Good morning; here's what the Oilman has for you today:

• Offshore Drilling FTW

• China Turns into World’s Biggest Refiner

• Tweet of the Day

Offshore Drilling FTW

The daily rates for offshore drilling rigs have surged to half a million dollars over the past year, and they are going to climb higher, too.

That’s what Wood Mackenzie has forecast, saying the offshore drilling market is at a tipping point.

Golden times for the Golden Triangle

Most of the surge in offshore drilling will come from the deep waters around North America, South America, and Africa, per Wood Mac.

The reason is not just that this is the only place left with big enough oil reserves.

Apparently, there is also an emissions element: deepwater drilling is lower-emission than alternatives.

Who’d have thought, right?

The day this report came out was a bad day for activists.

But a good day for energy security.

“Higher oil prices, the focus on energy security and deepwater’s emissions advantages have supported deepwater development and, to some extent, boosted exploration,” said a Wood Mac analyst.

Say what? More exploration?

The IEA won’t be happy to hear that. It just predicted peak oil demand in 2028.

1.1 Billion Reasons

There are a lot of reasons why deepwater rigs’ day rates are rising, and exploration is picking up.

The thousand, million, billion reasons of millions of energy-loving people can be summed up in this term:

Energy demand.

That’s why Big Oil shareholders voted against climate resolutions.

That’s why BP and Shell are making a U-turn on oil and gas.

And that’s why Gibson Energy just bought the South Texas Gateway from Buckeye Partners.

Energy demand — it’s what everyone needs (and wants).

One doesn’t spend $1.1 billion on an oil export terminal unless you expect more of it.

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China Turns into World’s Biggest Refiner

China last year overtook the U.S. to become the country with the biggest refining capacity and is still building refineries.

By 2028, China will become the biggest supplier of fuels, essentially cornering the global fuels market.

Another trap we sleepwalked into

In the past three years, U.S. refiners have been shutting down refineries because they became uneconomical.

Blame those biofuel blending mandates.

Some have been converting their refineries into biofuel plants. Guess why.

Yep. Those blending mandates again.

Meanwhile, China has been building new refineries like crazy.

Per the IEA, by 2028, China will have total capacity of 19.7 million bpd.

Of this, 3.2 million bpd will be spare capacity.

But we can just switch to EVs, right?

Yeah, sure, we can all switch to EVs and make carmakers and Gavin Newsom happy but…

Guess who’s cornered the battery mineral supply?

That’s right, China.

Which, by the way, is the biggest EV market in the world.

And yet it’s building new refineries like it knows something the rest of us don’t.

For example, the fact that you can’t go 100% EV, not easily, at least.

China is covering all bases, literally.

It will be selling gas and diesel to the rest of the world under its own terms.

This might be the time our leaders woke up from their sleepwalk into disaster.

Around the Global Patch

🇹🇷 Erdogan's election win: Turkey's oil and gas implications.
🇨🇳 Weak Chinese data spurs oil demand worries.
🇷🇺 Russia greenlights Yamal LNG exports: Germany's role.

Tweet of the Day

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