““Investors in energy stocks have been a bit thrown off by the volatility, so they’re looking more for energy firms to pay back down their debt, or return money to shareholders, rather than going and investing in new wells — even if those new wells would be profitable,” Ashworth said.”
https://www.cbsnews.com/news/oil-production-prices-us-compan…
The article also mentions that a number of oil companies do not expect to increase production until at least next year. Maybe.
It would be absolutely stupid to use hydrogen in power generation, because we have no source of hydrogen that does not consume more energy than is available from the hydrogen produced. (Even if we feed it to the currently-available fusion reactors.) If we’re just using the hydrogen for storage, batteries are a better choice: they lose less energy.
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If you are such an expert on energy, then why don’t you explain why the worldwide engineers and scientists do not agree with your position.
https://genh2hydrogen.com/hydrogen-production-companies-shou…
Green hydrogen can supply 25% of the world’s energy needs and can become a $10 trillion market by 2050. This is crucial since the energy needs are likely to double by 2040. A mix of renewables in energy production can lessen the carbon release by nearly 80%. The by-product of hydrogen green energy is water so there are no hazardous emissions after the hydrogen production electrolysis process.
Sustainable Transportation
Fuel cells of electric vehicles can be effectively charged with green hydrogen. This is one of the most environment-friendly transportation methods. You can rely on hydrogen storage companies to tick-off your storage requirements. Choose the one that ensures controlled storage of large volumes of gaseous or liquified hydrogen.
Further, it can also act as a fuel directly and replace gasoline. All we need would be new infrastructures like hydrogen ready engines from green hydrogen companies, power generation technologies and pipelines. Besides transportation, green hydrogen can also be used in different power systems for optimal environmental protection.
The leading hydrogen infrastructure companies can offer on-site production, compression, and storage with unique techniques. The design features can be implemented in multiple ways for efficient results and reliability. So, try to leverage green hydrogen for both domestic and industrial purposes for a safe, clean, and pollutant-free future.
WASHINGTON, D.C. — The U.S. Department of Energy (DOE) today announced $20 million in funding to demonstrate technology that will produce clean hydrogen energy from nuclear power. This innovative approach will allow clean hydrogen to serve as a source for zero-carbon electricity and represent an important economic product for nuclear plants beyond electricity. The project, based in Arizona, will make progress on DOE’s H2@Scale vision for clean hydrogen across multiple sectors and help meet the Department’s Hydrogen Shot goal of $1 per 1 kilogram in one decade. This announcement is part of a week-long celebration of Hydrogen and Fuel Cell Day that culminates on October 8.
https://www.energy.gov/articles/doe-announces-20-million-pro…
https://www.powermag.com/hydrogen-may-be-a-lifeline-for-nucl…
Like electricity, hydrogen is an energy carrier (but not a primary energy source). Hydrogen has some potential to replace oil as a transport fuel and in other applications. It is the preferred fuel for fuel cell electric vehicles (FCEVs), though portable storage at vehicle scale is a challenge. Hydrogen can also be used in internal combustion engines.
https://www.world-nuclear.org/information-library/energy-and…
THE MANY END-USES FOR HYDROGEN MAKE IT A LEADING PATHWAY TO A ZERO-CARBON FUTURE ACROSS MANY PARTS OF THE U.S. ECONOMY
https://www.nexteraenergy.com/company/work/green-hydrogen.ht…
Siemens Gamesa and Siemens Energy are joining forces to kickstart a new era of offshore green hydrogen production that will power a cleaner future.
Together, they are developing an innovative solution that fully integrates an electrolyzer into an offshore wind turbine as a single synchronized system to directly produce green hydrogen.
Siemens Gamesa is adapting the world’s most powerful turbine, the SG14-222 DD offshore wind turbine, to integrate an electrolysis system seamlessly into its operation.
Siemens Gamesa have leveraged in-depth knowledge and decades of experience with offshore wind and electric losses are now reduced to a minimum. A modular approach ensures a scalable offshore wind-to-hydrogen solution. Siemens Energy is developing a new electrolysis product that meets the needs of the harsh maritime offshore environment and is in perfect sync with the wind turbine.
The developments will serve as a test bed for making large-scale, cost-efficient hydrogen production a reality and will prove the feasibility of reliable, effective implementation of modular offshore wind-to-hydrogen systems.
Siemens Gamesa and Siemens Energy target a total investment of approximately EUR 120 million over the next five years in the development of this innovative solution, with a full-scale offshore demonstration expected by 2025/2026.
https://www.siemensgamesa.com/products-and-services/hybrid-a…
The above is just a small sampling of work going into the development of ways to produce green hydrogen.
Jaak
Even with double or even triple that market penetration, we’ll still likely be adding more ICE cars to the road each year than get removed due to the end of their useful life. The global ICE passenger automobile fleet will probably still be increasing even five years from now.
I have read in multiple places that the reason gas prices are so high is because refineries won’t reopen or new ones won’t be built. Yes, those are multi-billion dollar efforts, but (supposedly) those who own refineries are terrified that they will spend the money and then gas demand will collapse.
Built it’s obvious to me (*and you) that gas demand will not collapse, indeed, it will likely be higher than ever until EV’s (and other segments of the oil consumption chain) become significant parts of our daily life.
So either they see something we do not, or they’re happy with the state of affairs; I suspect refineries are raking it in right now as demand is clearly high enough to support gas prices at double what they were less than a year ago.
Yes, those are multi-billion dollar efforts, but (supposedly) those who own refineries are terrified that they will spend the money and then gas demand will collapse. But it’s obvious to me (*and you) that gas demand will not collapse, indeed, it will likely be higher than ever until EV’s (and other segments of the oil consumption chain) become significant parts of our daily life. So either they see something we do not, or they’re happy with the state of affairs; I suspect refineries are raking it in right now…
Projects such as refineries take years to plan, permit and then build. This means that they would have to project the present high prices to remain in place for many years.
The EIA tells us that Marathon has the largest refining capacity in the US after Saudi Aramco.
www.eia.gov/energyexplained/oil-and-petroleum-products/refin…
So, what is MRO’s net profit margin and, more importantly, what has it averaged over the last five and ten years? For the last quarter (ending in March) their NPM was just under 35%. Pretty good.
Their net profit margin over the last five years: -25%
Their net profit margin over the last ten years: -19%
www.macrotrends.net/stocks/charts/MRO/marathon-oil/profit-ma…
DB2
Built it’s obvious to me (*and you) that gas demand will not collapse, indeed, it will likely be higher than ever until EV’s (and other segments of the oil consumption chain) become significant parts of our daily life.
True - but that’s why they’re not building any new refineries. At least, not in the U.S. Because we’re talking about different time frames, and different markets.
Yes, gas demand will not ‘collapse’ any time within the next 3-5 years. But that’s not the relevant timeframe for a refinery investment, which has to make economic sense over 40-50 years of operation. And over that timeframe, you might indeed see gasoline demand suffer serious decline.
And perhaps more importantly, I was discussing global demand. Gasoline demand in 3-5 years is probably going to be higher than it is today - but that’s because we expect massive growth in demand in China, which will be more than enough to accommodate slowing demand growth in the EU (where EV adoption rates are probably high enough now to blunt demand growth). People will build refineries to continue to meet constant global demand for gasoline, but they’re not going to build them in the U.S. - they’ll build them in China.
The dilemma we face is that gasoline prices have skyrocketed due largely to two short-term exogenous shocks - the unwinding of the pandemic and Russia’s invasion of Ukraine. The former accelerated the decommissioning of marginal refineries, leading to a temporary shortage of refining capacity in the U.S.; the latter took about 7 mbpd of Russian refinery capacity off the global markets (and unlike their crude exports, it’s harder for them to redirect that to China and India).
But those shocks will be gone within a few years - well too short to materially affect the economics of a multi-decade investment like a new refinery.
Albaby
The US market is forecast to be a bit of a laggard. It’s expected to pick up from 2023 but will likely still only represent 15% of the global electric vehicle market in 2025. The EY study noted that consumers in Australia (38%) and the US (29%) are the least committed to switching to EVs.
Your earlier reply: For sure in the U.S. and maybe for the world.
After albaby provided good reasons why the US won’t see a decline in oil consumption in 3-5 years, you appear to be backtracking a bit on the US and are more enthusiastic about the rest of the world.
Albaby:“But those shocks will be gone within a few years - well too short to materially affect the economics of a multi-decade investment like a new refinery.”
The Saudis and other Arab countries are building refineries. They would rather sell refined products at much higher profit margins that just selling ‘crude oil’.
“By 2026, 18 new refineries are expected to commence operations in the Middle East. Al-Zour, Kuwait; Siraf, Iran; Bandar Jask, Iran; and Duqm I, Oman are some of the largest upcoming refineries in the Middle East during the 2022 to 2026 outlook period.”
https://www.offshore-technology.com/comment/middle-easts-ref….
and
https://www.bloomberg.com/news/articles/2022-06-20/world-loo…
t/
The US market is forecast to be a bit of a laggard. It’s expected to pick up from 2023 but will likely still only represent 15% of the global electric vehicle market in 2025. The EY study noted that consumers in Australia (38%) and the US (29%) are the least committed to switching to EVs.
Your earlier reply: For sure in the U.S. and maybe for the world.
After albaby provided good reasons why the US won’t see a decline in oil consumption in 3-5 years, you appear to be backtracking a bit on the US and are more enthusiastic about the rest of the world.
====================================================
PSU,
I am not back tracking. The above forecast is from the following link:
https://electrek.co/2022/05/31/this-is-where-electric-vehicl…
I provided that link to show where EVs are forecast to go in other studies.
Jaak
Built it’s obvious to me (*and you) that gas demand will not collapse, indeed, it will likely be higher than ever until EV’s (and other segments of the oil consumption chain) become significant parts of our daily life.
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Who ever said that gas demand will collapse. I said demand will peak in 3-5 years and then start a long slow decline.
Jaak
I was discussing global demand. Gasoline demand in 3-5 years is probably going to be higher than it is today - but that’s because we expect massive growth in demand in China, which will be more than enough to accommodate slowing demand growth in the EU (where EV adoption rates are probably high enough now to blunt demand growth).
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Global and U.S. gasoline demand will peak in 3-5 years. China’s growth in transportation sector will be EVs and mass transit - not ICE vehicles.
Read the following:
https://electrek.co/2022/05/31/this-is-where-electric-vehicl…
The EV share of sales in some markets will be higher, with EVs reaching 39% of sales in 2025 in China and Europe. Germany, the UK, and France are predicted to reach between 40-50% in 2025.
China and Europe are anticipated to account for a whopping 80% of EV sales in 2025, with adoption lagging elsewhere.
Jaak
There are a lot of reasons no new refineries will be build, and old refineries can’t be reopened:
1) As you mentioned, a new refinery costs a lot, and doesn’t return profits for quite a while.
2) A new refinery has LOTS and LOTS of regulation, and can be indefinitely delayed by various interest groups. This delays profitability even longer, if it ever happens.
3) Existing refineries need all sorts of spare parts. Many of those spare parts were cannibalized from refineries that were shut down (due to inefficiency or lack of demand).
4) Refineries, and oil and gas exploration, require people with specialized knowledge. But people are not going into those fields anymore, in fact, some universities are shutting down their programs due to lack of enrollment.
5) To make matters worse, with oil and gas company stock prices near highs, many experienced people are deciding that it’s a good time to retire.
6) Anything related to oil and gas has been vilified for a decade or more. Nobody wants to be involved in that - not as an employee, not as an investor, not in finance, nothing. After all, who wants to be a “planet killer”?
7) Banks and the rest of Wall Street have been going ESG very strongly. Oil and gas is generally not considered ESG-worthy, so even if someone was crazy/stupid enough to want to build a refinery, they wouldn’t get financing.
I just read about another:
8) Some old (very old!) refineries were scheduled to be decommissioned between 2021 and 2025. I was shocked to hear that we still have some 80+ year old refineries in operation, apparently due to new environmental regulations, it is nearly impossible to build new refineries, but it is possible to add to existing ones, so they added over the years to some very very old ones. Anyway, along came COVID, and demand for refined products dropped like a rock. So the refining companies had to decide where to cut production (and they HAD to cut production because there’s not enough space to store the stuff if they keep producing), so they figured they will just shut down those old refineries a bit earlier than planned. And they did! They shut them down, and started to dismantle them (can’t just leave the stuff languishing because it would become an EPA supersite pretty quickly) … and then a year later demand roared back, but it was too late to put those old refineries back together!
Global and U.S. gasoline demand will peak in 3-5 years. China’s growth in transportation sector will be EVs and mass transit - not ICE vehicles.
Read the following:
I did read it - and more helpfully, I read the BNEF report it was describing. It doesn’t say that global and U.S. gasoline demand will peak in 3-5 years.
It does say that BNEF projects that ICE passenger car fleet totals will peak in the next few years**. But as we’ve ben trying to tell you, passenger cars are only a portion of roadway transport - which itself is only a portion of overall petroleum use. If demand growth best sector of replacing petroleum use isn’t going to peak for another few years, the demand growth for overall petroleum use isn’t going to peak until many years after that - because the remaining sectors (like aviation fuel or industrial uses of petroleum) don’t have viable substitutes yet, and are still going to grow.
Albaby
**BNEF projections are among the most optimistic, and their assessment includes PHEVs (which still have a gas tank). So there’s a very good chance that even if BNEF is mostly right, gasoline use from passenger cars will still be rising even past 3-5 years from now.
It does say that BNEF projects that ICE passenger car fleet totals will peak in the next few years**. But as we’ve ben trying to tell you, passenger cars are only a portion of roadway transport - which itself is only a portion of overall petroleum use. If demand growth best sector of replacing petroleum use isn’t going to peak for another few years, the demand growth for overall petroleum use isn’t going to peak until many years after that - because the remaining sectors (like aviation fuel or industrial uses of petroleum) don’t have viable substitutes yet, and are still going to grow.
Albaby
**BNEF projections are among the most optimistic, and their assessment includes PHEVs (which still have a gas tank). So there’s a very good chance that even if BNEF is mostly right, gasoline use from passenger cars will still be rising even past 3-5 years from now.
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BNEF projections are about average for peak oil demand. OPEC projections are out in 2040. BP, Shell, Equinor and others have peak oil forecasts in occurring within 5 years.
Read the following analysis of various projections for peak oil demand:
6/1/2022
Oil has maintained its dominance in the transport sector, which absorbs around 57 percent of the total oil consumed in the world. That dominance, however, is facing a serious threat – the electrification of mobility. In 2012, only 130,000 electric vehicles (EVs) were sold globally, accounting for 0.01 percent of total cars sold during that year. In 2021, that number jumped to over 6.6 million EVs or 9 percent of the global car market and more than tripling the market share of EVs from two years earlier, according to the International Energy Agency (IEA). The trend is expected to continue and even accelerate as more countries announce bans on the sale of new diesel or gasoline cars or commit to the deployment of EVs. For instance, the U.S. wants to make half of all new vehicles sold in the country in 2030 zero-emissions vehicles while the United Kingdom announced a ban on new gasoline and diesel cars and vans by 2030.
In its 2020 World Energy Outlook, BP presented two scenarios where oil demand would never recover to its pre-pandemic levels.
The year when peak oil demand will happen and at what level vary significantly between publications and even within the same publication. The reason being the differences in assumptions related to variables such as the economic outlook for the forecasted period, decarbonization policies, population growth, the penetration rate of EVs, energy efficiency gains, carbon prices, as well as the rate of deployment of renewable energy sources.
While some projections indicate that oil demand might have already peaked others find demand peaking within the next 5 to 10 years (such as BP’s New Momentum, and Equinor’s Reforms). A very few, most notably OPEC, expect oil demand to plateau by 2040.
https://www.gisreportsonline.com/r/peak-oil-demand/
Jaak
Read the following analysis of various projections for peak oil demand:
From that link, captioning the figure showing the various peak oil forecasts:
"While forecasts vary, a rough consensus has emerged that oil demand will peak around 2040 – possibly reaching 114 million barrels per day...."
Obviously 2040 is an even longer period of demand growth than even the projection you’ve been arguing against.
Looking at the chart, Shell and Equinor and BP do not project oil demand will peak within five years. They have several models, showing oil demand peaking at various times. Many of them put the peak between the next 8-18 years (one of Shell’s models puts the peak out at 2050, actually). Each major has a scenario where we undertake massive regulation of carbon emissions (the ‘net zero’ and ‘accelerated’ scenarios), but needless to say I think those are the least likely scenarios.
That’s consistent with the 10 years that started off this discussion (and which you pushed back on), and absolutely not consistent with the 3-5 years you’ve been projecting.
Albaby
I do not see the demand lasting 10 years - at most 3-5 years.
I don’t see the demand lasting past the end of the summer.
Looking at the chart, Shell and Equinor and BP do not project oil demand will peak within five years. They have several models, showing oil demand peaking at various times. Many of them put the peak between the next 8-18 years (one of Shell’s models puts the peak out at 2050, actually). Each major has a scenario where we undertake massive regulation of carbon emissions (the ‘net zero’ and ‘accelerated’ scenarios), but needless to say I think those are the least likely scenarios.
================================================
I see only 3 projections with peaks after 2027 with the following 6 projections with peaks between 2025 and 2027.
Shell Sky is at peak in 2025
Equinor Reform peaks between 2005 to 2027
BP Accelerated peaks in 2025
Equinor Rebalance peaks between 2025 and 2027
BP Net Zero peaks in 2025
BP New Momentum is essentially at peak in 2027 since it projects 2025 with 100.8 MB/d and 2030 with a tiny rise to 101.1 MB/d.
These projections are consistent with my projection of peak demand in 5 years.
Jaak