As markets reel from the coronavirus crisis, prices available to oil and associated gas producers have fallen to single digits in Western Canada and turned negative in parts of North America, according to the International Energy Agency (IEA). Analysts expect some existing production will soon grind to a halt.
Reacting to the freefall in energy demand due to coronavirus lockdowns, Moody’s has lowered its price band for Henry Hub gas to $2.00-$3.00 per million British thermal units (MMBtu) for 2020. Analysts said this forecast could be cut further if economic weakness due to the pandemic drags on.
Origin Energy, the Australian upstream company and utility, has slashed its capital expenditure in reaction to the global Covid-19 outbreak but maintained guidance for earnings and profits in FY2020. CEO Frank Calabria reassured investors on the utility’s resilient balance sheet, saying there was “significant headroom” in its debt covenants at current oil prices.
Large tech players – Amazon, Apple, Facebook, Google and Microsoft – are migrating hyperscale data centres to renewable energy. Some 10% of new solar and wind power projects in the U.S. are now underpinned by corporate Power Purchase Agreements (PPAs) and often backed up by onsite energy storage units.
Covid-19 contingency measures have slashed U.S. energy demand, so upstream companies try to sell the surplus abroad. Pipeline gas deliveries to Mexico and feedstock for LNG export terminals hit over 15 billion cubic feet per day (Bcf/day) in the week ending March 30, edging up further since.
German storage company Tesvolt has kicked off production in Europe's first Gigafactory for commercial battery storage systems." Situated in Wittenberg, the factory can currently produce storage systems of 1 MWh per day and 255 MWh per year. Tevolt aspires to ramp up output to 1 GWh.
New technologies to produce green hydrogen will allow for 34% of global emissions to be cut “at manageable cost,” Bloomberg New Energy Finance finds. Excess renewable energy can be turned into hydrogen at $0.8 to $1.6/kg in most parts of the world before 2050, which would make it competitive with gas prices in Brazil, China, India and Germany.
Pakistan’s K-Electric has been approved to use up to 150 million cubic feet per day (mmcf/d) of LNG for its 900 MW power station at Bin Qasim, Karachi. State-run Pakistan LNG Ltd signed contracts to import 800 mmcf/d of LNG, mainly from Qatar and the commodity trader Gunvor.
Japanese manufacturers Marubeni and IHI Corp are conducting a feasibility study on ammonia co-firing in thermal power plants run by JERA, Japan’s leading LNG importer and power producer. Ammonia stores hydrogen at low cost and can be directly used as a fuel to generate electricity.
As the UK is on lockdown and most people are working from home, the electric load on the grid has increased and spread. National Grid is coping mainly because factories, shops and rail are winding down, causing a 9% drop in electricity demand on March 23 with further falls ahead.
As China strives to rekindle its economy, after strict lockdowns in January and February to contain the coronavirus, energy demand slowly recovers. Beijing lowered gas prices for industrial users, but Wood Mackenzies deems it’s insufficient to stir a lost-demand recovery and new coal-to-gas switching.