The American fossil fuel armada just got bigger 

 May 18, 2022

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Two things to start with:

  • ExxonMobil shareholders yesterday again defeated the Supermajor board, as they are Measure backup Call on their company to detail how a quick transition to net zero will hurt its finances.

  • Do not miss it Glencore surgery, Following the trading company’s confessions to a number of bribery and market manipulation offenses. It could pay up to $ 1.5 billion in the arrangement.

Welcome back to the energy source.

Exxon’s defeat was a scam for activists on a day when investor support for more radical climate action seemed to have almost dried up.

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The Petroleum Major easily rejected another proposal demanding that emissions targets be aligned with the Paris Climate Agreement. For rival Chevron, that same decision won a little over half the support of a similar decision proposed last year.

Votes pointed to declining support among large investors for ambitious climate proposals, as the energy security narrative increasingly outweighs climate concerns. At the two largest U.S. companies, investors have also supported the energy transition strategies put in place by the boards of their companies.

But if climate proponents are the losers from the shifting focus, U.S. natural liquids exporters are among the big winners. For American fossil fuels.

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The load of LNG is the topic of today’s newsletter. For our main item Derek spoke with Venture Global boss Mike Sable about his company’s plans to track rapid development. Data Drill clings to this issue and asks how long increased European gas prices can continue to pump LNG cargo.

Elsewhere, apparently, WeWork founder Adam Neumann Raised tens of millions Of dollars to “symbolize carbon credits and build a market on a chain.” . . Yes, neither do I. If anyone knows what this is about, please feel free to write in: [email protected]

To our American readers: Enjoy the holiday weekend. Thanks for reading.

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US LNG is taking another step forward

Another snail of American fossil fuel is ready to come to the rescue of Europe.

A few months after starting its Calcasieu Pass liquefied natural gas plant on the coast of Louisiana, Venture Global LNG has taken Final investment decision to build another $ 13 billion facility at PlaqueWomenClose to New Orleans.

Plaquemines will begin shipping in 2024, Venture Global CEO Mike Sable told me yesterday. The initial initial capacity will be 13 million tons per year, rising to 20 million tons a year later. Building LNG projects usually takes at least five years, exposing many developers To the supply chain risk and cost inflation.But Global Ventures believes it has developed a different and faster model, rolling out dozens of identical “trains” for liquefaction – as the units that liquefy the gas are called – for use in its plants.

“We are building identical drainage trains at Plaquemines that have already been successfully built at the plant for Calcasieu Pass,” Sable said. “We had 18 trains to Calcasieu Pass and these are 19 to 36 trains to Plaquemines… We do not supply raw material for the site and giant trains for building sticks, we roll them through factories.”

Also, what helps the pace is that the company began “secretly” building plaquamines last August, even before the sudden surge in global LNG prices and Europe’s anxieties about energy security.

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Overall, Venture Global estimates it could end up hurting LNG’s export capacity of 70 million tonnes a year – almost double its current US capacity.

This makes Venture Global central to US efforts to help the EU get rid of Russian gas. As you may recall, in March, Joe Biden and European Commission President Ursula von der Lane announced a plan for the US to help secure another 15 billion cubic meters (about 11 cubic meters). Million tonnes) of LNG to Europe this year. As part of the agreement, Europe will ensure demand for another 50 billion cubic meters of American LNG in the longer term.

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“It’s mostly Venture Global,” Sable said. Calcasieu Pass provided the extra gas this year, and its other plants will help meet the longer-term target when they operate in the coming years. “We are the only swing capability available in the U.S. on any scale,” he said.

Nearly all of the 15 cargo shipped from Calcasieu Pass since its launch this year have moved to Europe, Sable added, although much of the gas has been purchased by Asian service companies. “They diverted them to help Europe,” Sable said.

Beyond Venture Global, the U.S. has a lot of new capacity waiting on the wings. Cheniere Energy’s Corpus Christi expansion in Texas is expected to be the next project to make a final investment decision, estimates Jason Goeblman, director at Cowen. Sempra Infrastructure’s LNG vault plant in Louisiana May follow suit, while its project in Port Arthur (Texas again) took another step closer yesterday when Sempra announced a new supply deal with German RWE.Meanwhile, Cranes is already busy installing another plant, ExxonMobil and QatarEnergy’s Golden Pass, in southeast Texas. .

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Cowen calculates that the U.S. has a total export capacity of 151 million a year, almost double its current operating capacity, if all approved or planned – but not yet fully funded – projects continue.

This is a high order. At current rates, LNG development is running at nearly $ 1 billion per million tons of capacity, insiders say. Bankers will need long-term take-or-pay contracts before they stop financing the expensive project.

Sable said the Biden administration – Now so focused on expanding fossil fuel production to salvage short-term energy security concerns – increasingly supported additional LNG, with a faster approval process that helps push construction forward.

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“We’ve seen very constructive support from regulators here in the U.S.,” he said. “We’ve seen the fastest approvals in years. . .[from]The humans who really do the [approvals] “Work and work, see the global crisis in Europe, honest and serious and try to do a good job and play an important role and help bring the supply to market.”

Crucially, financiers have also grown more confident in the long-term future of gas, he said. The energy security crisis in Europe, coupled with hopes that gas could replace more carbon-rich coal in electricity generation, have renewed even European banks’ enthusiasm for fossil fuels, he said.

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“I think most banks and bankers understand that LNG and natural gas are the key to their emissions targets and you need to have more gas to reduce coal,” he said.

But others are less confident. Although switching from coal to gas has helped reduce emissions in the UK and US, some have Academic challenge That it can be repeated so easily elsewhere. And environmental groups are increasingly working to stop more LNG development in the US.

And although Plaquemines has managed to gain enough customers for its fast-build facilities, the main obstacle to further development along the Gulf remains the longer-term mixed forecast for LNG, Goebbelman said.

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The short-term demand in Europe triggered by the Russia-Ukraine crisis has sparked a huge new interest in contracts, he said. But it may not hold up given the continent’s commitment to a long-term transition away from fossil fuels.

“The problems with these projects are causing customers to sign up,” Goblman said.

“Obviously Asian customers want a long-term LNG supply. But with Europe, it’s a little less simple because they’re looking for a gas supply in the near term, but in the end they want to switch from gas to a cleaner fuel source. And that’s where the tension lies.”

(Derek Brewer)

Data exercise

Increased European gas prices continue to attract all the LNG cargo available to the continent – but rising spot prices in Asia may soon shift molecules eastward, analysts say.

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TTF benchmark prices in Europe have fallen from more than $ 30 per million British thermal units this month to just over $ 26 per million beto. Asian marker JKM sat around $ 22 / million BTU yesterday.

“All the factors that remain constant – such as no further cuts in Russian gas to Europe – we may see a rebalancing of LNG ships far from what [European] An area, which has become a black hole for LNG, draws all the available cargo, “Ming Fang, an analyst at consulting firm Rystad Energy, told him.

“Given that the prices of LNG cargo in the Atlantic and Pacific Oceans were within touching distance, if there was a price premium in the Pacific that would outweigh the increase in shipping charges for cargo to the Pacific instead of the Atlantic, sellers might be tempted to move. Sends there instead. “

Power points

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