1. Texas solar boom
- Texas already leads the nation in wind power, but it is rapidly catching up to California in solar.
- Texas is set to add 10 GW of solar by the end of 2022. California will only add 3.2 GW, according to the EIA.
- Texas will capture one-third of all new utility-scale solar coming online in the U.S. in the next two years.
- Roughly 30% of the new solar destined to be installed in Texas will occur in the Permian basin.
2. Biden pledges 50-52% cut in emissions
- President Biden announced a goal of slashing emissions by half by 2030, from a 2005 baseline. Other countries upped their ambition as well.
- That would require a 5% annual reduction going forward, which would be much faster than the 1.1% annual decline between 2007 and 2019.
- As Liam Denning at Bloomberg Opinion points out, that would require 80% reduction in emissions from the power sector, cutting methane emissions in half, plus finding another 1.2 billion tonnes of CO2 to cut, likely from transportation.
- The aggressive target will be difficult to reach, but the trajectory is clear, which carries enormous implications for oil and gas.
3. U.S. natural gas production to jump
- U.S. natural gas production is expected to jump, following several years of contraction.
- Natural gas output is set to hit a new record in 2022, at 93.3 billion cubic feet per day, according to Rystad Energy.
- Production…
1. Texas solar boom
- Texas already leads the nation in wind power, but it is rapidly catching up to California in solar.
- Texas is set to add 10 GW of solar by the end of 2022. California will only add 3.2 GW, according to the EIA.
- Texas will capture one-third of all new utility-scale solar coming online in the U.S. in the next two years.
- Roughly 30% of the new solar destined to be installed in Texas will occur in the Permian basin.
2. Biden pledges 50-52% cut in emissions
- President Biden announced a goal of slashing emissions by half by 2030, from a 2005 baseline. Other countries upped their ambition as well.
- That would require a 5% annual reduction going forward, which would be much faster than the 1.1% annual decline between 2007 and 2019.
- As Liam Denning at Bloomberg Opinion points out, that would require 80% reduction in emissions from the power sector, cutting methane emissions in half, plus finding another 1.2 billion tonnes of CO2 to cut, likely from transportation.
- The aggressive target will be difficult to reach, but the trajectory is clear, which carries enormous implications for oil and gas.
3. U.S. natural gas production to jump
- U.S. natural gas production is expected to jump, following several years of contraction.
- Natural gas output is set to hit a new record in 2022, at 93.3 billion cubic feet per day, according to Rystad Energy.
- Production will soar even faster, rising to 100 bcf/d by 2024, the firm said. That comes after contracting from a recent peak of 92.1 bcf/d in 2019 down to 90.8 bcf/d in 2020.
- Appalachia is "best in class" in terms of emissions intensity, Rystad said, with 7.1 kg of CO2 per barrel of oil equivalent (boe) in 2020.
- Meanwhile, gas from the Bakken is nearly three-times more emissions-intensive.
- However, the Haynesville shale is expected to account for most of the growth going forward, "forecast to add about 10 Bcfd from 2020 to 2035, growing by 86% during that timeframe," Rystad said.
4. Fracking activity to moderate
- Halliburton (NYSE: HAL) saw its share price plunge by over 7% this week when it told investors that fracking activity in the U.S. would "moderate" in the second quarter.
- Internationally, fracking activity could "accelerate," the company said, with Latin America in particular expected to look strong.
- Despite the relatively pessimistic surprise, Halliburton exceeded first quarter earnings expectations, reporting 19 cents per share.
- That put the company back in the black after a rough year in 2020.
5. India Covid crisis intensifies
- Daily case counts broke new world records in India this week, above 300,000. New Delhi and Mumbai were under new lockdowns even as Prime Minister Narendra Modi opposed lockdowns.
- "Google mobility indices for India suggest a sharp deterioration in demand conditions," Standard Chartered wrote in a note, with data through April 18, lagging the most recent turn for the worse.
- The bank said the data suggests a month-on-month decline in oil demand by about 0.4 mb/d for April.
- "Although we expect the fall in demand to be less severe than in the first wave of the pandemic, as has been the case elsewhere, the deterioration in mobility indices creates a downside risk to Indian oil demand," the bank said.
6. Road transportation on the rise
- While India suffers from a horrific spread of Covid-19, demand for road fuels is sharply on the rise elsewhere, particularly in the U.S., as vaccinations speed up.
- Gasoline demand is on track to increase by 1.8 mb/d in 2021 to reach 25.4 mb/d, although still down 1.2 mb/d from pre-pandemic levels.
- People are dramatically increasing driving in the U.S., even as flights remain sharply below pre-pandemic levels.
- Oil demand in the U.S. is expected to remain 0.8 mb/d below 2019 levels, but that is sharply up from 8% decline in 2020.
7. Global energy CO2 emissions shoot up
- The U.S. hosted a climate summit on April 22 and 23, where countries announced a slew of new 2030 emissions reduction targets.
- Global energy-related CO2 emissions will rebound this year, tracking fossil fuel demand.
- The IEA warned that dramatic action is needed. "This is a dire warning that the economic recovery from the Covid-19 crisis is currently anything but sustainable for our climate," International Energy Agency executive director Fatih Birol said.
- Global greenhouse gas emissions are set to rise by 4.8% in 2021, the largest annual increase in a decade.