Energy Pulse: in brief (4th August)
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A record solar buildout is expected in all regions in 2023
Projections in Wood Mackenzie’s latest Global Solar PV Market Outlook show that the industry’s buildout is continuing to accelerate in all regions. We expect to see PV installations to hit a new record in 2023 at nearly 270 gigawatts DC.
We expect the pace to continue to accelerate, reaching 330 GW DC a year by 2032, driven by ambitious renewable energy targets and policy support, increased electrification, coal plant phaseouts, energy security concerns, and falling costs.
China will continue to lead PV manufacturing for at least the next five years, although we expect the focus of Chinese exports to shift from modules to upstream cells and wafers. Policy incentives for local PV manufacturing in the US, Europe and India are not expected to significantly chip away at China’s market share in the near term.
Meanwhile, massive expansion of manufacturing capacity in China is pushing solar installations to record levels.
The UK government has begun the consultation for its review of the long-term fiscal regime for oil and gas, which will exclude consideration of the Energy Profits Levy
As promised in the chancellor's autumn statement last year, the UK Treasury has now issued a call for evidence from stakeholders for its review of oil and gas taxation. The document states that the focus is on the long-term future for the fiscal regime rather than the short term changes, and so changes to the Energy Profits Levy (EPL) will not be considered.
The exclusion of the EPL will be a major blow to investors in the UK Continental Shelf. As our analysis has shown, since it was introduced and then extended last year, the EPL will result in an additional £26 billion or revenue going to the UK government and causing a slowdown in investment, with some operators considering their options elsewhere. Operators in harvest mode, representing most of the UKCS, are worst impacted since they do not generally benefit from the Investment Tax Allowance, which helps long-lead projects such as Rosebank.
The focus on the "permanent" tax system and not the EPL which the current government plans to remove in 2028, avoids the most pressing issue facing the industry.
OMV has made the largest gas discovery in Austria for 40 years
OMV has confirmed the largest Austrian gas find in 40 years from the Wittau Tief-2a exploration well. Initial estimates indicate recoverable resources of around 160 billion cubic feet of gas, which if realised, could boost OMV’s gas production in Austria by 50% from around 51 million cubic feet per day in 2022. The find is the first significant discovery following OMV’s extensive onshore 3D seismic study which it completed in 2019.
The well is located around 10 kilometres east of Vienna and was drilled to 5,000 metres after 5 months of operations. OMV is considering various appraisal and development options for the discovery.
Production in Austria has been falling since the mid-2000s, with the majority of investment at existing fields focusing on secondary and enhanced recovery techniques to manage natural decline. Heightened gas supply risks in Europe have increased the appetite for countries to develop their own domestic production.
TotalEnergies has begun development drilling in Uganda
In July, TotalEnergies and partners CNOOC and UNOC started drilling on the Tilenga project in the Lake Albert region of Northwest Uganda. The first 12 wells will be on the large Jobi-Rii field, and over 400 wells are planned across the entire project.
This is a significant milestone towards Uganda becoming an oil producer. Up to 70 wells are planned at Tilenga ahead of our expected start-up in 2026.
The Tilenga news follows CNOOC’s completion of its first development well at the Kingfisher field. Around 80% of the volumes from the projects are expected to be exported through the port of Tanga in Tanzania, via the yet-to-be constructed 1,400-kilometre East Africa Crude Oil Pipeline (EACOP).
ADNOC has completed the world’s first carbon dioxide injection well in a carbonate saline aquifer
On 21 July, the Abu Dhabi National Oil Company (ADNOC) announced the completion of the world’s first dedicated CO2 injection and storage well in an onshore carbonate saline aquifer in the United Arab Emirates. Drilling commenced in January 2023.
More than 70% of hydrocarbon resources in the Middle East are found in carbonate reservoirs. Yet, CO2 injection in carbonate saline aquifers remains unknown territory for most operators. Exploring CO2 injection in the gigatonne-scale capacity potential of saline aquifers can provide the scale of storage needed to offset emissions in the region.
The CCUS project pipeline out to 2030 and beyond highlights the opportunity for the Middle East to significantly increase its contribution to global capacity. ADNOC intends to boost carbon capture and storage capacity to 5 million tons per year by 2030.
Private equity capital is flowing into the US Gulf of Mexico
Westlawn Group has submitted an assignment of interest to the US Bureau of Offshore Energy Management to acquire interests in the Spruance and Winterfell fields. The ownership structure of Westlawn is unknown, but we understand the company is backed by private equity.
The US Gulf of Mexico corporate landscape has been expanding over the last two years to include several new privately held companies, but their footprint is not yet material. However, Westlawn could buck the trend of recent private entrants. Its acquisitions in the US Gulf have primarily involved Beacon as the seller, and the partnership between the two companies could signal rapid growth in the basin.
The latest on the claim of a first-ever room-temperature superconductor
There have been some early signs of support for the team of scientists in South Korea who say they have discovered a material that is a superconductor at room temperature, a potentially revolutionary breakthrough. But there is still widespread scepticism among scientists that this putatively world-changing discovery is real.
A researcher at the Lawrence Berkeley National Laboratory in the US wrote a letter saying her modeling suggested the material discovered by the Korean team, a lead-phosphate apatite known as LK-99, “displays many key characteristics” needed for room-temperature superconductivity. She added that the “tantalizing” theoretical characteristics of the material, and the Korean team’s experimental results, would “spur on further investigations” of lead-phosphate apatite and similar materials.
Meanwhile, a team from the Huazhong University of Science and Technology in China said they had produced a small amount of LK-9, and posted a video apparently showing magnetic levitation, a property that can be a sign of superconductivity.
Thanks for this week’s Energy Pulse in brief to Michelle Davis, Gail Anderson, Lewis Lawrence, Paul McManus and James Blackwood.