nuclear-worker

Advanced Nuclear Goes Public | Old Science Makes a Comeback

This past week two companies in the advanced reactor space went public. Oklo Inc. (NYSE: OKLO) and Nano Nuclear (NASDAQ: NNE) had mixed opening days, with OKLO seeing nearly a 50% price drop from opening and NNE trading up well above its initial offering price opening day. NNE is developing two reactor designs for remote deployment, while OKLO has signed a letter of intent to supply FANG with its design to support oilfield electrification efforts.

Key public and private investors in these technologies are a who’s who of tech giants and industrial powerhouses. Bill Gates (TerraPower), Sam Altman (OKLO), Nucor (NuScale) and Dow (X-energy) are all heavily invested in the success of this technology to help decarbonize their businesses. More on developments in the space here

Unlike today’s reactor fleet, Generation IV reactors operate at much higher temperatures, some reaching over 900 Celsius. The success of those technologies would be massively impactful for heavy industry and mining where heat input is the greatest barrier to decarbonization, developing nations and remote communities. With so many of these designs being actively pursued across the globe, we believe it is a matter of when, not if, players in the space begin to flourish.

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Research Highlights

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About Enverus Intelligence®| Research
Enverus Intelligence® | Research, Inc. (EIR) is a subsidiary of Enverus that publishes energy-sector research focused on the oil, natural gas, power and renewable industries. EIR publishes reports including asset and company valuations, resource assessments, technical evaluations, and macro-economic forecasts and helps make intelligent connections for energy industry participants, service companies and capital providers worldwide. EIR is registered with the U.S. Securities and Exchange Commission as a foreign investment adviser. Click here to learn more.

Enverus Press Release - Tapping Alberta’s overlooked lithium brines

For Equinor in the U.S., lithium door opens after another closes

Equinor is acquiring 45% stakes in two of Standard Lithium’s direct lithium extraction (DLE) projects in the Smackover Formation in Southwest Arkansas and East Texas, less than a month after closing the book on its U.S. onshore shale operatorship. Under terms of the agreement, the Norwegian energy company will compensate Standard Lithium for $30 million in past costs net to the acquired interests and solely fund $60 million of costs—$40 million at the Arkansas project and $20 million in Texas—to progress the projects towards FIDs, representing a $33 million carry for Standard Lithium. Further development costs will be funded on a pro-rata basis. Equinor will also make milestone payments of up to $70 million total if positive FIDs are taken.

Equinor’s DLE investment is potentially the most significant and concrete to date from a major oil and gas producer, although others are exploring the technology, including ExxonMobil, Occidental Petroleum, Saudi Aramco and ADNOC. These investments are focused on DLE without the use of evaporation ponds, which has not yet been deployed commercially. DLE with evaporation ponds has been used commercially in Chile and Argentina.

Potentially most concrete DLE investment to date from a major O&G producer.

“This partnership with Equinor is a major accomplishment for Standard Lithium. It has long been our belief that success in this sector hinges on strategic partnerships with companies who share our vision and bring complementary strengths,” Standard Lithium CEO Robert Mintak said. He added, “With this partnership, we have the opportunity to accelerate our progress and carve out a significant role in shaping the future of sustainably produced lithium.” The Southwest Arkansas project, located in Magnolia, is targeting 30,000 tonnes of annual lithium hydroxide production capacity. The lithium brine resource in the area has an average concentration of 437 mg/L, according to Standard Lithium. The best well in the East Texas project area had a measured concentration of 806 mg/L, and the area has an average grade of 644 mg/L from three wells so far. Standard Lithium estimates a DLE project in East Texas could potentially produce 100,000 tonnes or more annually of lithium hydroxide.

Equinor said it will support the operator with core competencies such as subsurface and project execution capabilities. This is not Equinor’s first investment in DLE, although it is the company’s largest to date. In 2021, its venture capital arm—Equinor Ventures—invested in Lithium de France, which is developing combined geothermal and DLE projects in France.

Norwegian firm will reimburse $30MM, solely fund $60MM, pay up to $70MM on FID.

“Sustainably produced lithium can be an enabler in the energy transition, and we believe it can become an attractive business,” Equinor SVP Morten Halleraker said. “This investment is an option with limited up-front financial commitment. We can utilize core technologies from oil and gas in a complementary partnership to mature these projects towards a possible final investment decision.”

The transaction did not cover Standard Lithium’s Phase 1A demonstration project in El Dorado, Arkansas, where it is already partnered with German chemicals company Lanxess AG. That project is targeting annual production of 5,400 tonnes of battery-quality lithium carbonate from brine resources with an average grade of 217 mg/L. In March, Standard Lithium installed a new commercial-scale DLE column supplied by Koch Technology Solutions at the El Dorado plant. The new Li-Pro lithium selective sorption unit is the same size and design as the company intends to use for the Southwest Arkansas project.

Find more great content on the renewable energy sector, carbon management and environmental investments in the latest issue of Energy Transition Pulse.

About Enverus Intelligence Publications

Enverus Intelligence Publications presents the news as it happens with impactful, concise articles, cutting through the clutter to deliver timely perspectives and insights on various topics from writers who provide deep context to the energy sector.

Enverus Press Release: Beyond the horizon: US solar and storage solutions are on the rise

Streamlining Parcel Discovery for Power Projects With Contiguous Acreage

Traditionally, developers relied on finding areas suitable for power project siting and then looking through individual parcels in their areas of interest to identify the owners and county of the parcels. This process was time consuming and often overlooked the crucial aspect of contiguity among owners. As a result, navigating regulations and conducting outreach became needlessly complex, especially in areas involving multiple owners and counties.

Fortunately, there’s now a solution that addresses this challenge head-on. By integrating contiguity into the analysis, Enverus Power and Renewables Suitable Land Analytics Contiguous Acreage enhancement helps identify multiple parcels under the same ownership, simplifying negotiations and regulations needed to be followed, making the parcel outreach faster and bolstering overall project viability.

Finding Parcels for a Wind Power Project

Let’s explore how the parcel siting process for a wind project within a 2-mile radius of the planned transmission project OTTUMWA-SKUNK RIVER 345 KV TRANSMISSION LINE PROJECT unfolds with the Contiguous Acreage enhancement.

The OTTUMWA-SKUNK RIVER 345 KV TRANSMISSION LINE PROJECT represents a key component within the expansive MISO Long-Range Transmission Plan. In line with this strategic framework, the transmission line is set to be a collaborative effort between ITC Midwest and MidAmerican Energy, jointly owned to ensure effective management and operation. With ITC assuming the crucial role of overseeing the day-to-day operations and maintenance of the line, this project underscores a shared commitment to enhancing regional electric transmission infrastructure.

Within the radius, roughly 4,000 parcels need screening for wind potential. Previously, developers would assess parcel owners, average wind speeds and buildable acreage individually, which takes one month of two dedicated workers full time to pull this information. This process was laborious, often requiring investigation into neighboring parcels to gather additional data on wind potential, ownership and county regulations, and requires the full-time dedication of two employees for an entire month to compile the necessary information. Dealing with multiple owners or counties added complexity to negotiations and compliance efforts.

average-wind-speed-vs-buildable-acreage
Parcel ownership based on Average Wind Speed at 100M(M/S) versus Buildable Acreage

With Enverus PRISM® Power and Renewables Suitable Land Analytics, developers can gain insights into parcel ownership, buildable acreage and average wind speeds aggregated by the owner, facilitating more efficient analysis. Jadoc Inc. initially ranks first as the best combination of buildable acreage and wind resources. However, despite appearing promising the parcels are fragmented across different locations.

Leveraging Contiguous Acreage Enhancement

Here’s where Contiguous Acreage proves invaluable. By analyzing parcels based on contiguous ID, representing parcels grouped under the same ownership, developers can identify parcel owner and county groupings that are the most promising from a wind speed and buildable acreage perspective.

In this particular instance, the average wind speed at 100 m is 7.97 m/s, so the Kaska Farm Corp parcels from a wind speed, contiguity and buildable acreage perspective is more ideal for wind development compared to the Jadoc Inc. parcels identified previously.

Moving forward, users can delve deeper into land buildability with Enverus Power and Renewables Suitable Land Analytics add-on, identifying potential environmental constraints with precision.

In conclusion, the integration of Contiguous Acreage into the parcel siting process represents a significant advancement in power project development. By shifting the focus from individual parcels to contiguous land groupings, developers can streamline the analysis, optimize resource utilization and enhance overall project viability. The ability to identify truly contiguous parcels not only simplifies negotiations and regulatory compliance but also maximizes the potential for efficient project execution.

Enverus Press Release - Enverus EVOLVE - Creating the future of energy

Enverus EVOLVE: Creating the future of energy

AUSTIN, Texas (May 15, 2024) — Following its EVOLVE 2024 conference, Enverus, the leading generative AI and energy-dedicated SaaS company, announced that it was releasing complimentary access to its new Enverus Instant Analyst™ technology to its Oil & Gas Research (OGR) and Energy Transition Research (ETR) customers who were in attendance. These 750 users now join an exclusive group of early adopters and will be able to find concise answers quickly across tens of thousands of documents inside the Enverus Intelligence® Vault.

At the event, Chief Innovation Officer Colin Westmoreland explained how current OGR and ETR subscribers can now simply log in with their credentials where the tool was waiting.

“High quality data and intelligence is core to our DNA,” Westmoreland stated while on stage before the crowd, “but we need to move beyond ‘just’ better, faster decisions. Searching, sourcing and citing the research behind an answer is now available to these users in a matter of seconds,” he said. Personalized demonstrations were also available in the conference Solution Center, along with staff to answer questions.

Customers in attendance immediately got behind the idea.

“I think AI is going to be revolutionary,” said Thomas Greene, marketing manager at Tenaris and current customer of Enverus Intelligence® Research. “As an early user, I think Instant Analyst is set apart from other generative AI because of the source material that is behind it. With Enverus, you’ve got 30+ years of market intelligence that you’re pulling from, which is not something you’re going to be getting when you’re referencing ChatGPT or Copilot. I would recommend any energy professional use Enverus and Instant Analyst and give it a try because it makes your job much easier and allows you to do the work that you do every day, faster.”  

“Enverus provides valuable tools, especially for our business development group,” added Mary Frances Deibert, vice president of Marketing and Sustainability at Ironwood Midstream Energy Partners. “Enverus does a great job of pulling together information about producers, and producers are our customer base. We gain a competitive edge when our team can access data and parse it in a way that makes sense for our company. The data is the data, but the way Enverus provides access lets us pull data together so that fits into our business like a little puzzle piece. We employ the data to create opportunities, adding real value to our business.” Neither Tenaris, Ironwood Midstream Energy Partners, or their employees were compensated for their statements.

Learning & Development (L&D) training courses were also offered during EVOLVE. The L&D program is aimed at helping energy professionals enhance their skillsets around data-focused job functions that improve career growth opportunities. Opportunities ranged from becoming an Enverus Certified Specialist in Energy Analytics and Benchmarking to Enverus Certified Professional in Advanced Analytics and Asset Optimization.

“As an industry, we all have an inspiring mission to power the global quality of life for the 8 billion people on our planet,” shared Manuj Nikhanj, president of Enverus, during his conference remarks. “Energy — an already complex connected ecosystem — is only getting more challenging to navigate. The total demand for energy is only increasing through time and a strong network of connections and support is needed to maintain a resilient and reliable energy systems.  If one piece of that network fails, it’s not just a ripple effect, it can be felt like a tsunami. That’s why we engage in dialogue with our customers to meet their needs before their challenges arrive. Together with them, we are creating the future of energy together.”

EVOLVE 2024 Takeaways

Macro & Markets:

  • At bottom on gas prices
  • Bullish oil prices
  • Canadian companies offer compelling equity investment opportunities
  • Few remaining private company acquisition opportunities
  • Public M&A focused on companies trading near production value with ~5 years of inventory
  • Methane reporting and fees introduce material financial and counterparty risk

Asset Optimization:

  • More than half of planned ERCOT solar projects are sited sub-optimally
  • Longer laterals significantly improve economic returns
  • Four major U.S. basins are over 45% developed
  • Extended reach laterals allow operators to develop stranded or sub-economic resource
  • Only 25% of solar and wind projects in Texas are likely to get developed
  • Incremental wells in the Permian recover 1-1.5 Mbbl/1,000’ less

Carbon Innovation:

  • Pneumatic controller swaps address low-hanging emissions in the Permian
  • Demand for CO2 in the Permian, mostly for EOR, could outpace supply by 2028
  • Permian operators are most exposed to increased methane leak visibility
  • Subsidies enable blue hydrogen to compete with grey

Electrification:

  • Solar projects in high load areas have the highest chance of success
  • ERCOT storage projects offer significant revenue and profitability opportunities
  • Over 60% of Permian gas compression will be electrified by 2040 – if adequate generation is built
  • Tripling storage capacity in ERCOT, to 12 MWh by 2026, will pressure ancillary returns

About Enverus
Enverus is the most trusted, generative AI and energy-dedicated SaaS company, offering real-time access to analytics, insights and benchmark cost and revenue data sourced from our partnerships to 98% of U.S. energy producers, and more than 35,000 suppliers. Our platform, with intelligent connections, drives more efficient production and distribution, capital allocation, renewable energy development, investment and sourcing; and our experienced industry experts support our customers through thought leadership, consulting and technology innovations. We provide intelligence across the energy ecosystem: renewables, oil and gas, financial institutions, and power and utilities, with more than 6,000 customers in 50 countries. Learn more at Enverus.com.

kid-solar-gallery

The Sweet Relationship of Agriculture and Photovoltaics  

Harnessing Sunlight and Soil

As the early morning light filters through the countryside, you find yourself on a quiet rural road. You’re sipping coffee and humming your favorite tune. You’re on your way to see loved ones, explore a national park, make an early meeting in the office, or simply grabbing a quick bite in the next town over. Fields of corn stretch as far as the eye can see.

Beehives strategically placed near the solar farm to create new opportunities for pollination efforts
Dustin Vanasse and Yufan Zhang discussing agrivoltaics

A new sight emerges as the sun peeks over the horizon. Vast fields with rows of solar (PV) panels, basking in the sun. But along the rows you see what looks like packing boxes stacked beside the arrays, alive with the gentle hum of honeybees.

These solar farms offer more than just powering homes and industry – they present an opportunity for dual use solar that can turn the landscape into vibrant ecosystems across the rural land. This agrivoltaics partnership, the integration of agriculture and solar energy production, creates opportunities for increased biodiversity, enhanced pollination and community partnerships.

Beehives near a solar farm

Research indicates that the prevalent large-scale monoculture agriculture seen across the states isn’t optimal for land health and native species. By 2050, nearly 90% of species could lose habitat to agricultural expansion, with 1,280 species projected to lose at least 25% of their habitat.

However, amidst this landscape of change, a beacon of hope emerges as nearly 83% of new solar energy development in the U.S. in 2024 will be on farm and ranch land. This presents a unique opportunity to enhance previously monocultured agriculture into diverse ecosystems, which is critically needed for native pollinators and local wildlife to thrive and maintain population.

This solar farm uses wildflowers to increase the local biodiversity in East Central Minnesota.

A Sweet Pairing

Solar farms with strategically placed native flowers and plants that lure pollinators can have a positive impact on solar production and pollinators. In fact, Argonne National Laboratory found that growing wildflowers underneath the panels can increase pollinators such as honeybees and native bees by a whopping 2,000% in the area. This solar farm and honeybee relationship extends beyond the solar farm, benefiting pollination in surrounding crops.

A team from Enverus had the opportunity to tour a solar farm in East Central Minnesota to see this relationship in action. Led by Dustin Vanasse of Bare Honey, the team inspected honeybee hives and explored the solar farm, seeing how Bare Honey’s initiatives create a thriving environment for pollinators within solar farms.

Beekeepers can inspect upwards of 80 hives per day, ensuring the health and safety of the hives they care for.

The relationship also has a positive impact on the solar panels themselves. Studies conducted by Oregon State University show that planting crops or native wildflowers beneath solar panels creates a microclimate that cools the panels, boosting productivity by upwards of 10%.

By integrating a robust agrivoltaics strategy on solar farms, we can harness clean energy while creating habitats for pollinators. This dual-purpose approach contributes significantly to the sustainability of both energy production and agricultural practices. In the U.S. alone, honeybees and native bees play a crucial role, supporting crop yields estimated at $18 to $27 billion annually.

Bees on a frame of brood
Diving into solar hives

As large-scale solar energy installations become increasingly prevalent in rural areas worldwide, developers take a proactive approach to stakeholder engagement. By exploring alternative approaches to maximize the potential of solar installations beyond electricity generation, projects can have long term success through partnerships.

This integration of solar farms and honeybees represents just one facet of a broader sustainable movement aimed at shaping a more environmentally conscious future. Embracing renewable energy sources, implementing sustainable land practices and safeguarding biodiversity are all encompassed within agrivoltaics, marking a new frontier in solar farm development.

Explore how you can design your own agrivoltaics PV plants with RatedPower by taking a product tour.

Learn more about Bare Honey and Solar Honey.

emissions-wind-women-working

Navigating PJM’s Evolving Battery Storage Landscape

In the United States, the anticipated load growth and the retirement of aging plants to meet state mandates are creating a compelling narrative for the expansion of battery storage infrastructure. As this demand intensifies, developers are engaged in a competition to secure the most profitable locations for their storage assets.

Among the notable regional transmission organizations (RTO) signaling a need for increased battery storage in PJM. PJM’s regulatory landscape is shaped by state mandates necessitating the retirement of traditional thermal plants. Last summer witnessed the retirement of 4GW of capacity, with an additional 1GW slated for retirement this summer. Moreover, PJM anticipates a staggering 30GW surge in load growth over the next decade and a half in the Virginia area alone. Let’s delve into how the energy landscape is evolving within PJM for the foreseeable future and uncover strategies for pinpointing promising sites for battery storage projects.

Why PJM?

PJM emphasizes the role of ancillary services in maintaining grid stability. The services primarily operate within two key markets: regulation and reserves. Regulation is used to control small mismatches between load and generation adjusting for smaller imbalances to either side. Reserves help to recover system balance by making up for generation deficiencies if there is loss of a large generator or other larger scale disturbances in the system.

PJM stands out as an RTO offering significant economic opportunities for battery projects participating in the ancillary services market. This is evident in both the dollar amount per MW in both regulation and reserve markets as well as the expected rate of return for those markets utilizing Enverus Storage Economics in Enverus PRISM®. To maximize the potential value of a battery storage system, it’s ideal to locate the project in a region where ancillary services pay the most while also being able to take advantage of large locational marginal pricing (LMP) spreads to profit from those pricing arbitrage opportunities.

PJM Expected Load Growth

According to the 2024 PJM Load Forecast Report, the Dominion Utility region is projected to have one of the highest forecasted load growths within the PJM region. This increase can be largely attributed to the significant expansion of data centers in the area, which already boasts some of the highest concentration of data centers in the U.S. The substantial presence of data centers in the region, with their specific considerable power requirements can be attributed to the forecasted growth in this region, which can also represent a need for more energy demand and ancillary services to balance that growth and demand while also potentially unlocking more potential for power arbitrage in the surrounding areas.

The graphs below depict the top 10 counties in Virginia based on the average LMP pricing spread over the last 12 months, as well as the average LMP pricing. Forgiving some outliers, Loudoun & Prince Edwards counties stand out as ideal counties for being able to participate in the ancillary services market. Their strategic locations, coupled with high LMP spread differences, position them favorably to profit from arbitrage opportunities in high power demand/possible areas.

Project Probability and Queue Commentary

The graph above highlights the project probability of energy storage projects being completed by the owner. Dominion is also the main utility for Loudoun and Prince William counties which bodes well for our previous analysis. PJM is proposing to add an expedited interconnection process to allow projects to replace deactivated units in the interconnection process which can bode well for battery storage as it has a more streamlined development process than traditional projects. This comes as PJM has a historic backlog of projects in the interconnection queue which may help get more projects through the interconnection process.

Planned Transmission

With all the above in mind, we can narrow our siting search down to Loudoun and Prince Williams counties in Virginia. By identifying areas with lower interconnection costs and higher potential for available transmission capacity, we can utilize planned transmission routes to pinpoint ideal locations for development.   Overlaying this information with LMP nodes with the largest average Max – Min LMP spread will further highlight areas where the highest opportunity for pricing arbitrage is potentially available.

In this instance, locating a battery project near a planned transmission route, such as the Aspen – Golden route, offers several advantages. Not only does it help ensure the availability of transmission capacity, but it also alleviates some of the costs associated with grid interconnection for new projects.

This is just one example, but it serves to highlight some of the tools in PRISM and our publications in identifying optimal sites for battery storage systems within the PJM region. By leveraging these tools, developers can access valuable data and insights to inform strategic decision-making and maximize the potential of their energy storage projects. With the addition of Enverus Suitable Land Analytics and Parcels, users can take the next step in analyzing the suitable of land for their battery asset project by determining the best land for development. Whether it’s analyzing transmission routes, evaluating LMP spreads, or considering other factors crucial to project feasibility, PRISM equips stakeholders with the necessary tools to navigate complex energy landscapes and drive successful outcomes.

Enverus Press Release - Load impact imminent: Data center growth at the mercy of power supply constraints

EPA’s Power Plant Rule | CCS or Retirement

On March 25, 2024, the EPA released its final rulemaking on the update to 40 CFR Part 60 implementing its New Source Performance Standards for New, Modified and Reconstructed Fossil Fuel-Fired Electricity Generating Units. This rule introduces new requirements that will have major effects on existing coal power plants and any new, modified or reconstructed natural gas power plant. For existing coal power plants, there are three different categories:

  • Facilities retiring before 2032, no emission standards apply.
  • Facilities retiring before 2039 require retrofitting to accommodate 40% gas co-firing by 2030.
  • Facilities retiring after 2039 require CCS installation to capture 90% of CO2 by 2032.

New, modified or reconstructed natural gas power plants will be required to be constructed with CCS technology capable of capturing 90% of CO2 from the plant. This rule dates back and applies to plants that began construction or reconstruction after May 23, 2023. While majority of coal power plant capacity is scheduled to come offline before 2032, we believe that this rulemaking will force existing coal plants to consider early retirement, which, coupled with the increase in complexity and cost of constructing new natural gas power plants, further exacerbates grid stability and may lead to high electricity prices in affected regions. There will also be a material impact on gas demand as coal facilities retiring between 2032 and 2039 potentially rush to retrofit facilities to co-fire natural gas by 2030.

Highlights From Energy Transition Research

Cummins | Big Engines for Bigger Data – We take a dive into the growth prospects for Cummins’ data center-adjacent business lines, which we believe is supportive for the equity.

Data Center Demand | Load Impact Imminent – This publication offers a Lower 48-level view on expected growth in data center capacity and associated power demand.

Tracking the ET Market | Improving Multiples in a Lower Cost of CapitalEnvironment – The 4Q23 edition of the Energy Transition Research team’s equity tracking report provides coverage across various energy transition sectors as well as integrated traditional energy businesses.

accurate-grid-forecastin

Offshore wind has taken a beating in U.S. Can it come back?

In March 2021, the Biden administration set a goal of deploying 30 GW of offshore wind capacity in the U.S. by 2030. These efforts have faced significant growing pains, however, exacerbated by the COVID-19 pandemic and follow-on impacts such as inflation. Reaching 30 GW by 2030 increasingly appears difficult, if not impossible, to achieve.

Prior to 2021, there were just two operational offshore wind farms in the country, both off the East Coast. Ørsted predecessor DONG Energy’s Block Island Wind, a five-turbine wind farm with 30 MW of capacity, came online in 2016, and Ørsted and Dominion Energy’s 12 MW pilot project for Coastal Virginia Offshore Wind followed in 2020.

Europe added 23 GW in 10 years; U.S. will have to add 30 GW in 7 to meet goal.

Since then, only one project has been fully completed—Ørsted’s 132 MW South Fork Wind in March—while Avangrid’s 806 MW Vineyard Wind has delivered first power and will be completed later this year. While not a true apples-to-apples comparison, Europe installed 1.5-3.7 GW of offshore capacity per year between 2013 and the end of 2022, growing from a total of 7 GW to 30 GW over that time frame, according to industry association WindEurope.

According to Enverus Core data, there is roughly 41.1 GW of offshore wind capacity in the U.S. with assigned project names and/or developers that could potentially come online before YE30. (Enverus Core users, click here to interact with the workbook.) Only around 11.2 GW of those projects, however, are advanced enough to have interconnection agreements in place. The remaining roughly 30 GW of capacity is still in earlier phases of development with significantly less visibility regarding the likelihood of completion. Even for those projects with interconnection agreements, several developers have been struggling to make them commercially viable.

Perhaps the first rumblings of problems among developers in the U.S. came in late 2022, when Avangrid warned that supply chain disruptions, inflation and rising interest rates risked making its proposed Commonwealth Wind project off Massachusetts untenable. Those issues—which have most seriously impacted more mature projects, such as those awarded contracts prior to the pandemic—came to a head in a rapid-fire series of events beginning in the 2H23 and continuing into this year.

Avangrid terminated power purchase agreements for Commonwealth Wind and Park City Wind last August and October, respectively. Ørsted warned of impending impairments on several of its projects in September, and that same month governors of six Northeastern U.S. states requested federal support for the industry in a letter to President Biden. Ørsted ultimately recognized a $4 billion impairment in its 3Q23 results and canceled the Ocean Wind 1 and 2 projects, after New York denied petitions from the company and other developers for relief in October.

Rumblings of issues with projects began in 2022 and exploded in 2H23

Following a review of its portfolio, Ørsted made significant cuts to its development plans globally, including the planned Skipjack Wind project off Maryland, which brought its canceled planned offshore capacity in the U.S. up to about 3.2 GW. Equinor and BP also recognized respective impairments of $300 million and $540 million for the Empire Wind and Beacon Wind projects off New York, and they later terminated existing contracts with the New York State Energy Research and Development Authority for the wind farms. Eversource Energy finalized its full exit from offshore wind this February, after taking $2.17 billion in 2023 impairments on its portfolio.

Most recently, NYSERDA announced April 19 that it would not award final contracts to three projects selected in its third offshore wind solicitation—Attentive Energy One, Community Offshore Wind and Excelsior Wind—after newly spun-off GE Vernova’s decision to scrap its 18 MW Haliade-X turbine platform and move to a smaller turbine. NYSERDA said the decision caused “technical and commercial complexities” for the developers, which had planned to use the larger turbine, and GE Vernova CEO Scott Strazik told Reuters the company could not reach an agreement to supply smaller turbines to the projects before the contracts were canceled. Strazik added that the company expects to have a 15.5 MW replacement prototype turbine ready in late 2025.

Developers and state and federal authorities have begun making material efforts to address these challenges. Equinor and BP agreed to part ways on U.S. offshore wind with an asset swap that saw Equinor take over the Empire Wind projects and BP the Beacon Wind projects, so they could continue to progress them independently. Avangrid rebid its Park City and Commonwealth Wind projects, now known as New England Wind, and it also received a positive record of decision on the projects from the U.S. Bureau of Ocean Energy Management. Dominion Energy received the final federal approvals for the 2.6 GW Coastal Virginia Offshore Wind project in January and plans to begin offshore construction in Q2.

NYSERDA launched an expedited offshore wind solicitation in November, inviting all developers to submit bids even if they had existing or canceled contracts. It ultimately selected Equinor’s Empire Wind 1 and Ørsted’s Sunrise Wind 1 projects, and Ørsted took a positive FID on Sunrise Wind in March. On April 23, the agency announced it would hold its fifth offshore wind solicitation this summer, and it is also planning a $200 million solicitation for supportive supply chain and logistics development and a $300 million solicitation for major component supply chains.

New federal rules intended to streamline regulations for deploying offshore wind.

Lastly, on April 24 the Department of the Interior announced that BOEM and the Bureau of Safety and Environmental Enforcement finalized new regulations for renewable energy development on the U.S. Outer Continental Shelf. The final rules are intended to increase certainty and reduce costs associated with deployment of offshore wind and are expected to save about $1.9 billion for the industry over the next 20 years—although those savings seem small, considering the timeline and that each gigawatt-scale project costs billions of dollars to develop and build.

Still, the rules, among other things, eliminate duplicative regulatory processes, increase survey flexibility and tailor financial assurance requirements and instruments. Streamlining federal regulatory requirements on developers should allow them to get necessary approvals faster and reduce project timelines. The BOEM will also publicly release a five-year renewable energy leasing schedule every two years. On deck in 2024 are potential auctions in the Central Atlantic, the Gulf of Maine, the Gulf of Mexico and offshore Oregon.

About Enverus Intelligence Publications
Enverus Intelligence Publications presents the news as it happens with impactful, concise articles, cutting through the clutter to deliver timely perspectives and insights on various topics from writers who provide deep context to the energy sector.

Enverus News Release - Defying peak oil predictions

Oil Prices to Reach $95, Enverus Intelligence® Research Remains Bullish

Crude and product stocks are currently at levels that suggest Brent should be ~$85/bbl. We believe there is no geopolitical premium embedded in the price of oil. Historical data shows prices are justified at current stock levels.

Looking forward, Enverus Intelligence® Research (EIR) remains bullish on Brent crude prices. 

EIR expects Brent prices to continue to push higher and reach an average of $95/bbl by the fourth quarter of 2024. This move up in price is driven by crude and product draws in the second half of the year – assuming OPEC holds its production at current levels. 

Brent crude oil prices reached a high of $91 a barrel recently due to strong demand growth and improved momentum in the economy, as indicated by marked improvement in both consumer and industrial sentiment indexes.

That said, there is upside risk to oil prices.

Bullish statements about refilling the U.S. Strategic Petroleum Reserve and additional Russian production cuts are currently unaccounted for in EIR expectations for global oil balances. 

However if these two variables play up to their potential, higher prices (possibly $100 bbl and above) will ensue, as it would drastically tighten global oil balances. Currently, EIR’s Brent forecast is ~$10 a barrel higher than the current strip.

Specifically, Russia agreed to slash its production this past March by another 471,000 barrels per day (bpd) during the second quarter to meet the production cuts agreed on with other OPEC+ countries so that the reduction in output would be even.  

Next the U.S. Secretary of Energy recently stated the SPR would be refilled or exceed pre-Biden sales levels by the end of the year. A return to pre-Biden sales levels would require a build of around 200 MMbbl. This could mean crude purchases this year of 500 -1500 Mbbl/d depending on the start date.  

(Posted: 03/18/2024)

EIR has doubts about the aggressive pace stated by the Secretary of Energy, while Russia has a checkered history of adhering to stated cuts. 

Over the longer term, EIR believes oil prices in general will rise because expected global supply additions, appear unable to keep up with demand growth. OPEC will be the marginal producer in this scenario and have market control. “OPEC manages Brent prices to stay in the group’s comfort zone of $85 to $105 per barrel,” said Al Salazar, head of Macro Oil and Gas Research at EIR.

As for natural gas, Henry Hub prices should slowly recover this summer and average $2/MMBtu, which is roughly 30 cents/MMBtu under the current strip and down for our prior estimate of $2.25. 

Prices are anticipated to average $4.50/MMBtu by late 2025 and will touch $5 during winter months, which is close to the current strip. Such price levels are what is needed to motivate Haynesville production to grow at a pace sufficient to serve the historic LNG build-out, Salazar said. 

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Authors

al-salazar

Al Salazar
Senior Vice President, Enverus Intelligence® | Research (EIR) 
Al Salazar is a seasoned member of the Enverus Intelligence team, bringing more than 23 years of experience in the energy industry with a focus on fundamental analysis of oil, natural gas and power.
Throughout his career, Al has held key positions at EnCana/Cenovus and Suncor, where he honed his skills in forecasting, hedging, and corporate strategy.
Al’s 15-year tenure at EnCana/Cenovus was particularly impactful, where he contributed significantly to the company’s success. Al earned his bachelor’s degree in applied energy economics from the University of Calgary in 2000, followed by an MBA with honors from Syracuse University in 2007. Al’s academic background, coupled with his extensive professional experience, has equipped him with a deep understanding of the energy industry’s complexities and the necessary skills to navigate them effectively.

Head shot of Chris Griggs

Chris Griggs
Product marketing manager for Enverus Intelligence® | Research (EIR) and Trading & Risk. Chris Griggs leads the development and communication of the value these products provide various industries, including oilfield services, investment funds, wealth management departments, banks, E&P oil and gas departments, and midstream operators. Chris helps provide customers across the energy ecosystem with the intelligent connections and actionable insights that allow them to uncover new opportunities and thrive. 

About Enverus Intelligence Research
Enverus Intelligence ® | Research, Inc. (EIR) is a subsidiary of Enverus that publishes energy-sector research focused on the oil, natural gas, power and renewable industries. EIR publishes reports including asset and company valuations, resource assessments, technical evaluations and macro-economic forecasts; and helps make intelligent connections for energy industry participants, service companies and capital providers worldwide. EIR is registered with the U.S. Securities and Exchange Commission as a foreign investment adviser. Enverus is the most trusted, generative AI and energy-dedicated SaaS company, offering real-time access to analytics, insights and benchmark cost and revenue data sourced from our partnerships to 98% of U.S. energy producers, and more than 35,000 suppliers. Learn more at Enverus.com.

Enverus Press Release - Load impact imminent: Data center growth at the mercy of power supply constraints

Load impact imminent: Data center growth at the mercy of power supply constraints

CALGARY, Alberta (May 1, 2024) — Enverus Intelligence Research (EIR), a subsidiary of Enverus, the most trusted generative AI and energy-dedicated SaaS company, has released a collection of research focused on expected growth in data center capacity and associated power demand.

“Data centers are among the least price sensitive consumers of power, said Carson Kearl, report author and EIR analyst. “This presents an opportunity for high capital cost carbon free energy.

“Data center capacity growth will not translate one-to-one into net new load growth, operators will be on the hunt for cheap interties from current industrial consumers. Furthermore, installed data center capacity will grow by approximately 14 gigawatts from 2023 to 2030 as artificial intelligence accelerates data center capacity demand. This equates to 2 Bcf/d of incremental natural gas demand if fully served by gas-fired generation,” said Kearl.

Key takeaways from the report:

  • Data center capacity growth will not translate 1-to-1 into net new load growth due to the substitution of load from more marginal industrial power consumers (material manufacturers) and accelerated behind-the-fence generation.
  • Limiting the growth rate in computing to the fastest continuous five-year historical period (our low case) reduces EIR’s estimate to ~8 GW of capacity growth (0.9 Bcf/d increase in implied natural gas demand). EIR considers this unlikely and a conservative floor value. Accelerating the growth rate in computing to 25% faster than the fastest continuous five-year historical period (our low case) increases our estimate to ~24 GW of capacity growth (3.3 Bcf/d increase in implied natural gas demand).
  • Installed data center capacity grows by ~14 GW from 2023 to 2030 in our base case as AI accelerates data center capacity demand. This equates to 2 Bcf/d of incremental natural gas demand if fully served by gas-fired generation.
  • Estimated computing demand growth (43%) outpaces the fastest continuous five-year historical period (38%). This is partially offset by 24% annualized efficiency gains that track Nvidia chip improvements (excluding Blackwell). Capacity would need to grow 280 GW in our base case (42.3 Bcf/d) without efficiency improvements.
  • Data centers are among the least sensitive to power prices, in our view, due to the robust economics of the underlying businesses (Big Tech), the ability to pass on costs to consumers and the intense competition among participants to win the AI race.

EIR’s analysis pulls from a variety of Enverus products including Enverus Intelligence® Research, Energy Transition Research and Enverus Foundations ® Power & Renewables.

You must be an Enverus Intelligence® subscriber to access this report.

About Enverus Intelligence Research
Enverus Intelligence ® | Research, Inc. (EIR) is a subsidiary of Enverus that publishes energy-sector research focused on the oil, natural gas, power and renewable industries. EIR publishes reports including asset and company valuations, resource assessments, technical evaluations and macro-economic forecasts; and helps make intelligent connections for energy industry participants, service companies and capital providers worldwide. EIR is registered with the U.S. Securities and Exchange Commission as a foreign investment adviser. Enverus is the most trusted, generative AI and energy-dedicated SaaS company, offering real-time access to analytics, insights and benchmark cost and revenue data sourced from our partnerships to 98% of U.S. energy producers, and more than 35,000 suppliers. Learn more at Enverus.com.

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