option payment by December 2026.

The Tama-Atacama project is located in the Pampa del Tamarugal basin in the northern part of the Atacama Desert, Chile. (Courtesy of Pan Asia Metals.) Click to view in full size.

The company said it plans to start geophysics and drilling in the early months of 2024.

The announcement comes on the heels of the creation of a new government-controlled lithium partnership that fuses assets of state-run Codelco with private miner SQM (NYSE: SQM), as Chile’s President Gabriel Boric advances his push for greater public control over the battery metal.

SQM said it would partner with copper giant Codelco for the future development and production of the metal in the Atacama salt flat, in a tie-up set to kick off in 2025 and run through 2060.

The deal gives Codelco majority control in line with the president’s plans announced in April, Chile mines minister explained to MINING.COM in detail in May.

Pan Asia Metals’ stock rose as much as 40% to A$0.175, their biggest intraday percentage gain since May 19, 2023 and the highest level since Dec 15, 2023. It closed at A$0.16.

GEMOLOGY
EU adds Alrosa and CEO to sanctions list

MINING.COM Staff Writer | January 3, 2024 

Alrosa accounts for over 90% of all Russian diamond production. 

(Image from Alrosa)

The European Union has added Alrosa as well as its CEO, Pavel Alekseevich Marinychev, to its sanctions list.


“In line with the diamond ban we have introduced with the 12th package of sanctions, the EU today lists Alrosa, the largest diamond-mining company in the world, and its CEO,” EU’s foreign policy chief Josep Borrell said on social media platform X.

Last month, G7 nations announced a direct ban on Russian diamonds starting Jan. 1. This will be followed by phased-in restrictions on indirect imports of Russian gems from around March 1. A new system to trace the origin of the gems will be introduced in September.

“This is part of our coordinated efforts at G7 level to deprive Russia of this important revenue source,” Borrell added.

Alrosa accounts for over 90% of all Russian diamond production.

In total, the EU’s restrictive measures concerning actions that undermine or threaten the territorial integrity, sovereignty, and independence of Ukraine now encompass nearly 1,950 individuals and entities.

Alrosa did not immediately reply to a request for comment.

(With files from Reuters)

 

Shell Awards Contract for New Gulf of Mexico Platform to Seatrium

Shell's Vito platform, a near-sister of Sparta (Shell file image)

PUBLISHED JAN 1, 2024 9:21 PM BY THE MARITIME EXECUTIVE

 

Oil major Shell is wasting no time in advancing the development of the Sparta deepwater project in the U.S. Gulf of Mexico. Just days after making the final investment decision (FID) on the project, the company has awarded the contract for the construction of a semi-submersible floating production unit (FPU) as part of plans to ensure production commences in 2028.

Shell awarded the contract to Seatrium, which will build the hull, topsides and living quarters of the FPU. It follows a letter of intent sealed by both parties in August last year.

The Sparta FPU will be situated in the Garden Banks area, about 150 nautical miles off the coast of Louisiana. It will have a single topside bolstered by a four-column, semi-submersible floating hull. It is designed to produce 90,000 barrels of oil equivalent per day (boe/d). The FPU will be deployed in a depth of more than 1,400 meters of water to support eight initial wells.

Shell, which owns a 51 percent operator stake in Sparta, reached a final investment decision for the project on December 19.

Sparta currently has an estimated, discovered recoverable resource volume of 244 million boe. It marks Shell’s first development in the Gulf of Mexico to produce from reservoirs with extreme pressures up to 20,000 pounds per square inch. It is scheduled to begin production in 2028.

The Sparta FPU cements the relationship between Shell and Seatrium, which also constructed the Vito and Whale newbuild facilities. The FPU is a near-sister of Vito and Whale in that it replicates about 95 percent of Whale’s hull and 85 percent of Whale’s topsides. The two-level topside for Sparta will be integrated and lifted to the hull using Seatrium’s Goliath twin cranes, which are capable of lifting up to 30,000 tonnes.

“We are deeply honored that Shell has awarded Sparta, the third FPU newbuild, to Seatrium, following the successful deliveries of the Vito and Whale FPUs. It is a strong affirmation of our team’s capabilities and the long-standing partnership between both parties,” said William Gu, Seatrium Executive Vice President and Head of Oil & Gas International.

Though the two companies did not disclose the cost of the FPU, market intelligence firm DBS Group Research estimated it could be worth $300-400 million. “This marks a good start to the year and also a strong affirmation of Seatrium’s capabilities and the long-standing partnership with Shell,” said DBS in a research note.

The Sparta development will be the first of Shell’s "replicable" projects with all-electric topside compression equipment, reducing greenhouse gas intensity and emissions from its in-house operations.