Released August 10, 2023 | SUGAR LAND
en
Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)--The feedstock necessary to keep power running even during periods of extreme heat are starting to turn green for a U.S. economy expecting to see a significant decline in coal-fired capacity, but net-zero remains elusive.
U.S. crude oil production is on pace to set records both this year and next, a forecast that's to be expected given the guidance offered during the second-quarter earnings season. Pioneer Natural Resources (NYSE:PXD) (Irving, Texas), among the top producers in the Permian Basin, cut its budget, but raised its production estimate by 3% to a range of around 700,000 barrels of oil equivalent per day (Boe/d).
The U.S. Energy Information Administration (EIA), the statistical arm of the Department of Energy, sees net crude oil production declining from July to August. Permian production, which accounts for just over 60% of total inland production, should reach 5.7 million barrels per day (BBL/d), though that marks a slight decline from last month.
Total inland production, meanwhile, declines ever so slightly from July levels to average 9.39 million barrels per day (BBL/d) in the EIA's latest drilling productivity report. Total crude oil production (inland and offshore), however, is on pace to set a record in EIA's monthly market report for August, reaching 12.8 million BBL/d on average this year and 13.1 million BBL/d in 2024.
With EIA revising the 2024 forecast for West Texas Intermediate higher by nearly $3 per barrel to $81.48, prices are well above what companies need to make a profit. At the high end of inland shale estimates, Permian producers should break even provided WTI stays above $66 per barrel.
Shareholder pressure and record-setting global temperatures, however, could start to influence the pursuit of upstream revenue. More than a decade after the Fukushima nuclear meltdown in Japan and nuclear power is returning to the mix, with major economies such as German reversing course on atomic energy.
In the U.S. economy, the world's largest, the third unit at the Vogtle nuclear power plant in Georgia entered into service last month with 1,100 megawatts of electricity, enough to power a half million customers.
The EIA in its report for August, however, said nuclear as a component of electricity should remain static. Vogtle, meanwhile, came online seven years late and $17 billion over budget, which could disincentivize further developments.
Apart from crude oil, then, the biggest change in U.S. energy is in renewables, a sector that the EIA says "has been growing rapidly."
In its mid-year outlook, Industrial Info forecast more than $1 trillion worth of active projects related to the energy transition in North America, with more than half of that targeting renewable power.
John Berger, the chief executive officer of Sunnova Energy International (NYSE:NOVA) (Houston, Texas), told CNBC recently that solar power in particular was on the cusp of a residential boom. The company set a record in terms of new customers during the second quarter and even more are expected.
"We are already in the customer contracting phase for 2024, and, given our strong growth momentum, we are projecting 40% customer growth over 2023," he said in the latest earnings report.
The EIA expects the power sector to see 27 gigawatts (GW) of new solar power capacity coming online by the end of the year and another 31 GW in 2024.
"This new capacity leads to our forecast that renewables, other than hydropower, will account for a 16% share of total U.S. generation in 2023, up from 15% in 2022," the short-term market report read. "That share grows to 18% in 2024."
The additional solar capacity more than offsets the 15 GW worth of coal-fired power that's set to retire before the end of the year. Natural gas still dominates the grid, but the EIA said renewables are displacing some of that as well.
Little of that, however, impacts overall emissions. President Joe Biden aims for a net-zero economy, though that's a lofty goal considering the latest forecast from the EIA. Carbon intensity, which reflects efficiency, is on the decline, but emissions are not.
The EIA said that's largely because of fossil fuels rather than progress in the energy transition.
"Total CO2 emissions in 2024 remain flat, as small increases in petroleum emissions and coal emissions balance a decrease in natural gas emissions," the August report read.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
U.S. crude oil production is on pace to set records both this year and next, a forecast that's to be expected given the guidance offered during the second-quarter earnings season. Pioneer Natural Resources (NYSE:PXD) (Irving, Texas), among the top producers in the Permian Basin, cut its budget, but raised its production estimate by 3% to a range of around 700,000 barrels of oil equivalent per day (Boe/d).
The U.S. Energy Information Administration (EIA), the statistical arm of the Department of Energy, sees net crude oil production declining from July to August. Permian production, which accounts for just over 60% of total inland production, should reach 5.7 million barrels per day (BBL/d), though that marks a slight decline from last month.
Total inland production, meanwhile, declines ever so slightly from July levels to average 9.39 million barrels per day (BBL/d) in the EIA's latest drilling productivity report. Total crude oil production (inland and offshore), however, is on pace to set a record in EIA's monthly market report for August, reaching 12.8 million BBL/d on average this year and 13.1 million BBL/d in 2024.
With EIA revising the 2024 forecast for West Texas Intermediate higher by nearly $3 per barrel to $81.48, prices are well above what companies need to make a profit. At the high end of inland shale estimates, Permian producers should break even provided WTI stays above $66 per barrel.
Shareholder pressure and record-setting global temperatures, however, could start to influence the pursuit of upstream revenue. More than a decade after the Fukushima nuclear meltdown in Japan and nuclear power is returning to the mix, with major economies such as German reversing course on atomic energy.
In the U.S. economy, the world's largest, the third unit at the Vogtle nuclear power plant in Georgia entered into service last month with 1,100 megawatts of electricity, enough to power a half million customers.
The EIA in its report for August, however, said nuclear as a component of electricity should remain static. Vogtle, meanwhile, came online seven years late and $17 billion over budget, which could disincentivize further developments.
Apart from crude oil, then, the biggest change in U.S. energy is in renewables, a sector that the EIA says "has been growing rapidly."
In its mid-year outlook, Industrial Info forecast more than $1 trillion worth of active projects related to the energy transition in North America, with more than half of that targeting renewable power.
John Berger, the chief executive officer of Sunnova Energy International (NYSE:NOVA) (Houston, Texas), told CNBC recently that solar power in particular was on the cusp of a residential boom. The company set a record in terms of new customers during the second quarter and even more are expected.
"We are already in the customer contracting phase for 2024, and, given our strong growth momentum, we are projecting 40% customer growth over 2023," he said in the latest earnings report.
The EIA expects the power sector to see 27 gigawatts (GW) of new solar power capacity coming online by the end of the year and another 31 GW in 2024.
"This new capacity leads to our forecast that renewables, other than hydropower, will account for a 16% share of total U.S. generation in 2023, up from 15% in 2022," the short-term market report read. "That share grows to 18% in 2024."
The additional solar capacity more than offsets the 15 GW worth of coal-fired power that's set to retire before the end of the year. Natural gas still dominates the grid, but the EIA said renewables are displacing some of that as well.
Little of that, however, impacts overall emissions. President Joe Biden aims for a net-zero economy, though that's a lofty goal considering the latest forecast from the EIA. Carbon intensity, which reflects efficiency, is on the decline, but emissions are not.
The EIA said that's largely because of fossil fuels rather than progress in the energy transition.
"Total CO2 emissions in 2024 remain flat, as small increases in petroleum emissions and coal emissions balance a decrease in natural gas emissions," the August report read.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
