It’s true. A lot of folks harbor serious doubts about whether “green,” “blue,” or “pink” hydrogen (H2) can ever be produced efficiently and cheaply enough — and in sufficient volumes — to justify blending hydrogen with natural gas, let alone using H2 as an outright replacement for gas. At the same time, though, a growing number of electric utilities and independent power producers — generally cautious groups — are planning new, large-scale power plants that will be capable of hydrogen/natgas co-firing from the get-go, and can be converted with relative ease to 100% H2 later on. Can hydrogen really make sense as a generation fuel? In today’s RBN blog, we begin a series on the prospects for environmentally friendly hydrogen — and ammonia, an H2 carrier — in the power generation sector.
Posts from Housley Carr
There is a lot we don’t know about how the energy transition might play out over the next couple of decades. One thing that we can say with a high degree of certainty, however, is that the big run-up in wind and solar generating capacity in recent years is just the beginning — a lot more wind farms and solar arrays will be developed through the 2020s and ’30s, as will many, many energy-storage batteries. Another good bet is that as the portfolios of wind and solar developers grow, they will need help in maintaining, upgrading, and replacing their assets from a newly emerging type of company: the clean energy services provider. In today’s RBN blog, we discuss wind and solar’s role in the energy transition and the types of services these new companies might provide.
Multibillion-dollar mergers and acquisitions have attracted a lot of attention the past couple of years. Chevron buys Noble. ConocoPhillips acquires Concho. Cabot merges with Cimarex. Pioneer adds Parsley and DoublePoint. While it’s understandable that these mega-deals grab the spotlight, they tend to overshadow the many smaller-but-still-substantial agreements being announced at a rapid pace over the same period. Many of these less-than-$4-billion deals involve crude-oil-focused producers expanding their holdings in basins where they were already active, and many — no surprise — are happening in the Permian, although acreage in the Denver-Julesburg and the Eagle Ford are in play as well. In today’s RBN blog, we look at a few of the more interesting small and midsize acquisitions announced recently.
It’s been heard in many a pub: “Liquor may not be the answer, but it’s worth a shot.” You could make the same argument for hydrogen. While many question whether it will ever make economic sense to use hydrogen as a supplement to — or replacement for — natural gas on a large scale, others insist that hydrogen has a great future as a climate-friendly fuel, assuming it receives sufficient developmental support from government and ESG-minded industry. As it turns out, an early test of hydrogen’s potential is coming from the liquor industry itself, or more specifically, the maker of a renowned single-malt scotch on the Isle of Islay, off Scotland’s western coast. In today’s RBN blog, we discuss the distiller’s hydrogen production and combustion project and the broader plan by members of the Scotch Whisky Association and Scotland itself to achieve net-zero carbon emissions within a generation, largely through the expanded use of hydrogen.
Even through the market turmoil of the past couple of years, the Permian has been a production powerhouse, lately churning out an average of nearly 5 MMb/d of crude oil and 14 Bcf/d of natural gas. But is the Permian on shaky ground? Well, sort of. Distinct areas within both the Midland and Delaware basins in West Texas have experienced an increasing number of higher-magnitude earthquakes that have been linked to the saltwater disposal (SWD) wells that E&Ps use to get rid of the massive volumes of “produced water” their oil and gas operations generate. As a result, regulators have been ordering some of these disposal wells to be shut down and directing producers and midstreamers to develop “seismic response action plans” aimed at reducing the frequency and severity of quakes. In today’s RBN blog, we look at what has been happening on the earthquake front in West Texas and how E&Ps can deal with it.
The energy market dislocations of the COVID era have accelerated consolidation in the midstream sector as oil and gas gatherers — and gas processors — in the Permian and other basins seek greater scale, improved reliability, and the potential to direct more hydrocarbons through their takeaway pipelines. New evidence of this trend came just last week, when Enterprise Products Partners announced it has agreed to acquire privately held Navitas Midstream Partners, a fast-growing gas gatherer and processor in the Permian’s Midland Basin, for $3.25 billion. As we discuss in today’s RBN blog, the acquisition will give Enterprise its first gas gathering and processing assets in the heart of the Midland and may boost volumes on its residue-gas and NGL pipelines there.
It’s possible for a single new infrastructure project to be a game-changer — the Transcontinental Railroad comes to mind, and so do the New York City subway system and the Hoover Dam. In the energy industry’s midstream sector, things work a little differently. There, projects are incremental. They’re privately, rather than publicly backed and so they must be commercially justified, which means they need to serve a specific purpose. That’s not to say they can’t shift the landscape of the areas they serve. For example, when the Shale Revolution transformed and disrupted U.S. hydrocarbon markets, supply and demand dynamics were turned on their head and waves of projects had to be built to handle surging production in suddenly supercharged shale plays like the Bakken, Appalachia, and Permian and to serve new markets, most notably exports. Sometimes, it’s a more complicated combination of projects and events that, as a group, cause not-so-subtle shifts in how things are done. Lately, handfuls of pipeline projects and refinery closures — plus increasing regional crude oil production in both the U.S. and Canada — have spurred changes in traditional pipeline-flow patterns and may breathe new life into oil-export activity at the Louisiana Offshore Oil Port and the Beaumont-Nederland area in Texas. In today’s RBN blog, we discuss these changes and their effects.
The international shipping industry’s push to significantly reduce its carbon footprint over the next three decades is raising an obvious question: Is there a zero- or low-carbon bunker fuel that meets all of the industry’s basic criteria — things like availability, safety, and relative economy, not to mention sufficient on-board energy to transport massive, city-block-sized vessels thousands of miles at a clip. There is no clear answer yet, but there is a lot of talk about ammonia, or more specifically ammonia produced in a way that either generates no carbon dioxide (CO2) or that captures and sequesters much of the CO2 that is generated during production. But several major challenges must be met before “green” and “blue” ammonia can lay claim to even a small slice of the bunkers market, as we discuss in today’s RBN blog.
Mexico’s state-owned Petróleos Mexicanos, the second-largest exporter of crude oil to the U.S. after Canada, said in late December that it will slash its export volumes in 2022 and eliminate them completely in 2023. The plan is premised on Pemex’s expectation that, with increased utilization of the company’s six existing refineries and the impending start-up of a new one, it will need every barrel of the Maya, Isthmus, Olmeca, and other varieties of oil it produces. While at first glance it may seem that Mexico phasing out exports of crude would pose a major challenge to some U.S. refineries, there’s good reason to believe that in reality it won’t. In fact, as we discuss in today’s RBN blog, there may be less to Pemex’s planned export phase-out than meets the eye.
For the next few years, New Englanders will remain heavily dependent on natural-gas-fired generation — and keep their fingers crossed regarding the availability of piped-in gas for power during periods of frigid winter weather. But the power sector in the enviro-conscious six-state region has ambitious plans to gradually ratchet down its reliance on gas and other fossil fuels and increase the role of wind, solar, and battery storage. Over time, that could help to alleviate the gas-supply risk associated with New England’s seasonally insufficient gas pipeline capacity. However, front-and-center roles for highly variable renewable energy sources could pose reliability challenges of their own. In today’s RBN blog, we discuss the evolution of the region’s electric grid and what it may mean for natural gas producers and midstreamers.
In early December, natural gas production in the Permian has been averaging a record 14.2 Bcf/d, a gain of 1 Bcf/d in only six months. That rapid pace of growth is putting pressure on every aspect of midstream infrastructure — gas gathering systems, processing plants, and takeaway pipelines — and resulting in a variety of efforts aimed at ensuring there will be sufficient capacity in place to support the increasing gas volumes being produced. New gas-gathering mileage is being added, some new processing plants are being built, and at least a couple of new large-diameter pipelines from the Permian to the Gulf Coast are being considered. However, reflecting the midstream sector’s financial discipline, there’s also a big push to make fuller use of existing assets, in some cases by relocating processing plants, compressors, and other assets to where they are needed most. In today’s RBN blog, we discuss the latest gas-related infrastructure developments in the Permian’s Midland and Delaware basins.
There’s been a lot of talk lately about “green” and “blue” hydrogen becoming increasingly important players in the world’s lower-carbon energy future. Green and blue ammonia too, given that ammonia, with its high hydrogen content, is an efficient “carrier” of hydrogen when it needs to be delivered by ship, railcar, or truck. Also, ammonia itself — like hydrogen — can be used to power fuel cells and ammonia-combustion technology is being developed to use fuel ammonia at power plants. But for these low- or zero-carbon energy products to be adopted at a global scale, new infrastructure will need to be built, not only to enable their production and consumption but to transport them to where they’ll be consumed. Enter the just-finished ammonia terminal that Royal Vopak and Moda Midstream jointly developed at a prime site along the Houston Ship Channel. In today’s RBN blog, we discuss the greenfield facility and its prospective role as a major import/export hub for ammonia.
International shipowners need to significantly reduce their carbon-dioxide emissions by 2030 and will come under pressure to achieve carbon neutrality by 2050. Given that the industry currently depends almost entirely on fossil fuels for ship propulsion — and that every zero- or near-zero-carbon alternative faces serious headwinds — it won’t be an easy or low-cost transition. One pathway would be expanding the use of LNG as a bunker fuel in the near term and then shifting to alternatives like bio-LNG and synthetic LNG as they become more commercially available and economic. Another would be to use “green” or “blue” hydrogen, ammonia, or methanol. But there are challenges to each, not the least of which are the small volumes of non-traditional fuels being produced — and their high cost — and the need for new infrastructure both to produce and distribute them, as we discuss in today’s RBN blog.
There’s been a slew of high-profile shipments of “carbon-neutral LNG” the past few months, typically involving the use of carbon credits to offset, ton-for-ton, the carbon dioxide equivalent of greenhouse gases released during the production, piping, and liquefaction of natural gas, the shipping of LNG, and often the regasification and ultimate consumption of the gas too. The problem is, there is no widely agreed-to definition for carbon neutral, nor is there a consensus on how to quantify and validate the GHG “footprint” of a specific LNG cargo. Now, an international group representing the world’s LNG importers has established a framework for “GHG-neutral LNG” that it hopes will gain widespread acceptance. Elements of the proposal are sure to be controversial, however, as we discuss in today’s RBN blog.