Norway's overall gas production will be lower than planned in the coming weeks due to an extended outage at Shell's (SHEL.L)Nyhamna processing plant, gas infrastructure operator Gassco said in a statement to Reuters on Friday. Shell on Tuesday extended an ongoing maintenance outage at the plant by nearly a month to July 15 and stopped all non-essential work after discovering a gas formation with hydrogen when cleaning a water-based cooling system. Norway is Europe's biggest gas supplier following sharp cutbacks in Russian deliveries amid the war in Ukraine. Shell on Friday said investigations at Nyhamna were continuing amid a "complex situation" and that local and international experts were working to tackle the problem. The company said step-by-step measures taken this week had reduced the gas formation in the cooling system. All other work at the site remains on hold for the time being, it added but did not provide any fresh projections on the length of the outage. Gassco said this will lead to lower Norwegian output. "Considering the overall period the plant is shut down, overall production from the Norwegian continental shelf will be lower than planned," a spokesperson for the gas infrastructure operator said. It would be up to the market to decide at which European delivery point the reductions may occur, the spokesperson added. Norway exports gas via pipelines to Britain, Germany, France, Belgium and Denmark. Nyhamna processes gas from the Ormen Lange and Aasta Hansteen fields, with the outage cutting 79.8 million cubic metres (mcm) of export capacity per day from the plant. Norwegian overall gas flows typically top out at just over 340 mcm per day when operating at full capacity. Norway's Petroleum Safety Authority (PSA) said on Friday it had not yet started a formal investigation but was closely following the incident. "I don't have any information about the incident itself to share," a spokesperson for the PSA said.

Oil and gas deals in May 2023 topped the value of May 2022 agreements despite the smaller number of transactions, according to a report from S&P Global Market Intelligence. May transactions this year numbered 24 but had a combined value of $30.33 billion, compared to 37 transactions with a combined value of $6.29 billion in the same period last year, according to data from the business intelligence firm. Nine asset transactions totaling $4.55 billion were recorded for May 2023, compared to 33 asset deals with an aggregate value of $2.85 billion in May 2022. ### **ONEOK Acquisition** The largest transaction to date for the year is the acquisition of Magellan Midstream Partners by ONEOK in a deal worth nearly $19 billion. In May, ONEOK said it would acquire all outstanding units of Magellan in a cash-and-stock transaction valued at approximately $18.8 billion, including assumed debt, “resulting in a combined company with a total enterprise value of $60 billion”. Magellan will be merged into a newly created, 100 percent wholly owned subsidiary of ONEOK, and the acquisition “creates a more resilient energy infrastructure company that is expected to produce stable cash flows through diverse commodity cycles”, the companies said. “The combination of ONEOK and Magellan will create a diversified North American midstream infrastructure company with predominately fee-based earnings, a strong balance sheet, and significant financial flexibility focused on delivering essential energy products and services to our customers and continued strong returns to investors,” ONEOK President And CEO Pierce H. Norton II said. “Our expanded products platform will present further opportunities in our core businesses as well as enhance our ability to participate in the ongoing energy transformation with an increased presence in sustainable fuel and hydrogen corridors. We are excited about the future of our combined companies and look forward to welcoming Magellan’s well-respected employees to ONEOK," Norton added. ### **Chevron’s Acquisition of PDC Energy** The second-largest transaction of 2023 to date is Chevron Corp.’s purchase of PDC Energy for nearly $8 billion, according to S&P Global. In May, Chevron said that it had entered into a definitive agreement with PDC Energy to acquire all outstanding shares of PDC in an all-stock transaction valued at $6.3 billion, or $72 per share. Based on Chevron’s closing price on May 19, and under the terms of the agreement, PDC shareholders will receive 0.4638 shares of Chevron for each PDC share, Chevron said, adding that the total enterprise value, including debt, of the transaction was $7.6 billion. Chevron said in a statement that the acquisition of PDC provides it with high-quality assets expected to deliver higher returns in lower carbon intensity basins in the USA. PDC brings strong free cash flow, low breakeven production, and development opportunities adjacent to Chevron’s position in the DJ Basin, as well as additional acreage to Chevron’s leading position in the Permian Basin, the company said. Enverus Director Andrew Dittmar told Rigzone in an earlier report that the deal makes Chevron an even more formidable operator in Colorado “by tacking an additional 275,000 net acres onto the significant DJ position the company acquired in 2020 with its purchase of Noble Energy”. ### **ConocoPhillips Asset Deal** The largest asset deal of 2023 to date is ConocoPhillips's purchase of the remaining 50 percent interest in the Surmont oil sands project in Alberta from Total E&P Canada Ltd. for around $3 billion. “Long-life, low-sustaining capital assets like Surmont play an important role in our deep, durable, and diverse low-cost-of-supply portfolio. Upon close, we look forward to leveraging our position as 100% owner and operator of Surmont to further optimize the asset while progressing toward our overall interim and long-term emissions intensity objectives”, ConocoPhillips Chair and Chief Executive Ryan Lance said.

Australian oil and gas producer Senex Energy has agreed on a deal with fellow Australian company AGL for the supply of gas. Australia’s largest power company, AGL will purchase 42 petajoules (PJ) of gas from Senex in January 2025. The gas will come from Senex’s prospective Atlas expansion of its Surat Basin gas field. Ian Davies, Senex CEO, stressed the importance of the deal, stating: “The [Australian Competition and Consumer Commission] and Australian Energy Market Operator have forecast structural gas shortfalls in the east coast market without new supply in the coming years and have warned of the urgent investment needed to ensure enough supply.” The Atlas field expansion will provide a 50% expansion of Atlas’ gas production, increasing the field’s yield up to 18PJ per year. The facility is Australia’s first field solely designated towards domestic gas supply. Senex was awarded land for the field’s expansion and invested $708m (A$1.03bn) to increase both this and the nearby Roma North field. In total, the two are expected to increase Senex’s overall production by 60PJ per year by 2025. This would meet more than 10% of yearly energy demand on the country’s east coast. Davies also noted the importance of Atlas’ gas production in supporting the energy transition. “Gas plays an essential “firming” role for renewable generation by providing fast and reliable electricity to support intermittent, or “non-firm”, solar and wind generation. “Gas is the critical safety net, maintaining the stability of the electricity grid and supporting Australia’s manufacturers as the road to net zero becomes increasingly complex,” Davies added. The expansion of the two projects has been beset by issues, however. Expansion of the two fields was halted in December of 2022 as a response to the Australian Government’s legislation aimed at controlling rising energy prices. The projects are still suspended and the supply deal with AGl hinges on the timely completion of the work at Atlas.

Liquefied petroleum gas (LPG) registers a substantial increase in sales in 2022, exceeding pre-pandemic data, according to the results of the technical report of the Public Services Regulatory Authority (ARESEP). Growth in 2022 was 9% when the country consumed 390.2 million liters of LPG, for a value of ¢94.6 billion (without tax). The highest gas consumption is registered in homes, with 36%; followed by industry with 33%; commercial sector has 17% and stations 14%. The price of gas had a rebound the previous year, due to the growing demand in Asia for the petrochemical industry and the replacement of wood stoves in India, which caused a sustained increase in the international price of this product. However, in January 2022, a decrease in the single tax on LPG was approved in the country, for which consumers saved ¢10,237 million. In the country there are 1,326 registered establishments that sell gas cylinders, which are subdivided into warehouses (3%), exclusive gas outlets (7%) and points of sale such as grocery stores and suppliers (90%). 70% of dealers have an inventory of 20 cylinders or less. In 2022, a new gas cylinder bottling company entered the market: Nanogas, which joins Gas Zeta (with 39.5% of total sales), Tomza/Super Gas (33%), BlueFlame (17 .3%) and Petrogas (9.4%). In the country there are approximately 1,300,000 gas cylinders, which represent 39% of the product sold in the country. Although the Central region is the one in which the lowest percentage of households uses LPG (37%), it is the region that concentrates the largest number of total households in the country, which is why it accounts for the highest residential gas consumption with practically half of the total sales of LPG in cylinders and more than 70% of the points of sale. The use of gas as fuel for vehicles has grown, and thus the market has adapted to provide this product at service stations, for a total of 99 stations that sell LPG, which sell 11 million liters annually. There is also an increase in the number of storage tanks in all regions of the country, going from 6,417 tanks in 2019 to 7,525 in 2022. Gas sales for stationary tanks grew by 23%. During 2022, 68,187 new containers were introduced, of which 44,464 are from gas companies. Due to being in poor condition, 7,586 cylinders were destroyed, mainly aluminum, given the vulnerability of this material. Currently there are 9% aluminum cylinders on the market. The presence of more screw valves in the country is evident, which cover 43% of the market. Thanks to the visits and inspections carried out by ARESEP in the field, 3095 cylinders were evaluated in 335 different establishments. During these visits, 10,740 cylinders were stamped, which were taken out of circulation while the defects found are reviewed and corrected.

Iraq signed several gas and infrastructure deals with Qatar on Thursday as it welcomed the Gulf state’s Emir to Baghdad as part of its push to secure foreign investment in reconstruction. Sheikh Tamim bin Hamad Al-Thani was welcomed by Prime Minister Mohamed Shia Al-Sudani at the airport, images broadcast on Iraqi media showed. Relations between the two countries saw a long period of tension under ousted dictator Saddam Hussein, before easing up over the past decade. Despite Iraq’s immense oil and gas reserves, about one third of the population lives in poverty, and the government is seeking out regional partners to rebuild its war-battered roads, schools and hospitals. Al-Sudani’s office said the two sides had signed agreements on oil and gas supply to Iraq, the establishment of a joint oil company and the construction of a refinery. Iraq’s National Investment Authority also signed agreements with Qatari firms working in the property and construction sectors. QatarEnergy has already agreed to take a 25 percent stake in the Gas Growth Integrated Project, a $10 billion plan aimed at more efficiently using Iraq’s gas resources and improving the country’s rundown electricity grid. The state-owned Qatari company joined the consortium at the invitation of French energy firm TotalEnergies, which oversees a 45-percent stake in the project. Iraq’s Basra Oil Company holds 30 percent. Qatari officials joined a conference in Baghdad in late May alongside regional counterparts, where Iraq announced an ambitious project to turn itself into a transport hub by developing its road and rail infrastructure, linking Europe with the Middle East. If completed, the $17 billion project known as the “Route of Development” would span the length of the country, stretching 1,200 kilometres (745 miles) from the northern border with Turkey to the Gulf in the south.

U.S. natural gas infrastructure will have to expand so that gas can serve as a backup power generation fuel amid soaring wind and solar capacity in the energy transition, says the chief executive of the pipeline giant handling one-third of U.S. gas deliveries. Natural gas will continue to be needed to prevent blackouts if weather is not cooperative with renewable power generation, Williams’s CEO Alan Armstrong told the Financial Times.  “Nobody’s ever going to be comfortable saying: ‘Oh, we’re willing to risk that for five days, we don’t have wind or solar and we’re not going to have a back-up’,” Armstrong told FT. As the number of electric vehicles (EVs) rises and the “electrify everything” drive increases, power grids will need more flexibility amid surging intermittent sources such as wind and solar power. That’s why natural gas will play a role in the shift to cleaner energy, the top executive of the pipeline giant said. The U.S. Administration, on the other hand, is looking to make the grid zero-emissions by 2035.  Last year, natural gas accounted for 39.8% of U.S. utility-scale electricity generation, the largest share of any source, followed by coal at 19.5%, nuclear at 18.2%, and wind at 10.2%. In total, about 60% of all U.S. electricity generation was from fossil fuels—coal, natural gas, petroleum, and other gases. About 18% was from nuclear energy, and about 22% was from renewable energy sources including hydropower, EIA data showed. During the quarterly Q1 call with Wall Street analysts last month, Williams’s Armstrong said that access to abundant and low-cost natural gas reserves depends on having the appropriate infrastructure to move energy when and where it is needed. “We are seeing and feeling today the impacts of inadequate infrastructure with consumers bearing the brunt of these actions in the form of high utility bills, unnecessary blackouts and energy-driven inflation,” Armstrong told analysts.

The China National Petroleum Corporation (CNPC), the government-owned parent company of  PetroChina, and Cnooc (OTCPK: CEOHF) has kicked off ultra-deepwater exploratory drilling for oil and gas as the country looks to wean itself of foreign oil.  According to Chinese news agency Xinhua Global Service, CNPC will drill a test borehole of up to 11,000 meters (36,089 feet), the country’s deepest ever, which will help it better understand the Earth’s internal structure better, as well as to test underground drilling techniques. CNPC’s borehole depth is not far from Qatar’s world record of 12,289 meters (40,318 feet) for a petroleum well depth that was drilled in the Al Shaheen Oil Field in 2008 or Russia’s Kola Superdeep well that reached a depth of 12,262 meters (40,230 feet). In the oil and gas exploration and production (E&P) industry, deepwater is defined as water depth greater than 1,000 feet while ultra-deepwater is defined as depths greater than 5,000 feet.  ### Deepwater Boom But China is not the only country willing to drill to ridiculous depths in the pursuit of energy security. Deepwater oil and gas production is set to increase by 60% by 2030, to contribute 8% of overall upstream production, according to a new report from Wood Mackenzie, as cited by Rig Zone.  Ultra-deepwater production is set to continue growing at breakneck speed to account for half of all deepwater production by 2030. Deepwater production remains the fastest-growing upstream oil and gas segment with production expected to hit 10.4 million boe/d in 2022 from just 300,000 barrels of oil equivalent per day (boe/d) in 1990. Wood Mackenzie has predicted that by the end of the decade, that figure will pass 17 million boe/d. Norway's Aker BP (NYSE:BP) (OTCQX:AKRBF) is the latest oil major to make an ultra-deepwater discovery. At a total depth of 8,168 m, Aker BP says the well is the longest exploration well drilled in offshore Norway. The much bigger than expected oil discovery was made in the Yggdrasil area of the North Sea. Preliminary estimates indicate a gross recoverable volume of 40 million-90 million barrels of oil equivalent (boe), much higher than the company’s earlier projection of between 18 million and 45 million boe. The discovery will significantly enhance the company’s resource base for the Yggdrasil development, which previously was estimated at 650M gross boe.The oil discovery is located within production licenses 873 and 442: In license 873, with Equinor ASA (NYSE:EQNR) and PGNiG Upstream Norway as partners. The plan for development and operations (PDO) for this project was submitted to Norwegian authorities in December 2022, with production scheduled to start in 2027. In 2021, U.S. oil and gas major Exxon Mobil (NYSE: XOM) made a big deepwater oil and gas find. Exxon announced that it had made two more discoveries at the Sailfin-1 and Yarrow-1 wells in the Stabroek block offshore Guyana, bringing discoveries on the block to more than 30 since 2015. Exxon revealed that the Sailfin-1 well was drilled in 4,616 feet of water and encountered 312 feet of hydrocarbon-bearing sandstone, while the Yarrow-1 well was drilled in 3,560 feet of water and encountered 75 feet of hydrocarbon-bearing sandstone. Exxon did not disclose how much crude oil or gas it estimates the new discoveries to contain, but hiked a previous output forecast for the third quarter from older discoveries in the region.  The supermajor has boosted development and production offshore Guyana at a pace that "_far exceeds the industry average”_. Exxon’s two sanctioned offshore Guyana projects, Liza Phase 1 and Liza Phase 2, are now producing above design capacity and have already achieved an average of nearly 360K bbl/day of oil. The supermajor expects total production from Guyana to cross a million barrels per day by the end of this decade. Exxon said a third project, Payara, is expected to launch by year-end 2023 while a fourth project, Yellowtail, could kick off operations in 2025.  Exxon is the operator of the Stabroek block where it holds a 45% interest while partners Hess Corp. (NYSE: HES) and Cnooc hold a 30% and 25% interest, respectively. Exxon’s oil and gas production is well below record levels, averaging 3.7M boe/day, nearly 9% below 4.1M boe/day set in 2016.

Natural Gas price surges higher on Thursday supported by lower-than-expected Natural Gas Storage Change data from the Energy Information Administration (EIA) and a weaker US Dollar following the European Central Bank (ECB) interest rate decision. The weekly EIA data showed a lower-than-expected 84B cubic feet of Gas in storage in the week ending June 9, indicating demand outweighed supply.  Early on Thursday, Natural Gas rose after the ECB raised interest rates by 0.25%, as expected, and revised up its core inflation forecasts, thus paving the way for hikes in the future. This strengthened the Euro and led to a steep decline in the US Dollar Index (DXY), buttressing Natural Gas which is mainly priced and traded in USD.  XNG/USD saw further gains after a market heavily commited to the short side was caught in a short squeeze by the news that outages at the Nyhamna Gas processing plant in Norway.  At the time of writing, Natural Gas is trading over 9% higher on the day at $2.594 MMBtu.  XNG/USD saw further gains after a market heavily commited to the short side was caught in a short squeeze by the news that outages at the Nyhamna Gas processing plant in Norway.  At the time of writing, Natural Gas is trading over 9% higher on the day at $2.594 MMBtu.  ## Natural Gas news and market movers  - Natural Gas rises strongly on the back of lower-than-expected Natural Gas storage data from the week ending June 9 and a weaker US Dollar. The EIA inventory data showed a fall to 84B cubic feet when a lesser decline to 95B had been expected from 104B in the previous week. The data suggests demand outweighs supply.  - News of a technical issue at the Nyhamna Gas processing plant in Norway brought into doubt confidence in Norwegian supply. News that the maintenance issue would require over a month to resolve, during which time the plant would be outed, was a further negative for supply.  - The Commitment of Traders (COT) report from the CFTC for the previous week showed Natural Gas traders were heavily short the commodity, laying the foundation for a short squeze higher on the Nyhamna news.  - Natural Gas rose following the ECB meeting and decision to increase all three of its key interest rates by 0.25%, to 4.00%, 4.25% and 3.50% for the main refinancing, marginal lending and deposit facilities respectively.  - More importantly the ECB revised up its forecasts for core inflation in 2023-4.  - This will probably lead to higher interest rates in the future and contrasts with the US Federal Reserve’s relatively less hawkish outlook.  - A key phrase in the ECB’s monetary policy statement was, “The Governing Council’s future decisions will ensure that the key ECB interest rates will be brought to levels sufficiently restrictive to achieve a timely return of inflation to the 2% medium-term target and will be kept at those levels for as long as necessary." - That said, the ECB also revised down growth estimates for 2023-4 – a dovish sign.  - In her press conference after the decision, ECB President Lagarde left the door open to more hikes in the future, said the labor market was 'on fire', that inflation would probably remain sticky for some time and the ECB still had more work to do. - Natural Gas price is further underpinned by a mixture of increased Asian demand, forecasts of hotter weather, Russian pipeline disruptions and Norwegian outages. 

European gas prices have doubled in just 10 trading days, highlighting how the market still remains on the edge over the continent’s gas supplies despite storage levels at record highs for the time of year. In Thursday trading the price of the European gas benchmark Title Transfer Facility (TTF) rose as much as 27 per cent on the day to €49.50 per megawatt hour, its highest level since early April. At the start of June, TTF had fallen to as low as a two-year low of €23/MwH. While prices are still down substantially from their peaks last summer, when the cut off of Russian pipeline supplies propelled TTF to eye-watering heights above €340/MwH, traders said market participants remain jittery. Underscoring the volatility, TTF prices later momentarily traded below the previous day’s close before rising 7.3 per cent at €42.80. Fresh reports that the Netherlands is to follow through with plans this year to close its Groningen gasfield — once Europe’s largest single source of domestic supplies — triggered the rally on Thursday, while forecasts for hotter weather and supply outage extensions at key fields in Norway continue to support prices. Supply disruptions have added to fears that European gas markets are still adjusting to a new reality, where securing seaborne imports of liquefied natural gas are critical for replacing the Russian pipeline supplies that met 40 per cent of EU demand before the invasion of Ukraine. “Reports of Groningen closing down adds to a host of other news that are bullish for gas prices,” said Tom Marzec-Manser at energy consultancy ICIS. “But the price swings are an indication that there is still a lot of uncertainty over Europe’s gas outlook, and market participants remain on the edge,” he said. Hans Vijlbrief, the Dutch state secretary for mining, told the FT in January that Groningen will be shut by October 1 but if necessary, it would remain open until October 2024. Production at the Groningen gas was reduced to 2.8 bcm per annum last year, the minimum to keep its pumps working, with tremors blamed on drilling causing damages to property in the area. While Europe’s gas storage sites are now more than 70 per cent full, and well on its way to achieving the bloc’s target of 90 per cent full storage by the start of November, storage alone cannot meet demand in the winter. Before this month’s rebound in TTF, the price of LNG in Northeast Asia had briefly moved above the European market for one of the first times since the start of the energy crisis, incentivising traders to send cargoes east. But with the price surge in recent days, TTF has regained its premium over Asian gas markets, re-incentivising traders to send LNG to Europe. “We’ll see [the competition for LNG] again this year and in subsequent years. The link between European and Asian LNG markets and prices will be generally stronger than before the Ukraine war because Europe buys much more LNG now,” said Glen Kurokawa, power sector lead at consultancy CRU. But Kurokawa said he did not think competition for LNG would be quite as intense this year compared to 2022, arguing that Europe had cut gas “consumption for industry” and the power sector compared to last year.

The Dutch government is set to permanently shut down the Groningen gas field in October, a move that may limit Europe’s supply buffer as it heads into the next winter. The closure will take effect from October 1, people familiar with the matter said, asking not to be identified as the plans are still private. The official decision on the field will be taken during a cabinet meeting later this month, said a spokesperson for the Dutch State Secretary for Mining. The field has been a key source of gas for much of western Europe, as well as a backbone of Dutch public finances, since production commenced in 1963. The site has caused huge local opposition after hundreds of earthquakes with magnitudes of up to 3.6 damaged thousands of homes. The move comes days after prime minister, Mark Rutte, narrowly survived a no-confidence vote. Dutch front-month gas futures, the benchmark for Europe, jumped more than 30% higher as the shutdown removes one option to boost flows if the energy crisis worsens next winter. Prices have been volatile with outages in Norway stoking concerns about supplies and hot weather boosting demand. The government previously said it aims to shut the field at the latest by Oct. 2024 depending on the “geopolitical situation.” Gas prices have fallen significantly from last summer’s peaks after Russia’s invasion of Ukraine triggered an energy crisis in Europe. Dutch Prime Minister Mark Rutte, who delivered a public apology before parliament in 2019, survived a no-confidence vote earlier this month as the government is reeling from accusations that it was insensitive to complaints for decades. Earlier this year, the Dutch government pledged to spend a total of €22 billion across a 30-year period to compensate Groningen residents. Of the approximately 327,000 homes in the region, at least 127,000 have reported some damage, according to the Groningen Mining Damage Institute. More than 3,300 buildings have been demolished in the area since 2012 because earthquakes have rendered them unsafe. The Dutch government may also dismantle the gas wells by filling them up with concrete next year, one person said. A maximum of 2.8 billion cubic meters of gas will be extracted from the Groningen field until October as it currently runs on pilot light, which means it’s operating at minimum levels now. The decision for closure isn’t entirely irrevocable, the people said. If there is another energy crisis or a very cold winter, it would take about two weeks to reopen the wells, they said. That’s enough time for the government to revert its decision, depending on weather forecasts.