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🛢️Chevron Averts LNG Supply Disruption

Louisiana Judge Orders DoI to Expand Gulf Lease Sale Area

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The Oilman
September 25th, 2023

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  • Chevron Averts LNG Supply Disruption

  • Louisiana Judge Orders DoI to Expand Gulf Lease Sale Area

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Chevron Averts LNG Supply Disruption

Chevron and workers at its two LNG facilities in Australia have struck a new wage deal that will end industrial action that started earlier this month.

This will avert supply disruptions at a crucial time in LNG markets.

But it’s still unclear if there will be enough LNG for everyone.

Winter is coming

When the news broke that workers at the Gorgon and Wheatstone projects were preparing to strike, gas prices in Europe skyrocketed.

Then, they calmed down as the danger of disruptions was averted.

But it’s late September, and LNG importers are stepping up purchases.

China recently booked 30 LNG cargos on the spot market.

Even though Chinese buyers have been busy closing long-term supply deals.

Meanwhile, Europe’s gas storage is already full to the brim.

But it won’t be enough for the whole winter.

So, Europe might need to start paying for floating storage.

That won’t affect inflation at all, right?

The market’s one outage away from a price surge

We saw it last year when Freeport ran into trouble.

Gas prices skyrocketed immediately.

It’s going to happen again if there’s another outage anywhere.

And outages are not exactly uncommon for LNG plants.

Stuff happens. These are complex facilities.

The LNG market is in a precarious balance.

And it could lose it at any point.

Imagine being entirely dependent on LNG imports for your energy security…

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Louisiana Judge Orders DoI to Expand Gulf Lease Sale Area

In August, the Department of the Interior shrank the area it was going to auction for oil and gas exploration in the Gulf.

Now, a Louisiana judge has ordered it to expand to its original size of 73.4 million acres.

“Weaponization of the Endangered Species Act”

The BOEM cut the lease sale area on concern about the habitat of an endangered whale species.

The move followed pressure from environmentalists.

It's funny how no green group is calling for an end to offshore wind, which is causing more whale deaths.

Anyway, at the time, the BOEM said it would offer 6.7 million acres in the September 27 lease sale.

It also said it would limit the traffic of vessels in the area for the whales.

The API, Chevron, and Shell sued.

And they won.

The DoI got called out again on its attempts to interfere with the industry.

That’s how you get insufficient oil and gas investments

Government interference or, rather, deliberate attempts to hurt the industry is how you get supply deficits.

Companies can’t risk making massive investment decisions under the threat of ever more constraints.

Even though demand for oil and for gas remains robust and growing.

It’s a ridiculous situation.

You have to demand, and all you need is to get the supply to those with the demand.

But your government is constantly putting obstacles in your way.

Then it starts complaining about high prices.

They probably see nothing wrong with this at the DoI.

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Around the Global Patch

🇮🇳 ONGC gears up for offshore facility tender.
🇨🇳 China plans a second FPSO for deep-water oil reserves.
🇷🇺 Russian fuel export ban boosts oil prices.

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