Analyst Takes

Analyst takes: Essential September energy trends to keep an eye on

byChris Griggs

As we step into October, it’s a great opportunity to reflect on the energy trends of the previous month. The expert team at Enverus Intelligence® | Research (EIR) has meticulously evaluated key trends and developments to bring you valuable analyst perspectives, supporting your business decision-making process. By being informed, you prepare yourself to jump at the potential energy opportunities that 2023 has to offer. Read further to get the latest insights and stay attuned to the pulse of the energy marketplace.

What, me worry? Risks as Brent approaches $100/bbl (Sept. 27, 2023)

Brent has yet to hit EIR’s $100/bbl target, but the rally has largely fulfilled the bullish price expectations EIR has held since 4Q22. Oil prices continue to strengthen despite President Biden employing the SPR and making attempts to lower tensions with Iran, Venezuela and Saudi Arabia to open avenues for possible increases in supply. Absent a major recession, EIR forecasts Brent prices to stay above $90/bbl throughout 2024. 

ERA partners with Cenovus on advanced reactor study (Sept. 19, 2023)

In a recent move signaling Alberta’s commitment to the energy transition, the province has greenlit funding for a study on the deployment of small modular nuclear reactors for oil sands operations. Backed by a $7 million investment from the Technology Innovation and Emissions Reduction Fund, this partnership with Cenovus positions nuclear energy as a potential game-changer in reducing emissions from Alberta’s oil sands. For operators, embracing small modular reactor technology could offer a strategic pathway to participate in the energy transition that aligns them with global net-zero ambitions. EIR believes advanced reactors are uniquely positioned as the optimal solution for remote regions with industrial heating and power needs. As the energy landscape evolves, having a concrete energy transition strategy becomes increasingly vital. EIR’s report, “Energy Transition Opportunities for Upstream Participants” lays out a variety of other ways operators can secure the future of their business in a changing energy landscape.

CVX decarbonizes with ACES hydrogen hub (Sept. 15, 2023)

CVX’s recent acquisition of a majority stake in the Utah ACES Delta project will provide the financial strength and energy market expertise to scale low-carbon hydrogen development, in EIR’s opinion. They believe the company can enhance demand for this lower intensity product by replacing grey hydrogen along its value chain and leveraging its brand equity to secure third-party offtake agreements. In addition to its existing agreement to supply green hydrogen for power generation, EIR thinks the project would see incremental demand should the EPA’s proposed power plant emissions standards move forward. From a technical perspective, the project may face a low electrolyzer capacity factor from the use of excess renewable energy, which would dampen project economics assuming they are not purchasing renewable energy credits when there isn’t a surplus of renewable electricity.

South Dakota snubs summit (Sept. 12, 2023)

Summit Carbon Solutions’ CO2 pipeline route permit application has been rejected by the South Dakota Public Utilities Commission. The project has nearly 500 miles of planned CO2 pipeline through South Dakota to collect and transport up to 12 mtpa of CO2 emissions from more than 30 Midwest ethanol plants for permanent storage in North Dakota. Of the 32 ethanol facilities Summit highlights on their proposed route, EIR estimates 3.6 mtpa of CO2 emissions with an average capture breakeven of $50/tonne. The route application for this project was also denied in North Dakota, but Summit is appealing that decision. This setback could remove at least eight emitting facilities and 0.9 mtpa of emissions from the project that are located in South Dakota, and all but guarantees the project will miss its planned 2024 start. An alternative route could see the pipeline network extend through Minnesota to bypass South Dakota and connect the remaining ethanol plants to the planned North Dakota storage site, however route rulings for Minnesota, Nebraska and Iowa are still in progress.

This vote follows South Dakota’s rejection of Navigator’s Heartland Greenway CO2 pipeline, although the South Dakota portion represents only 112 of 1,348 total miles of planned pipeline and three of 21 capture facilities. Nonetheless, opposition to CO2 pipelines across the Midwest from both the public and government remains strong and will add significant delays for any proposed pipeline project.

EPA’s emission quantification changes could significantly impact industry targets and increasing tax liabilities (Sept. 11, 2023)

The U.S. Environmental Protection Agency’s proposed emission quantification process changes would have raised 2021 methane emissions by 130% and CO2e emissions by 41% in the upstream and gathering sectors. The addition of super-emitter events and changes to equipment leaks, combustion slip and flaring efficiencies are the most impactful revisions that would particularly affect the Appalachian and Permian Basins. The proposal could lead to more facilities exceeding the methane fee threshold in the future. The unit cost of the fee is low in aggregate, but may lead to shut-ins for lower-producing, higher-emitting assets that will be disproportionately impacted. Overall, these changes will affect emission targets and EIR estimates it would have increased methane fee liabilities threefold to $2.9 billion, had the tax and proposal been in place in 2021.

Saudi Arabia manages crude markets (Sept. 5, 2023)

Saudi Arabia has extended its voluntary 1 MMbbl/d oil production cut until the end of 2023. The cut drove Brent crude prices as high as ~$91/bbl on Sept. 5. The cut compliments the bullish oil view from Enverus and increases EIR’s conviction that Brent prices will touch $100/bbl by the end of 4Q23. EIR has held firm on our bullish call, despite this past summer’s wave of bearish price outlook downgrades.  

In the bustling world of the energy industry, Enverus Intelligence® | Research (EIR) knows the importance of staying up with the latest trends for making insightful business decisions. We encourage you to keep connected with us on LinkedIn for regular updates and impactful insights into the energy forecast for October and the future. Rely on EIR for the expert guidance required to steer through the constantly transforming energy sector.

*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. See additional disclosures here.

Chris Griggs

Chris Griggs

Chris Griggs is the product marketing manager for Enverus Intelligence® | Research (EIR) and Trading & Risk at Enverus, where he 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. 

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