Latest news with #energyIndustry
Bloomberg
15 hours ago
- Business
- Bloomberg
China's Gas Sector Lobbies for More Power Plants to Boost Demand
China's natural gas producers are lobbying Beijing to increase the number of power plants that run on the fuel, in a bid to help prop up faltering demand. The power sector — which currently accounts for 18% of China's gas consumption — is viewed by the industry as a key engine of growth, according to people involved in advising on energy policy. Under the sector's latest proposal, China would build nearly 70 gigawatts of new gas-fired capacity by 2030, an almost 50% increase from 2025's estimated level, they said, asking not to be named as the plan is not public.
Globe and Mail
20-05-2025
- Business
- Globe and Mail
MEG Energy could attract higher offers in wake of Strathcona's $5.9-billion bid, analysts say
Strathcona Resources Ltd.'s SCR-T $5.9-billion unsolicited takeover bid for MEG Energy Corp. MEG-T could just be the opening ante in a series of higher offers for the last of Canada's large pure-play oil sands producers. Canada's energy industry has doubled down on oil sands assets in recent years as U.S. and other foreign players retreated from the capital-intensive industry that has struggled with limited access to global oil markets. Sentiment has improved with last year's opening of the Trans Mountain pipeline expansion to the West Coast, which has shrunk the discount on oil sands-derived crude – and growing support nationally for the concept of new pipelines. Last week, Strathcona bid about $23.27 in cash and stock for MEG. A successful deal would make the suitor Canada's fifth-largest oil producer at around 219,000 barrels a day. Strathcona is controlled by Calgary-based Waterous Energy Fund, which is led by former investment banker Adam Waterous. Mr. Waterous has described the two businesses as highly complementary 'doppelgangers,' making it easy to combine them. However, analysts suggest there could be higher offers in the cards for MEG, which has yet to give a formal response to the bid. They cite a who's who of domestic producers as possible rivals. Greg Pardy, analyst with RBC Capital Markets, sees Cenovus Energy Inc. as the most logical acquisitor. Both companies have operations in the Christina Lake region of northeastern Alberta, which could translate into operational savings, he said. However, Cenovus has large expenditures under way to add its own production and improve performance at its U.S. refineries. That could be dealt with by selling some of its international assets, such as those in the South China Sea, Mr. Pardy wrote in a note to clients. He also floated Imperial Oil Ltd. as a possible white knight as MEG's assets would complement its own steam-assisted gravity draining oil sands operations. However, the company has significant spending on tap for its own projects in the Cold Lake area, he noted. Imperial Oil, the Canadian affiliate of Exxon Mobil Corp., has often been speculated as an acquirer of companies, but has rarely made large acquisitions. Travis Wood, analyst at National Bank Financial, said he believes Strathcona's offer for MEG Energy is low, arguing a bid for the company should reflect a takeover price of $24-$26 a share, based on 2026 financial estimates. An offer based on longer-range estimates and potential savings could lift that price tag to $28-$29.50 a share, but that cuts down the list of potential suitors, Mr. Wood wrote in a research report. Canadian Natural Resources Ltd. tops Mr. Wood's list, based on the likelihood of large costs savings stemming from the company's acquisition several years ago of the Canadian assets of Devon Energy Corp., which are in close proximity to MEG's operations. The company has for years increased its holdings in the oil sands with large deals, most recently last year's takeover of Chevron Corp.'s Canadian assets. Broadly, he expects more merger and acquisition activity in the Canadian oil patch, following on the heels of other takeovers, including Whitecap Resources Ltd.'s just-closed $6-billion takeover of Veren Energy. 'The Canadian energy sector has witnessed some interesting transactions so far this year, both from a corporate and asset-level transaction perspective, with what we believe is a goal to expedite, unlock and expand value for shareholders,' he wrote. He said ARC Resources Ltd. is another potential takeover target, based on its liquids-rich natural gas reserves in the Montney region. Oil sands producers covet such production as a blending agent that allows heavy crude to flow in pipelines.
E&E News
09-05-2025
- Business
- E&E News
Has US oil production peaked? CEO reopens debate.
'Drill, baby, drill' has hit peak oil. Oil and gas leaders have been saying for a while that oil production in the United States could be headed for a plateau — in a few years. Maybe it would start declining in the early 2030s. Not many industry executives have been willing to use the word 'peak,' much less say that the peak was happening — even as oil prices steadily sank. Advertisement But Travis Stice, the chair and CEO of Texas-based Diamondback Energy, said that part out loud this week. With fewer rigs and crews in the field, he told investors he sees output going down for the first time in a long time. It is 'likely that U.S. onshore oil production has peaked and will begin to decline this quarter,' Stice said in a letter to investors released Monday. 'This will have a meaningful impact on our industry and our country.' 'Peak' is a strong word in the oil business. It brings back talk about the once widely held concept that the world was running out of oil. That view was largely put to rest in the 2010s when U.S. producers used advances in hydraulic fracturing to tap sources of oil previously considered too difficult and expensive to exploit. That led directly to the United States going from a net importer to the world's top producer. But that rise seems to be ending, if slowly. The shale business was maturing even before talk of tariffs started raising concerns about the U.S. economy and driving up the cost of steel. And geology has stopped cooperating. Many of the best sites for drilling have been tapped and it's getting more expensive to get significant amounts of new oil out of the tight shale formations that fueled the country's extended boom. Now those tariff worries, economic uncertainty and talk of a global oil surplus are weighing on the closely watched price of oil. The benchmark U.S. crude spot price was $58.50 a barrel on Monday, according to the U.S. Energy Information Administration. That marked a drop of about $20 from the week before President Donald Trump took office in January. On Thursday, oil futures in New York were trading at about $60 a barrel. The oil price is at depths rarely seen in the past 20 years, Stice said, and the U.S. oil business is at 'a tipping point.' Travis Stice is the CEO of Diamondback Energy. | iStock/Diamondback Energy It's an ironic time for the boom to peak. Trump is enacting what might the most pro-oil agenda since the rise of the environmental movement, ripping protective regulations out by the roots and pushing new fossil fuel projects, sometimes with more fervor than the industry itself. But that isn't putting more drill bits in the ground. Diamondback said it is dropping three rigs and a completion crew at least until fall. Other big players are pulling back, too. On Thursday, Houston-based ConocoPhillips said it was lowering its capital spending plans for the year. In a good sign for Trump, gasoline prices have remained relatively low. The U.S. average price for a gallon of regular gasoline was $3.152, AAA reported Thursday — nearly 49 cents cheaper than a year earlier. But experts say the drop is largely tied to economic uncertainty, not increased drilling. The Trump administration says its efforts, in the long term, will both lower prices and let businesses prosper. 'While prices are going to move up and down in the short term, the Trump administration is focused on changing policies, changing the investment climate for businesses in this country, all big wins for the American people and why the President was elected in the first place,' Department of Energy spokesperson Ben Dietderich said in an email. Nicole Schomburg, a senior director at FTI Consulting, which works with many of the oil and gas companies that drove the shale boom, says the U.S. industry is better prepared now than it was for recent price dives in 2014 and 2020. 'People have claimed we're going to see peak oil or that the 'shale bubble' will burst for years. But that hasn't happened,' Schomburg said in an email exchange, 'and one of the big reasons why is because the world has continued to demand more oil than many 'experts' thought.' But as the leader of a top independent producer in the country's dominant Permian Basin oil play, Stice's words carry some weight. And the geological 'headwinds,' he said, are starting to outweigh the 'tailwinds' the industry had enjoyed from technological advances and finding new efficiencies. The head of Occidental Petroleum is also using what might be called 'the p-word,' if a bit less strongly. In an earnings call Thursday, CEO Vicki Hollub said the company had expected a peak in U.S. production sometime between 2027 and 2030, but the growing economic uncertainty means 'it's looking like peak could come sooner.' Trump's outreach to the oil barons always had a contradiction at its heart. 'Drill, baby, drill' sounds great at a rally. But it doesn't necessarily go over as well in a boardroom where company leaders want demand to go up along with prices. Oil executives worried during the 2024 presidential campaign about the prospect of a trade war that could dampen the economy and cool demand. Still, backing Trump was an easy call for many oil executives even as oil production hit world records under then-President Joe Biden. Trump wooed them with promises of deregulation, and they showered him with millions of dollars to fuel his return to power. And the president has delivered on deregulation with an avalanche of executive orders dismantling Biden's agenda aiming at reining in the effects of climate change. As welcome as those orders may be for oil producers, they can't make up for the lower demand caused by the forces that Stice recounted to his investors — global economic worries and a looming boost in supply from OPEC+ producers around the world. Diamondback estimates that the number of fracking crews is down 20 percent in the Permian this year. That means it's down about 15 percent across the country, said Stice, who later this month is set to give up his CEO title and become executive chair of the company he's run as chief executive since 2012. The oil rig count, he said, will likely be down 10 percent by the end of June and still headed downward. Tariffs are starting to bite as well. At Diamondback, Stice said, they have driven up the cost of casing more than 10 percent. For his company, that adds up to nearly $40 million annually. Still, he isn't saying drilling is going to stop. Stice said in his letter that Diamondback would produce 480,000 to 495,000 barrels of oil a day this year, down slightly from an earlier estimate. 'To use a driving analogy, we are taking our foot off the accelerator as we approach a red light,' Stice said in his letter. 'If the light turns green before we get to the stoplight, we will hit the gas again, but we are also prepared to brake if needed.' A green light, he explained during an earnings call this week, means an oil price of $65 to $70 per barrel. That's about $5 to $10 higher than benchmark U.S. oil futures were trading Thursday. Reporter Shelby Webb contributed.
