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G7 Wants to Transition, LNG Construction Costs Rise

Good morning; here's what the Oilman has for you today:
G7 Vows To Speed Up Energy Transition
The U.S. LNG Boom Flounders Amid Soaring Costs
Tweet of the Day

G7 Vows To Speed Up Energy Transition
The seven wealthiest countries in the world just pledged to speed up the rollout of wind and solar and reduce fossil fuel consumption.
The G7 stopped short of setting firm deadlines for the phaseout of oil, gas, and coal.
All talk, little action
There’s barely a meeting of the world’s wealthiest nations that doesn’t feature some sort of a transition commitment.
Even that meeting last year when the G7 plotted the energy sanctions on Russia, they talked about the transition.
They would probably talk about the transition if they met to discuss military spending.
But here’s the thing: it’s all talk.
Sure, there’s the…
IRA in the U.S.
The Green Deal in Europe
And the UK really wants to become the Saudi Arabia of wind…
But at the same time, oil and gas consumption among the G7 is rising.
Except for Germany, but that’s because gas has become so expensive.
The global oil and gas demand is rising, too. So whatever pledges the G7 makes, they’ll need to bring the rest of the world on board.

Why doesn’t Greta protest China’s new coal plants?
It’s a joke many transition skeptics are making.
And the reason it’s funny is simple.
The G7 can make any pledges they like. They can even take some action on them.
But it will all be useless unless the rest of the world follows.
This will be tough.
Because the rest of the world doesn’t care where its energy comes from.
It also doesn’t have billions to spare on boosting wind and solar capacity and switching from often second-hand dominated car markets to EVs.
The “energy transition” remains a rich kids’ game.
And even the richest seven kids are not rich enough for it.

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Cameron Snow is the co-founder of Danomics, a cloud-based interpretation platform to help the oil and gas industry keep up with digital transformation and leverage new technologies such as machine learning.
On this episode, Cameron and Adam discuss:
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What success looks like
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The U.S. LNG Boom Flounders Amid Soaring Costs
Rising costs and intensifying competition are slowing down the expansion of LNG production capacity in the United States.
What’s more, investment commitments are getting harder to come by amid concerns about the projects’ long-term viability.
Gas or transition. You can’t have it both ways.
The boom in future U.S. LNG supply has been hailed as a game-changer for the world’s energy security.
Especially Europe’s.
But there’s a but. Of course, there’s a but.
Europe is dead set on the energy transition, and high-ranking officials have repeatedly said there is no alternative to it.
This means that any LNG imports the continent now needs are a medium-term thing.
Investors in billion-dollar LNG plants don’t like the sound of that. Would you?
So, even though demand is booming – and that’s driving greater competition among producers – financing the new capacity is getting harder.
There’s trouble on the ground as well
“It’s dramatically more expensive,” Tellurian’s CEO Charif Souki told the FT. “There are fewer and fewer construction companies that can actually handle these kinds of loads.”
Inflation and a tight labor market: a recipe for LNG capacity boost disaster.
Because of higher construction costs, LNG export hopefuls have even been forced to try and renegotiate long-term offtake deals.
Offtakers sure haven’t loved this, casting a shadow over the prospects of many a planned project.
On top of the inflation, labor, and higher interest rates problems…
And all that’s happening right when demand is strong, and U.S. gas is cheap because of excess production from oil wells.
The universe sure loves irony.

Around the Global Patch
🇮🇶 Iraq & Kurdistan reach agreement on oil exports.
🇫🇮 14 years behind schedule, Europe’s largest nuclear reactor now online.
🇰🇿 Kazakhstan oil workers protest, arrested.

Tweet of the Day
First night of Germany's grid without nuclear: it's bad.
It's night. No sun. Wind has dropped to almost nothing.
Most of German "renewables" right now is richly-subsidized bioenergy with half the net CO2 emissions of an efficient gas power plant.
Importing nuclear from France.
— Mark Nelson (@energybants)
3:03 AM • Apr 17, 2023

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