Main Takeaways for the week of December 15, 2021
Natural gas and electricity prices reach new peaks in Europe as a Russia's troop buildup on the border with Ukraine prompts the G7 to threaten severe consequences. The European Commission looks to improve security of natural gas supply by proposing to block any long-term gas supply contracts with Russia beyond 2049, raising questions about the role of natural gas in Europe in 2049. Omicron variant will almost certainly become the dominant strain, though OPEC remains confident in 2022 oil demand. Infrastructure concerns begin to arise around electrifying transportation and home heating. Demand for rich sources of battery materials continues to heat up, as BHP forgives $2.3B in Mongolian debt to speed major copper project and a bidding war erupts for Ontario’s Ring of Fire nickel deposits.
Featured Article
Rethinking Canada’s Security Strategy: How Canada Can Graduate from the Kids’ Table by Mark Agnew and Nicholas Todd
Headlines
Global Petroleum Liquids
- OPEC expects mild effect of omicron variant on global oil demand
- EIA forecasts steep rise in U.S. oil and gas production in January 2022
- Omicron is dominant variant in London, Ontario
Global LNG
Global Coal
North American Energy Infrastructure
- Biden admin releases EV Charging Action Plan, establishing Joint Office of Energy and Transportation
- New economics paper indicates that Texas heat pumps increased electricity demand sensitivity to temperature, contributing to February power outages
U.S. - China Energy Relations
- EIA forecasts small increase in China’s energy use from declining working age population lifting wages
- Higher diversity of importers rather than increased domestic production main result of U.S. tariffs on Chinese solar panels
EU – Russia Energy Relations
- European Commission moves to block long-term gas supply contracts with Russia beyond 2049, proposes measures for joint procurement and high heating season gas storage levels
- S. Secretary of State Blinken claims that continued blocking of Nord Stream 2 is “a source of leverage on Russia”, despite continued European natural gas crisis
- G7 warns Russia of “massive consequences” if Ukraine is attacked
U.S. - Canada Energy Relations
Middle East Energy Geopolitics
- UAE suspends planned $23B weapons deal with US over China’s role in the Gulf
- JCPOA revival talks not going well
Canadian Oil and Gas
- Suncor announces 2022 capex of $4.7B, mostly for sustaining operations
- CER forecasts oil Canadian crude oil production of 4.7 MMb/d in 2050 after peaking in 2032 under scenario where Canadian and global climate policies increase at current pace
Electricity
- Uncoordinated adoption of EVs risks overloading Canadian electricity infrastructure
- Europe continues to experience skyrocketing electricity prices
- Government of Japan considering capacity market to boost hydrogen/ammonia power plants
Renewables
- Polysilicon, Chinese power rationing, and shipping keep PV module prices high
- California utilities regulator moves to end subsidies for rooftop solar
Energy Minerals
- Two Australian mining companies in bidding war for Ring of Fire nickel deposits
- Rio Tinto cancels $2.3B of debt owed by Mongolia to push forward giant Oyu Tolgoi copper project, one of the largest known copper/gold deposits in the world
- S&P Global Platts expects global lithium to remain expensive throughout 2022
Hydrogen
Nuclear
- No significant developments
Other Recommended Content
- The Future of Energy, with Helima Croft – Council on Foreign Relations podcast featuring Helima Croft and James M. Lindsay
- Changing susceptibility to cold weather in Texas power demand – working paper by Blake Shaffer, Daniel Quintero, and Joshua Rhodes
- An Energy Transition in Three Corresponding Acts Part IV – Smarter Markets podcast featuring Stephen Stapczynski and Susan Sakmar
- Outlook for U.S. Shale – CSIS podcast featuring Artem Abramov, Casey Merriman, and Ben Cahill
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