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Two of the world's wealthiest men have put their vast resources behind what the nuclear industry calls small modular reactors (SMRs) in the quest for the perfect carbon-free energy source. TerraPower, founded by Bill Gates, and PacifiCorp, owned by Warren Buffett's Berkshire Hathaway, are sponsors of the project. The first SMR from TerraPower, the Natrium reactor project, will be built in Wyoming--the nation's primary coal producer--at the very location that once housed a coal station, where the infrastructure for a steam-cycle power plant and distribution to the electrical grid already exist. Last year, the state legislature passed a law authorizing utilities to replace coal or natural gas generation with small nuclear reactors and the US Department of Energy awarded TerraPower $80 million in initial funding to demonstrate Natrium technology; the department has committed additional funding subject to congressional approvals. Just ask anyone in Texas where a combination of frozen wind turbines and unprecedented demand last winter darkened the state for days.
Schlumberger and Panasonic have announced that they will collaborate on a new battery-grade-lithium production process that they say will pave the way for improved lithium production to help meet the expected surge in demand from the fast-growing global electric vehicle (EV) market. The announcement came from the Schlumberger New Energy arm of Schlumberger and from Panasonic Energy of North America, a division of Panasonic Corporation of North America. The lithium-extraction and -production process will be used by Schlumberger at the Nevada pilot plant of its Neolith Energy venture. According to Schlumberger, Neolith Energy's approach uses a differentiated direct-lithium-extraction process to produce high-purity, battery-grade lithium material while reducing production time from more than a year to weeks. The company also said the process significantly reduces groundwater use and physical footprint vs. conventional evaporative methods of extracting lithium.
Occidental Petroleum (Oxy) said this week it has agreed to sell almost 25,000 net acres in the Permian Basin of Texas to Colgate Energy Partners III for nearly $508 million. Average output of the properties amounts to 10,000 BOE/D from about 360 wells in the southern Delaware Basin, Houston-based Oxy reported in its announcement. The sale, expected to close in the third quarter, will boost Midland-based Colgate's holdings in the Permian to about 83,000 acres with an estimated production of 55,000. Colgate said it plans to run up to six drilling rigs by year's end and boost average production to 75,000 BOE/D by 2022. Proceeds from the sale will be used to pay down Oxy's debt that was around $35.4 billion in March, down slightly from the $36.03-billion debt reported last June.
TC Energy said this week that it has terminated plans to complete the transborder Keystone XL Pipeline which has faced legal battles and permitting challenges for more than a decade. The Calgary-based pipeline operator halted construction on the project on 20 January, the day that US President Joe Biden took office and in one of his first acts as chief executive revoked the pipeline's permits. TC Energy's CEO, François Poirier, issued a statement that said the company values the experience it gained, and relationships made with various stakeholders while pursuing the ill-fated project. "Through the process, we developed meaningful indigenous equity opportunities and a first-of-its-kind, industry-leading plan to operate the pipeline with net-zero emissions throughout its life cycle. We will continue to identify opportunities to apply this level of ingenuity across our business going forward, including our current evaluation of the potential to power existing US assets with renewable energy," Poirier said in the statement.
The International Gas Union's (IGU) recent report on world LNG markets found that the trade increased by only 1.4 mt to 356.1 mt compared to 2019 supported by increased exports from the US and Australia, together adding 13.4 mt of exports. Asia Pacific and Asia again imported the most volumes in 2020, together accounting for more than 70% of global LNG imports. Asia also accounted for the largest growth in imports in 2020--adding 9.5 mt of net LNG imports vs. 2019. While 20 mtpa in liquefaction capacity was brought on stream in 2020, all in the US, startup of several liquefaction trains in Russia, Indonesia, the US, and Malaysia were delayed as a result of the pandemic, according to the report. The only project that was sanctioned in 2020 was the 3.25-mtpa Energia Costa Azul facility in Mexico, and in early 2021 Qatar took final investment decision (FID) on four expansion trains totaling 32 mtpa.
Transocean told investors the debut of the world's first two 20,000-psi-ready (20K) rigs has been pushed into next year. While the share price dropped on the news, the delay attributed to supply chain disruptions during the pandemic could be well timed to a rising tide of work with oil demand and prices up sharply. Transocean's message is that the market is recovering in time for the start of work by the Deepwater Atlas, which is set to begin drilling next year, and the Deepwater Titan, scheduled for early 2023. They are the new high-specification rigs to be available for deepwater work at a time when demand is rising for the limited supply of high-end deepwater rigs. Bobby Thigpen, chief executive officer for Transocean, predicted that by year's end nearly every active rig in the deepwater Gulf of Mexico is likely to be on contract.
The Biden Administration released a new advisory bulletin on 7 June directing pipeline operators to provide detailed plans for minimizing methane emissions from their systems and operations by the end of the year. The US Department of Transportation's Pipeline and Hazardous Materials Safety Administration (PHMSA) submitted the advisory to production companies to begin to comply with the PIPES Act, a law signed at the end of 2020, that created dozens of new regulatory mandates for the agency including the oversight of methane leaks by natural gas pipelines and transmission systems. "Minimizing methane emissions from pipelines will help improve safety and combat climate change, while creating jobs for pipeline workers," said Tristan Brown, PHMSA acting administrator. "Pipeline operators have an obligation to protect the public and the environment by identifying and addressing methane leaks." Released methane is the second-greatest source of greenhouse-gas emissions after carbon dioxide but can be more harmful in the short term due to its heat-trapping potential.
Texas-based independent exploration and production company Talos Energy and UK-based clean energy group Storegga Geotechnologies have formed an exclusive joint venture to source, evaluate, and develop carbon capture and storage (CCS) projects along the US Gulf Coast and in the Gulf of Mexico. Areas under consideration include state and federal waters offshore Texas, Louisiana, Mississippi, and Alabama. There are no upfront capital commitments, and the partners will share costs in the initial phases on a 50/50 basis with Talos designated the operating partner. Talos said it and Storegga will, in collaboration, "originate and mature CCS ventures with emitters, infrastructure providers, service companies, and financing partners, among others." As individual CCS projects are matured, each will be "ring-fenced" with separate operating agreements, financing structures, and the possibility of additional working interest partners.
Independence Energy and Contango Oil & Gas announced today an all-stock merger that will create a company with an estimated enterprise value of almost $5.7 billion. Independence shareholders will own 76% of the combined company which is to be headquartered in Houston. Contango shareholders will own the remainder. The two companies combined production for the first quarter was approximately 111,000 BOE/D and their combined decline rate for the year is estimated to be 18%. On a pro forma basis, the 2020 booked reserves show a commodity breakdown of 47% oil, 15% natural gas liquids, and 38% natural gas.
Denver-based Civitas Resources announced today that it is acquiring Crestone Peak Resources in an all-stock transaction. Civitas was formed last month through the announced merger of Denver-Julesburg (DJ) Basin operators Bonanza Creek Energy and Extraction Oil & Gas. On a pro forma basis, the three-way merger will create a firm with an enterprise value of nearly $4.5 billion and a production profile of almost 160,000 BOE/D. Crestone's assets will bring Civitas' position in the DJ Basin to more than 500,000 net acres. In addition, the combination with Crestone is expected to realize nearly $45 million in expected annual synergies.