Trump Administration Sanctions and Iranian Oil Exports

 

Iran's daily exports  have ranged from a high of over 3,000,000 BOPD in 2018 to a record low of 464,489 BOPD in 2020. Thank-you President Trump for taking the fight of war on terror straight to the Iranian regime. Iran's crude oil exports have resurged to to its highest level in six years to more than 1.56 Million BOPD.

China is the largest importer of Iranian oil. There are a number of importing countries but China is the dominant player.

Trump Administrations sanctions on Iranian oil exports:

 The Trump Administration reinstated all the U.S. sanctions that were removed under the Obama 2015 nuclear deals. 

The Trump Administration put additional pressure on Iran's oil sector, financial institutions, and shipping sectors. Other sectors of the economy also felt the sanctions; purchase of U.S. dollars, trade in gold, limits trading the rial,  debt transactions, trade in carpets, and sale of aircraft to Iran.

The Iranian nuclear programs felt the effect of the sanctions. The Trump administration withdrew from the JCPOA calling it "horrible and defective."

The Trump "maximum pressure policy hindered Iran's economy  slowing more than 80% of the Iranian economy. The chart above illustrates just how effective the Trump policy's worked.

It's also clear by the chart that the Biden Administration is a friend of Iran. Biden's  policies have been a disaster to the stability of the Middle East.

Why are LNG export projects "Paused"....Climate Agenda!

President Joe Biden recently announced a "temporary pause" on approving new LNG, liquified natural gas export facilities and private projects. The administration stated that the purpose of the pause is to conduct a comprehensive evaluation and review of the impacts of LNG exports on important, critical factors which include energy costs and energy security. The Biden administration claims to ensure that LNG projects are aligned with Americas energy needs while considering the broader implication of gas exports.

LNG exports can and frequently affect the complicated natural gas markets. As producers increase their LNG exports, the additional demand for domestic gas supplies may lead to the upward pressure on gas prices.  One of the key pricing index areas is Henry Hub. AS LNG exports have historically grown over the past decade, natural gas prices have been stable, and at times have decreased. The large increase in daily domestic natural gas production has dampened the impact of LNG exports on pricing.

Energy security concerns have been raised by the administration. The Administration believes  increased LNG exports would tighten domestic gas markets causing increased prices for consumers. The Biden Administration has adversely attacked the the fossil fuel companies since the first day in office  It has been more difficult to permit gas wells on Federal leases, there are restrictions on Federal leases, restrictions on pipelines, and now the pause on LNG facilities permits. President has used these policies to appease the climate provocateurs and the "climate justice warriors" of the Democrat party. This is the basis for the Biden climate agenda and efforts to speed up the transition to "greener" energy sources.  The "pause" is clearly an indication of the commitment to the  environmental justice leaders of the party illustrating that the fight against climate change is a top priority. 

LNG gas exports however play a significant role in America's energy future needs.

LNG exports contribute to economic growth by creating jobs in the industry and associated construction of LNG plants.

LNG exports illustrate the major role the U.S. has in global energy markets reducing dependence in politically unstable areas of the world.

Natural gas has been widely recognized as a cleaner alternative to other fuels. LNG exports to countries that rely on coal for electric generation can reduce carbon emissions in those areas.

JP Morgan's Jamie Dimon has called the Administrations energy transition policies wrong and  enormously naïve and a political reason to pacify the climate warriors in the party. In fact JP Morgan has funded fossil energy projects to the amount of $434 Billion, more than any other institution. The bank believe LNG will be an economic  positive for the U.S.

Israel Hamas war and Tamar Gas Production

 

The ongoing Israel-Hamas war has significant implications for gas production, particularly at the Tamar field offshore Israel.

 

Hamas Targeting Tamar:

• The Izz ad-Din al-Qassam Brigades, Hamas’ armed wing, claimed that they targeted a “Zionist gas platform” off the coast of Gaza¹.Chevron has shutdown the field at Israel’s request emphasizing safety for personnel, facilities, and the environment. Operations at Tamar and Leviathan areas have resumed after a 5 week suspension.

 

1. Tamar Field and Its Importance:
• The Tamar field, located approximately 25 kilometers northwest of Gaza, plays a crucial role in meeting Israel’s domestic gas needs.
• It has been a major contributor to Israel’s energy mix, providing about 40% of the country’s gas consumption.
• Israel’s rapid transition from coal-dominated electricity generation to gas-based power (now accounting for 70% of electricity) was fueled by the discovery of offshore gas deposits, including Tamar in 2009.
2. Impact of the Conflict on Tamar Field:
• Following Hamas attacks, Israel’s Energy Ministry instructed Chevron, the operator of the Tamar platform, to temporarily cease production.
• The Tamar platform has faced security threats before, including rocket attacks in 2021.
• Additionally, the East Mediterranean Gas (EMG) pipeline, which connects Israel and Egypt, was also temporarily halted due to security concerns. This pipeline runs from Ashkelon (Israel) to Arish (northern Sinai, Egypt).
3. Gas Exports and Regional Impact:
• In 2022, Israel produced 21.9 billion cubic meters (Bcm) of gas, with 11.4 Bcm from Leviathan and 10.2 Bcm from Tamar.
• Of this, 12.7 Bcm was consumed domestically, while 5.8 Bcm was exported to Egypt and 3.4 Bcm to Jordan.
• The EMG pipeline, which starts near the Gaza border, is crucial for Israeli gas exports to Egypt. If the conflict persists, it could impact not only supplies to Israel but also exports to Egypt.
• Egypt’s ability to meet its domestic gas needs and its LNG exports to Turkey and the EU would be affected.
4. Market Implications:
• The shutdown of Tamar significantly affects the regional gas supply and could put pressure on prices.
• Tamar’s daily production of 900 million cubic feet of gas is substantial, and any prolonged shutdown would have broader consequences.

 

 

 

 

Tamar and Leviathan Fields Brief: Offshore Israel

 

The history of Offshore Israel's Offshore Operations & Development

1. Tamar Field Discovery (2009):

• The Tamar gas field, located in the Mediterranean Sea off the coast of Israel, was discovered by Noble Energy in 2009. It was the largest natural gas discovery in Israel's history at that time.

2. Leviathan Field Discovery (2010):

• The Leviathan gas field was discovered in December 2010, also by Noble Energy. It surpassed the Tamar field in size and became one of the largest natural gas discoveries globally.

3. Development Planning:

• After the discoveries, plans for the development and utilization of the gas resources began to take shape. This involved feasibility studies, environmental assessments, and negotiations with stakeholders.

The development planning phase for the Tamar and Leviathan gas fields involved multiple stakeholders, including energy companies like Noble Energy, government entities, regulatory bodies, and various other partners. Here's a closer look at Noble Energy's participation and contributions, along with other key players:

1. Noble Energy (Chevron):

• Noble Energy, an independent energy company based in the United States, played a central role in the exploration and development of both the Tamar and Leviathan gas fields. They were the primary operator and held significant stakes in these projects.
• Noble Energy conducted extensive seismic surveys, drilling campaigns, and reservoir analysis to assess the commercial viability of the gas fields.
• The company also led the planning and execution of development activities, including the design and construction of offshore platforms, subsea infrastructure, and onshore processing facilities.
• Additionally, Noble Energy was involved in negotiations with government authorities, local communities, and other stakeholders to secure necessary permits, licenses, and agreements for project development and operation.

2. Other Energy Companies:

• Alongside Noble Energy, other energy companies participated in the development of the gas fields. These companies often held minority stakes in the projects and contributed technical expertise, financial resources, and operational support.
• For example, Delek Group, an Israeli conglomerate, played a significant role as a partner in both the Tamar and Leviathan projects. Through its subsidiaries, Delek Group held ownership interests in the gas fields and participated in development activities.
• Other international energy companies may have also been involved as partners or contractors, contributing specialized skills and resources to various aspects of the projects.

3. Government Entities and Regulatory Bodies:

• National and local government entities in Israel were actively involved in the development planning process. They provided regulatory oversight, issued permits and licenses, and established policies governing the exploration, production, and distribution of natural gas.
• The Israeli government also played a role in facilitating agreements between the project developers and other stakeholders, including neighboring countries for potential gas exports.

4. Financial Institutions and Investors:

• Financial institutions and investors provided funding and capital investment for the development of the gas fields. These entities may have included commercial banks, investment firms, and international lenders who recognized the strategic importance and economic potential of the projects.
• Investment in the Tamar and Leviathan gas fields was seen as an opportunity to tap into Israel's emerging energy sector and capitalize on the growing demand for natural gas in the region.

Overall, the development planning phase for the Tamar and Leviathan gas fields was a collaborative effort involving multiple stakeholders working together to bring these significant energy projects from discovery to production. Noble Energy's expertise, along with the contributions of other partners, played a crucial role in realizing the potential of these offshore reserves and advancing Israel's energy security objectives.

 

 

 

4.  (Chevron)Development Contracts:

• Contracts for the development of the fields were signed with various stakeholders, including energy companies and government entities. These contracts outlined the terms for exploration, production, and revenue-sharing arrangements.
• There are a number of parties involved in the development contracts. These include the operators, which oversee development operations and activities, service contractors which provide specialized activities, and of course financial institutions.

5. Regulatory Approvals:

• Obtaining regulatory approvals for the development projects was a significant milestone. This involved compliance with environmental regulations, land use permits, and other legal requirements.

6. Infrastructure Development:

Certainly! The development planning phase for the Tamar and Leviathan gas fields involved multiple stakeholders, including energy companies like Noble Energy, government entities, regulatory bodies, and various other partners. Here's a closer look at Noble Energy's participation and contributions, along with other key players:

1. Noble Energy:

• Noble Energy, an independent energy company based in the United States, played a central role in the exploration and development of both the Tamar and Leviathan gas fields. They were the primary operator and held significant stakes in these projects.
• Noble Energy conducted extensive seismic surveys, drilling campaigns, and reservoir analysis to assess the commercial viability of the gas fields.
• The company also led the planning and execution of development activities, including the design and construction of offshore platforms, subsea infrastructure, and onshore processing facilities.
• Additionally, Noble Energy was involved in negotiations with government authorities, local communities, and other stakeholders to secure necessary permits, licenses, and agreements for project development and operation.

2. Other Energy Companies:

• Alongside Noble Energy, other energy companies participated in the development of the gas fields. These companies often held minority stakes in the projects and contributed technical expertise, financial resources, and operational support.
• For example, Delek Group, an Israeli conglomerate, played a significant role as a partner in both the Tamar and Leviathan projects. Through its subsidiaries, Delek Group held ownership interests in the gas fields and participated in development activities.
• Other international energy companies may have also been involved as partners or contractors, contributing specialized skills and resources to various aspects of the projects.

3. Government Entities and Regulatory Bodies:

• National and local government entities in Israel were actively involved in the development planning process. They provided regulatory oversight, issued permits and licenses, and established policies governing the exploration, production, and distribution of natural gas.
• The Israeli government also played a role in facilitating agreements between the project developers and other stakeholders, including neighboring countries for potential gas exports.

4. Financial Institutions and Investors:

• Financial institutions and investors provided funding and capital investment for the development of the gas fields. These entities may have included commercial banks, investment firms, and international lenders who recognized the strategic importance and economic potential of the projects.
• Investment in the Tamar and Leviathan gas fields was seen as an opportunity to tap into Israel's emerging energy sector and capitalize on the growing demand for natural gas in the region.

Overall, the development planning phase for the Tamar and Leviathan gas fields was a collaborative effort involving multiple stakeholders working together to bring these significant energy projects from discovery to production. Noble Energy's expertise, along with the contributions of other partners, played a crucial role in realizing the potential of these offshore reserves and advancing Israel's energy security objectives.

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• There were a number of technical challenges that included subsea infrastructure and designing onshore processing plants. Delays resulted from equipment breakdowns, unexpected geologic environments, and supply chain issues.
• Environmental issues and impacts included marine habitat, pollution, and other concerns from environmental groups.
• The Geopolitical Factors include ownership disputes and territorial claims.
• Construction of the necessary infrastructure for gas extraction, processing, and transportation commenced. This included drilling platforms, pipelines, and onshore processing facilities.
• Tamar and Leviathan gas fields have overcome a number of hurdles tobecome a major contributor to Israel’s energy supply.

7. Production Begins:

• Production from the Tamar field began in 2013, providing a significant source of natural gas for Israel's domestic consumption and export.

8. Leviathan Field Development:

• Development of the Leviathan field followed, with production expected to begin in 2019.

9. Expansion and Export:

• With both fields in operation, Israel aimed to expand its domestic use of natural gas while also exploring opportunities for export to neighboring countries.

10. Continued Operations:

• Both the Tamar and Leviathan fields continue to operate, contributing to Israel's energy security and serving as important assets in the regional energy landscape.

This timeline provides a broad overview of the development of the Tamar and Leviathan gas fields, highlighting key milestones in their exploration, development, and utilization.

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Natural Gas replaces Solar electric generation during Eclipse in Texas

 

Texas was negatively affected by the the Eclipse on April 8th largely because it we path of totality. The path of totality is the area where the Moon completely blocks the sun resulting in an absence of solar light. The sudden reduction in solar power was compensated for by the increase in other sources of electric generation such as natural gas and coal. Solar power contributes a significant  portion to the Texas power grid. Grid operators need to be prepared for reductions in solar power to prevent strain on the grid and improve  reliability.

Uranium U3O8 Production in the U.S.

 

Uranium production in the 4th quarter of 2023 totaled 12, 653 pounds U308. This occurred from 4 areas in Wyoming and one in Nebraska. Uranium production fluctuates due to market demand, regulatory uncertainties, and  changing economic conditions. Wyoming is a major uranium producer in the U.S. It's clear that uranium production has declined significantly over the last six years.

U.S. Monthly LNG Exports BCFD

 

LNG  is the primary growth driver of U.S. gas and LNG exports. The gas exports are expected to displace Russian gas exports to Europe.

Texas Oil Procing Counties

 

Map of oil producing counties in Texas. Permian Basin and Eagleford are in red. Much of the Gulf Coast Region is natural gas production.

Texas Oil Production: 2013 to the Present

Texas oil production has recovered from the COVID-19 low of 3.78 MBD in February 2021 to 5.49MBD in May of 2023, just above the pre-COVID-19 high. The oil price is currently above the $80/Bbl. This works out well for the Permian Basin Producers.

Texas Natural gas Production: 2013 to Present

Texas natural gas production has recovered from the COVID lows of February 2021 when production dropped to 667 BCF. Record oil and gas production benefits the state as well as the U.S.  The increase inproduction back to pre-COVID-19 levels has caused a significant drop in natural prices in the U.S.

U.S. Natural Gas Production Growth: 4% 2023

 

U.S. natural gas production averaged 12 BCF/Day in 2023. The above chart indicates that Appalachia, Permian Basin, and the Haynesville play accounted for 59% of total U.S. natural gas production. What a difference a decade makes. Both horizontal drilling and fracking improvements make these areas economic for producers.

Western U.S. Yearly Hydropower Generation

 

Hydropower generation as the lowest during 2023 since 2001. There are a number of factors affecting annual hydropower generation:

1. Precipitation patterns

2.Snowpack: water is released over time as the snow slowly melts

3. Reservoir storage

4. Drought

These factors  illustrate the complex nature of hydropower generation which makes it difficult to forecast annual hydropower generation.

Liquified Natural Gas (LNG) Exports from select Countries

 

The U.S. is the worlds largest exporter of Liquified Natural Gas (LNG). U.S. exports averaged 11.9 BCFD in 2023, a 12% increase over 2022.