Hurricane Ida Officially Becomes Most Devasting Hurricane In Gulf Of Mexico

In the latest edition of the Numbers Report, we will take a look at some of the most interesting figures put out this week in the energy and metals sectors. Each week we’ll dig into some data and provide a bit of explanation on what drives the numbers.

Let’s take a look.

1. Hurricane Ida Derails US Gulf of Mexico Output More Than Anyone Else

- Hurricane Ida has now officially become the most devastating hurricane to hit production in the US Gulf of Mexico, with some 28% of crude output still halted in the GoM as of September 16, i.e. 20 days after Ida made landfall.
- Oil exports picked up unevenly after Tropical storm Nicholas passed - LOOP is still yet to receive its first vessel since Hurricane Ida, whilst Texan terminals like Beaumont or Corpus Christi have restarted operations on 16-17 September.
- Two refineries that both wield a 250kbpd capacity, Phillips 66’s Alliance and Shell’s Norco Refinery, remain shut as both were flooded during the hurricane and sustained unspecified damage that will take at least weeks to repair.
- Market rumours speculate that it is not unimaginable that Phillips 66’s Alliance Refinery will not be rebuilt or repaired.

2. Europe Will Lead World in Wind Capacity Additions

- The global pipeline of floating wind power projects reached 54 GW, with more than half of those located in Europe, reports S&P Platts.
- The United Kingdom and Ireland combined account for more than 30% of all upcoming projects, with the former seeing the first-ever floating wind farm (Hywind) commissioned in 2017.
- According to independent assessments, the UK would need 100 GW of offshore wind capacity to meet its 2050 net-zero objective.
- Beyond Europe, Australia is the largest floating offshore wind developer with 7.4 GW worth of projects coming onstream soon, followed by South Korea and the United States.

3. Methanol Bunkering Might be Shipping’s Next Call

- Maersk’s pioneering move to order eight deep-sea vessels that would run on sustainably produced methanol have sent ripples across the shipping industry, S&P Platts writes.
- Increasing methanol prices notwithstanding, as of today there are 12 methanol-fuelled ships out there with at least that many more scheduled for delivery over 2022-2023.
- Despite the recent flurry of interest towards methanol, several of its deficiencies are still unsolved, such as its low flash point and much lower energy density.
- According to Platts, LNG dual fuel vessels will take the prime in terms of future vessel deliveries, with its base case forecast seeing at least 440 such vessels delivered, more than fivefold more than methanol-fueled ones.

4. Gazprom Waits for German Certification

- The operator company of Nord Stream 2 announced its certification application is complete, leaving the German regulatory agency BNetzA with four months to produce a draft decision.
- Gazprom has argued that a fast-tracked certification procedure could help depress prices that already rose above $960 per 1,000 cubic meters in Europe this week.
- Russian energy authorities stated they might consider granting other (ex-Gazprom) gas producers access to the Nord Stream 2 pipeline, both as a means of mitigating E.U. compliance issues and to accommodate increasing gas output.
- In the meantime, the European Parliament is calling upon relevant parties to derail the launch of Nord Stream 2, wary of cozying up to Russia.

5. Indian Coal Demand Might Trigger Nationwide Stock Shortage

- India’s state-owned coal mining firm Coal India continues to urge the government to ramp up coal purchases as plants is several regions of the country are facing feedstock shortages, Reuters writes.
- With coal accounting for more than 70% of India’s power generation capacity, coal-powered electricity output outpaced all other energy sources, hitting an almost 20% year-on-year increase over January-August.
- By mid-September, the average coal inventories held by an Indian coal-fired plant dropped to a 3-year low of six days (some 100 out of 135 plants had less than 7 days of stocks).
- Coal imports to India amounted to 26 million tons last month, the highest monthly volume since June 2020 which nevertheless failed to improve the stock shortage issue.

6. European Carbon Price Surges on Coal Resurgence

- As European gas prices continue hitting all-time highs, utility companies have ramped up their purchases of coal to meet winter demand, subsequently triggering a run in carbon prices.
- Europe’s coal imports in August amounted to 12 million tons, the highest reading since March 2019.
- Carbon prices on the EU Emissions Trading System reached a record high last week of 63.35 per metric ton of CO2 (equivalent to $75/mt).
- Concurrently with the ongoing gas supply tightness and higher coal imports, market participants expect the EU to tighten its carbon allowances as it seeks to implement its 55% emission reduction target.

7. US Power Prices Follow in Footsteps of Europe

- US electricity prices for the winter season soared to a 7-year high, triggered by the ongoing gas market tightness, writes Bloomberg.
- Pummelled by weak renewables generation, tight gas markets and exorbitantly high LNG prices, European power prices soared beyond the €150/MWh mark ($175/Mwh) this week.
- US prices are still not there, though this week's trading saw Jan 2022 prices soar above $80 per MWh for the first time since 2014 as -American utility firms confront their own share of gas supply shortages.

That’s it for this week’s Numbers Report. Thanks for reading, and we’ll see you next week.