Energy storage pioneer Corvus Energy is set to start development and production of sustainable, large scale maritime-certified hydrogen fuel cell systems. Production will be located in Bergen, Norway with Toyota onboard as key partner and supplier of mass-produced fuel cell technology.

2020 will be remembered as one of the most challenging years in the history of the oil and gas sector.

As the climate is changing, the Arctic is warming four times faster than global averages, causing the circumpolar Jetstream to weaken and move southwards. Consequently, freezing cold air masses – known as the Polar Vortex – descend to more densely populated areas in the earth’s Northern Hemisphere, where humans have no other immediate choice but to increase fossil fuel consumption to keep warm.

Analyzing global temperatures and related weather phenomena, Rystad Energy believes that the increased frequency of this weather pattern – which has caused a rise in demand for coal, liquefied natural gas (LNG), electricity and even a bit of oil – is here to stay. Recent eye-popping price spikes and their spread between summer and winter will widen, especially for gas, both natural and liquefied.

With European and Asian markets hungry for natural gas and LNG, storage levels are getting depleted. And with the Polar Vortex expected to create another cold snap in February, a perfect demand storm will likely cause a spike in global demand and contribute to a 4% rise in LNG consumption this year, reaching about 377 million tonnes (MT) in 2021 versus 363 MT in 2020.

Due to the cold snap, North-east Asia has already reached an international LNG import all-time-high in December, when the region imported a record 22 MT. China in particular imported a record 66 MT in the whole of 2020, despite the effect of the Covid-19 pandemic, and is on the verge of overtaking Japan as the world’s largest LNG importer. Rystad Energy expects Chinese LNG imports in 2021 to grow to 72.9 MT, just 2 MT short of Japan’s projected 74.9 MT.

The Polar Vortex has so far hit Asian and European markets hard, causing a rise in the profitability of LNG, natural gas and coal. Rystad Energy’s price forecasts show that high gas and LNG price levels will likely remain high in coming weeks and are only likely to ease back in March and April as spring approaches in the Northern Hemisphere.

Yet US Henry Hub gas prices remain surprisingly subdued at $2.75 per MMBtu, a steep drop from the peak price of $3.40 per MMBtu registered in late October 2020. There are two main reasons US gas prices are comparatively depressed. First, the Polar Vortex has so far only drifted south over Europe and Asia, and not yet North America. Second, higher oil prices are incentivizing shale operators to tap into drilled but uncompleted wells (DUCs), which increases the domestic supply of both oil and gas.

As more wells are brought online, we see continued pressure on domestic US gas prices, even despite the surge in demand for US LNG exports. Rystad Energy expects the Henry Hub price to average $2.95 per MMBtu in 2021, in nominal terms.

The Polar Vortex, together with increased North East Asian demand for heating, has pushed up Asian LNG prices and the arbitrage window between the US and Asian markets. This has directed more US LNG volumes to the Far East compared to the US and Europe. Consequently, the long voyage from source to market is good for vessel demand, and thus also charter rates.

The increased demand for US LNG in Asia has led to congestion in the Panama Canal, the shortest route for transporting LNG from the US Gulf Coast to Asia. Maintenance and weather disruptions have further supported the current backup in the canal. Consequently, shippers may have to use alternative routes including passing through the Suez Canal or around South Africa for transporting cargoes from the US to Asia.

These routes would more than double the route distance and increase passage time from 20 to 30 days. As such, voyage costs for cargos from the US to Japan have soared as high as $5.60 per MMBtu during January 2021.

Perfect storm for coal

Japan presents an interesting case of how the attractiveness of coal has rebounded as a result of the Polar Vortex. With most of Japan’s nuclear reactors still offline in the wake of the Fukushima disaster, Japan has relied heavily on LNG to meet its power demand and is therefore vulnerable to any shock related to the supply and demand balance in the LNG market. The Japanese power sector has also been affected by heavy snowfall and a lack of sunshine, thus affecting solar power generation and worsening the overall power supply. While the shortage can be offset by increased use of coal and oil, utilities have asked the public to use less electricity, a difficult ask in the midst of freezing temperatures.

The situation is hardly better in China. On 7 January 2021, Beijing recorded its lowest temperature since 1966 – touching -19.6 degrees Celsius. This has sharply lifted Chinese coal demand for both heating and power, and to deal with the demand spike, major north Asian energy consumers have ramped up coal consumption in recent weeks. In particular, thermal coal spot prices in China have soared since the start of the new year.

The cold weather has dampened domestic coal production and transportation, though the nationwide coal shortage started to appear in early November when major domestic coal-producing areas in Inner Mongolia, Shaanxi and Shanxi provinces reported reduced supply due to the government’s crackdown on illegal production and sale of coal.

But the volatile coal market situation has also been exacerbated by the government’s own policy decisions. China's coal import quota system, plus the informal ban on Australian coal imports, has resulted in limited imported coal available to take up the domestic production shortfall, even though it is substantially cheaper. Chinese coal buyers were able to increase imports from Indonesia and Russia in December as the annual quota expanded, and have also recently turned to alternative sources of supply, including South Africa and Colombia, but these volumes are reportedly unlikely to arrive in time or in sufficient quantities to meet short-term demand requirements.

“The new round of lower temperatures can support the high energy prices in the market. As milder weather returns, we expect to see less upward pressure on energy prices. Still, the market will continue to be tight during the coming months, as challenges in the Panama Canal are yet to be resolved, Chinese coal production needs to recover, and gas storage needs to be restocked for the current market tightness to ease,” says Sindre Knutsson, vice president of gas market research at Rystad Energy.

For more analysis, insights and reports, clients and non-clients can apply for access to Rystad Energy’s Free Solutions .


Wallem has signed an agreement with the Ocean Technologies Group to implement its recently launched OCEAN Learning Platform.
 

Equinor experienced several serious incidents throughout the year, but also achieved a reduction in the number of serious incidents and personal injuries in 2020 compared to the previous year. The results support a good trend in safety performance during the last decade, but also demonstrate the need to further improve our safety work.

The National Offshore Wind Research and Development Consortium announces Round One awards in the Offshore Wind Solicitation 1.0 for offshore wind technology research and development projects. Today’s announcement advances the Consortium’s long-term strategy for identifying innovative technology to further drive down costs of offshore wind development in the United States, making it even more competitive with other generation resources.

Despite the devastating downturn of 2020, most global majors held up quite well during the market turmoil, a Rystad Energy comparative analysis reveals after measuring key upstream performance metrics. Total outshined all other peers, as the French company not only exceled in financial and operational performance, but also was the only major to replace all of the year’s produced resources.

The UK Chamber of Shipping, the voice of the UK shipping industry, has joined global industry and human rights leaders, including A.P. Møller - Mærsk, BP, BW, Cargill, COSCO, DOW, Euronav, MISC, NYK, Rio Tinto, Shell, Trafigura, Unilever and Vale, in signing the Neptune Declaration on Seafarer Wellbeing and Crew Change in a worldwide call to action to end the unprecedented crew change crisis caused by COVID-19.

Teledyne Marine has contracted with SITECH Gulf to serve as their exclusive distributor in the U.A.E., Oman, Qatar, Bahrain, Kuwait, Saudi Arabia, Jordan and Egypt, and official distributor in select North African countries to represent their full line of marine products for civil engineering, offshore energy, and oceanographic applications.

Equinor and bp have completed their previously announced transaction, whereby Equinor has sold a 50% interest in both the Empire Wind and Beacon Wind assets on the US east coast for a total cash consideration of around USD 1.1 bn excluding customary purchase price adjustments.

Equinor has decided to write down the book value of its Tanzania LNG project (TLNG) on the company’s balance sheet by 982million USD. This will be reflected in adjusted earnings for EPI division in fourth quarter 2020 results to be reported on 10 February 2021.

While progress has been made in recent years on the commercial framework for TLNG, overall project economics have not yet improved sufficiently to justify keeping it on the balance sheet.

The TLNG project has an anticipated breakeven price well above the portfolio average for Equinor and is, at this time, not competitive within this portfolio. Equinor will continue to engage with the Government of Tanzania in negotiations on a commercial, fiscal and legal framework that may provide a viable business case for TLNG in the future.

Equinor maintains an attractive portfolio of project development opportunities in oil and gas as well as renewables. This portfolio requires strict prioritization, ensuring capital is allocated towards projects yielding the most competitive returns. As shown at the Capital Markets Update in February last year, Equinor’s oil and gas projects with expected start-up by 2026 have an average breakeven below $35/bbl based on today’s estimates. Similar for non-sanctioned oil and gas projects with expected start-up within this decade, the average breakeven is below $40/bbl.

Equinor has been present in Tanzania since 2007 when the company signed a Production Sharing Agreement (PSA) with the Tanzania Petroleum Development Corporation (TPDC). Equinor is the operator with a 65% participating interest, along with ExxonMobil’s working interest of 35%. TPDC has the right to participate with a 10% interest. Equinor made nine gas discoveries in Block 2 offshore Tanzania with estimated volumes of 20 Tcf of gas in place.

International Submarine Engineering Ltd. (ISE) has successfully completed the second stage in the autonomous dock prototype project. This project is a joint project between Dalhousie University and ISE with funding provided by Innovation for Defence Excellence and Security (IDEaS).

C-Innovation, LLC (C-I), an affiliate of Edison Chouest Offshore (ECO) and its family of companies, has announced a one-year contract extension with BP for Riserless Light Well Intervention (RLWI) in the Gulf of Mexico (GOM). The Island Venture and team are currently mobilized and in the field working on one of BP’s assets.

The launch of ABB’s CEMcaptain will help shipping comply with the sulphur emission regulations that were enforced in 2020, and keep in check their CO2 footprint.

In January 2020, the low sulphur and nitrousoxide emission limits in the International Maritime Organization regulations became effective worldwide. CEMcaptain is a powerful emissions monitoring system from ABB designed to help the maritime industry meet these new regulations and become more sustainable. Its measurement and digital capabilities increase on-board safety, provide process optimization and substantially reduce ownership costs. By consistently achieving 98 percent and more uptime, the new system not only requires less maintenance effort but also saves time otherwise spent on handling non-compliance issues.

Designed with busy mariners and a regularly changing crew in mind, CEMcaptain is a multi-component analyzer system that continuously provides real-time data offering reliable measurement of emissions with the highest stability. Operating in even the harshest of conditions it integrates analyzer modules and sample handling components in a standalone cabinet, making installation easy.

Equipped with ABB’s renowned Uras26 non-dispersive IR gas analyzer, CEMcaptain simultaneously and continuously measures sulphur dioxide (SO2) and carbon dioxide (CO2) in line with regulation requirements. Each analyzer has two separate gas paths to allow for continuous CO2/SO2 measurement of separate streams, with up to four different components per analyzer module.

“Our solutions are driving the evolution of sustainable shipping, paving the way to a zero-emission marine industry. ABB has more than 60,000 Continuous Emissions Monitoring Systems (CEMS) installed in over 100 countries that help monitor our environment,” said Stephen Gibbons, ABB’s Head of Product Management in Continuous Gas Analyzers. “We draw on 60 years of experience in emissions monitoring to provide this support in concrete terms. CEMcaptain has been combined with innovations in on-site and remote digital services. The result is a solution that provides the industry with a digital toolbox that increases regulatory compliance and operational efficiency.”

Fast fault reporting, diagnosis and repair are achieved via the on-site and remote digital services which help operators get closer to 100 percent availability for their gas analysis instrumentation. Dynamic QR codes are integrated into the ABB CEMcaptain system display panel. All relevant diagnostic information can be collected from the analyzer via a scanned code and transferred to ABB support. This means that maritime instrumentation technicians can send real-time information to an ABB service expert to get immediate guidance on appropriate maintenance. ABB Ability™ Remote Assistance with secured connectivity direct to ABB support is also offered for real-time solutions to problems. These features reduce the costly training of changing crews as well as the number of experts required on board. They also increase on-board safety by reducing crew exposure to emissions.

CEMcaptain GAA610-M is approved by all major classification societies (DNV GL, ABS, Lloyd’s Register, Bureau Veritas, ClassNK, Korean Register).

UK floating offshore wind could reach “subsidy-free” levels by the early 2030s, according to a study completed by the Offshore Renewable Energy (ORE) Catapult’s Floating Offshore Wind Centre of Excellence (FOW CoE).

Damen Shipyards Group has placed an order with VEEM – the Western Australia-based market leader in marine stabilization products – for a VG1000SD Gyrostabilizer.