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Oil remains, by far, the most dominant source of energy worldwide, with the EIA estimating that the world consumed 92.2 million barrels per day (b/d) of petroleum and other liquid fuels in 2020, despite a 9% decline due to the pandemic.

As the world’s biggest polluters such as the U.S. and China become more aggressive with their climate goals, the biggest oil and gas companies that shoulder the biggest responsibility for GHG emissions and are likely to feel the heat the most.

Interestingly, the world’s 5 biggest oil and gas companies (in terms of revenue) are from China and Europe, with U.S.’ giants ExxonMobil (NYSE:XOM), Chevron Corp. (NYSE:CVX), and Marathon Oil (NYSE:MRO) coming in lower at #6, #8, and #9, respectively.

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Source: Oil Price

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Natural gas production in the US is set to grow to a new record in 2022, at 93.3 billion cubic feet per day (Bcfd) and will continue to rise further, exceeding 100 Bcfd in 2024, a Rystad Energy analysis shows. As a result, the performance of the country’s key gas basins is going to attract increased interest from investors and markets, with CO2 emissions intensity, capital efficiency and potential bottlenecks drawing close scrutiny.

The country’s output reached a record in 2019, at 92.1 Bcfd, but production declined subsequently to 90.8 Bcfd in 2020 as a result of the Covid-19 pandemic. Rystad Energy expects that 2021 volumes will fall even further, to 89.7 Bcfd but the trend will quickly change as the effect of the pandemic subsides and activity builds up across the country’s major gas basins.

Rystad Energy’s analysis reveals that the Appalachian Basin was US’ best-in-class in 2020 when it comes to CO2 emissions intensity, and the region is set to report a record-high capital efficiency in 2021, as reinvestment to maintain output will drop to its lowest ever. Meanwhile, the Haynesville play will offer the largest gas output growth going forward, risking bottlenecks unless more pipelines are approved.

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Source: Oil Price

Jet fuel and petrochemicals are expected to fuel crude demand this decade. Moreover, oil demand in the transport sector is set to peak by 2026. This is one year earlier than originally anticipated. Goldman Sachs believes oil demand will peak in 2026. Then, BP Plc believes the highest global demand growth is already over. Now, the International Energy Agency (IEA) thinks the peak could come later, in 2030. However it’s framed, it is clear that the oil and gas industry is facing a turbulent future.

The adoption of electric vehicles (EV) is expected to increase sharply over the next decade, driving down the demand for oil to power road transportation. According to Deloitte, we can expect a CAGR of 29 percent for the EV industry between now and 2030, with sales expected to increase from 2.5 million in 2020 to 11.2 million by 2025, and 31.1 million by 2030.

It is thought that China will account for around 49 percent of the global EV market share, with Europe following at 27 percent and the USA with a 14 percent market share. Developed countries are expected to drive EV demand over the next decade until growth levels out in the 2030s.

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Source: Oil Price

If you have further questions about any peak oil demand-related topics, feel free to reach out to us here.

By now, those of you who read about my top New Year’s stock pick, Recon Africa, will have learned that this small-cap explorer may have just moved one giant step forward in Namibia’s Kavango Basin.

Beyond my wildest imagination, this small-cap explorer set out to drill three wells to prove up the existence of indicators of petroleum systems in Namibia.

They may have proved it in the first drill.

Some results are just in and this play may have just been hugely de-risked.

But it looks like they did much more than that. They encountered oil and gas indicators, too.

If you scooped up shares in Reconnaissance Energy Africa (“Recon Africa”) (TSXV:RECO, OTC:RECAF) when I first recommended it, I’m sure you’ve been watching its remarkable rise with great interest.

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Source: Oil Price

Has peak oil demand already come and gone? That’s an exceptionally hard question to answer. There are some experts that say unequivocally, yes. They claim that peak oil is already upon us, thanks to the crushing blow that the Covid-19 pandemic dealt to global oil demand as well as the ever-escalating worldwide transition toward clean energy. But there are just as many who say that the world’s thirst for oil still has a long way to go before we hear its swan song.

Regardless of whether oil demand has peaked or plateaued during the pandemic, what is undeniably true is that the world is going to burn a whole lot more oil in the future before the global community is able to decarbonize entirely – a goal that is still a long, long way off, no matter who you ask.

“The world is expected to burn hundreds of billions of barrels of oil in the coming decades,” Bloomberg Markets reported this week. “That gives plenty of incentive for giants like Total or Royal Dutch Shell Plc, plus the hundreds of smaller explorers that remain in business, to keep searching the world’s frontiers for the next place to sink their drill bits.”

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Source: Oil Price

Over the past 60 years, U.S. oil production has seen its ups and downs. From the decline that began in 1970 through the fracking boom of the 2000s, U.S. presidents have overseen a wide range of oil production changes.

As I have explained previously, a president often benefits from the actions of his predecessor. For example, President Carter benefitted from President Nixon’s decision to approve the Alaska Pipeline, and Presidents Obama and Trump benefitted from the pro-fracking regulations of the President George W. Bush administration.

Thus, this article shouldn’t be seen as crediting particular presidents for the oil production that took place while they were in office. Generally, those trends were set in motion years earlier.

With that in mind, below I present the change in oil production during each presidential term since 1960. For presidents that served two terms, I broke it into two parts. Nixon’s term consists of about 5.5 years, and due to Nixon’s resignation Gerald Ford’s term was about 2.5 years.

Here are the terms:

  • John Fitzgerald Kennedy (JFK): 1961 – 1963
  • Lyndon Baines Johnson (LBJ): 1963 – 1969
  • Richard Milhouse Nixon (RMN): 1969 – 1974
  • Gerald Rudolph Ford (GRF): 1974 – 1977
  • Jimmy Carter (JC): 1977 – 1981
  • Ronald Wilson Reagan (RWR): 1981 – 1989
  • George Herbert Walker Bush (GHWB): 1989 – 1993
  • William Jefferson Clinton (WJC): 1993 – 2001
  • George Walker Bush (GWB): 2001 – 2009
  • Barack Hussein Obama (BHO): 2009 – 2017
  • Donald Trump (DT) 2017 – 2021

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Source: Oil Price

If you have further questions about any U.S Oil production topics, feel free to reach out to us here.

U.S. oil production remains about 2 million bpd lower than its pre-pandemic levels. Still, methane emissions are already back to their levels from before the coronavirus. Worrying as this is in itself, it could also threaten energy companies’ long-term growth prospects because investors’ priorities are changing. What investors want from oil and gas now is not just stable returns but a lower carbon—and methane—footprint.

The Financial Times reported recently, citing data from the Environmental Defense Fund, that methane emissions in the U.S. shale patch had rebounded to pre-pandemic levels already, after dropping sharply as oil and gas production dropped last year amid the pandemic. Methane is a much more powerful greenhouse gas than carbon dioxide, although it dissipates faster in the atmosphere and has recently been garnering growing attention from regulators, environmentalists, and, now, shareholders.

“The investor community that stuck with [the shale industry] is the steady ones, that want discipline, that want predictability,” Regina Mayor, global head of energy at accounting major KPMG, recently told Forbes in an interview. “That’s the investor base they are all pandering to now. The growth investors are gone.”

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Source: Oil Price

Iranian oil potentially returning legitimately to the market. It will not be a shock. The complete return will not take place at least until the summer of next year. This is from the statement of Goldman Sachs says as the U.S. is taking part in indirect talks about the so-called Iran nuclear deal.

“With OPEC+ appearing to manage its exit for now, supply concerns will likely shift to the potential return of Iran to the JCPOA (Joint Comprehensive Plan of Action) agreement,” analysts at Goldman Sachs said in a note on Monday, as carried by Reuters.

The United States is engaging in indirect talks about the Iran nuclear deal. Moreover, there are diplomats from Europe, Russia, and China in Vienna.

Currently, the U.S. sanctions imposed by the Trump Administration are preventing Iran from exporting all of its oil, as many buyers around the world don’t want to risk their U.S. assets by doing business with Iran.

U.S. President Joe Biden has signaled a willingness to return to the nuclear deal. This is only if Iran returns to full compliance in its nuclear activities.

“We don’t anticipate an early or immediate breakthrough, as these discussions we fully expect will be difficult. But we do believe that these discussions with our partners and, in turn, our partners with Iran is a healthy step forward,” Ned Price, U.S. State Department spokesman, said on Monday.

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Source: Oil Price

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There are signs that the crisis engulfing Venezuela’s shattered petroleum industry could start to ease. In a recent televised address, Venezuela’s President Nicolas Maduro stated that Venezuela was open for oil investment from the U.S. and around the world. That coupled with earlier plans to open the Latin American country’s state-controlled petroleum industry to private control of some petroleum projects has sparked a flurry of interest in the near-failed state.

These events have triggered considerable speculation that representatives of foreign energy companies are traveling to Caracas to explore the opportunities that exist in Venezuela’s broken energy sector. The petroleum-rich Latin American country is endowed with the world’s largest oil reserves, totaling 304 billion barrels, with many existing oilfields currently inactive because of PDVSA’s lack of resources. Those characteristics indicate there are considerable opportunities for foreign energy companies, especially if Maduro, as rumored, is willing to provide them with proprietary control of energy assets.

A Reuter’s January 2021 article highlighted that small domestic oilfield contractors were meeting with Venezuelan officials to discuss operating fields owned by national oil company PDVSA in exchange for receiving a share of the profits.

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Source: Oil Price

Increased scrutiny over the environmental impact of natural gas—a key source of methane, which is a much more harmful greenhouse gas than carbon dioxide—has some industry analysts questioning the long-term prospects of global gas demand in the energy transition.

Big Oil has bet big on natural gas developments in the past decade, expecting incessant growth in demand for decades to come. Today, the majors continue to expect solid demand for natural gas, justifying investments in more production.

But investors and buyers of natural gas have started to fret over the emissions impact of the fuel.

This could create risks for the biggest oil and gas corporations, including Shell, Total, and ExxonMobil, according to Sarah McFarlane of The Wall Street Journal.

Those three supermajors and many other oil and gas companies have bet big on growing their natural gas divisions to meet what they see as continued growth in global gas demand.

The net-zero and energy transition narrative, however, has changed the overall narrative in the gas industry—buyers want net-zero cargoes, while producers and sellers pledge carbon capture and reduction of methane emissions.

Natural gas demand will continue to grow in the coming years, after fully recouping this year the losses from the 2020 pandemic shock, the International Energy Agency (IEA) said earlier this year.

Asia is set to continue leading that growth, while many Western markets, including the European Union (EU), will start to pay more attention to the environmental credentials of natural gas.

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Source: Oil Price

If you have further questions connected to how oil and gas trends affect the oil majors, feel free to reach out to us here.