Evaluate Energy’s recent M&A report analyzing global upstream activity shows that just $9.8 billion of new oil and gas M&A deals were agreed during the first quarter of 2019.
This represents a 61% drop on spending in Q4 2018 and a 75% drop compared with Q1 2018.
Low oil prices and changing spending priorities were the two main causes. The full report is available now at this link.
A special editorial series features monthly articles on Canadian natural gas development and LNG projects and is published by the Daily Oil Bulletin based in Calgary.
For further details and to read the articles:
https://www.dailyoilbulletin.com/series/canada-lng-and-the-natural-gas-economy/
A new special report by the International Energy Agency (IEA) on natural gas is poking a hole in the argument that natural gas and LNG is just as bad, or even worse than coal, in terms of its global warming potential.
Full story:
https://www.jwnenergy.com/article/2019/7/no-natural-gas-not-bad-coal-iea/
Evaluate Energy’s latest M&A review shows that there were $91 billion in new deals agreed in the second quarter, which makes it the second largest quarter for upstream spending since 2013.
https://www.jwnenergy.com/article/2019/7/top-10-upstream-deals-q2-2019/
The U.S. Energy Information Administration (EIA) has used Evaluate Energy data to show that the finding costs for 116 global exploration and production companies hit a 10-year low in 2018, while finding and lifting costs combined were similar to costs recorded in 2017.
http://blog.evaluateenergy.com/eia-oil-company-finding-costs-reached-a-10-year-low-in-2018
Gas is set to become an increasingly important part of the world’s energy mix … at least for the next two or three decades. Specifically, by 2050, oil and gas is predicted to account for 40 per cent of the total, according to a recent DNV GV report highlighted in UK Energy Strategies’ weekly Monitoring Service.
An increasing global demand for oil and gas surely makes it all-the-more important that Britain, like many other import-dependent economies, has access to its own, reliable, independent and, crucially, secure supply. In this context, the apparent ‘nimbyism’ of activists objecting to increased extraction of our own onshore natural gas could be portrayed as being contrary to Britain’s long-term interests.
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The British experience — characterized by conflict and contradictions over energy extraction — serves as a proxy for many jurisdictions.
The timing of DNV GV’s report is surely not just coincidental with the recent rise in gas prices to a 10-year high. Experts argue that the rise in gas prices has made coal more economical as a fuel for power stations. The potential long-term environmental effects of a ‘coal revival’ for reasons of short-term economic gain can only be seen as a large step backwards for Britain.
The impact of a ‘coal revival’ is greater than purely environmental. In 2017, before the rise in gas prices, the U.K. imported 8.5 million tonnes of the 11.52 million tonnes of coal it consumed — over 70 per cent. A ‘coal revival’ would surely see this percentage rise, leading to the conclusion that coal is not a secure source of energy for Britain in the 21st century, let alone a desirable one.
Britain needs a low-carbon, secure and diverse energy mix going forwards. The UK Energy Strategies Weekly Monitoring Service frequently reports the latest successes in the renewables sector and it is clear that renewable energy is already a significant and growing part of Britain’s energy mix. But what about oil and gas?
Britain is in the fortunate position to have a largely untapped supply of oil and gas under sovereign soil. Unfortunately, the nascent industry seeking to take advantage of this opportunity has so far struggled to secure the social licence in support of both the principle and of the necessary extraction techniques, which would then, in effect, enable government to support its activities. Cuadrilla is now just starting to frack its site in Lancashire, and we await the impact of those activities.
Industry must engage with and demonstrate to communities — including the activists — that appropriate measures are in place to make British onshore natural gas exploration and extraction as safe and environmentally friendly as possible. Unless and until they are, we will surely see more companies experiencing the same delaying tactics that Cuadrilla has experienced at Preston, which will not only keep the costs of extraction higher than arguably necessary, but will also potentially create supply issues for Britain in the future.
So, the recent appointment of a commissioner for this emerging industry should be seen as a positive step. Industry should make full and good use of the engagement opportunities this appointment presents, both with communities, and with local and national government.
While UK Energy Strategies has recognized the need for the oil and gas sector to secure its vital social licence, this has not, as yet, seemingly been translated into the necessary program of action by industry. UKES would be delighted to assist industry — across the energy sector — to work with both government and communities to present its case.
Ian Derbyshire is chief executive of UK Energy Strategies.
Originally posted on JWN Energy – https://www.jwnenergy.com/article/2018/10/why-growing-gas-demand-and-coals-revival-raises-vital-questions-over-energy-policy-and-social-licence/
DNV GL’s report can be found here – https://www.dnvgl.com/oilgas/perspectives/gas-capital-expenditure-boost-to-fuel-the-energy-transition.html?utm_campaign=OG_GLOB_18Q4_NEWS_Perspectives_03%7C2018&utm_medium=email&utm_source=Eloqua&elqTrackId=544fd47a31a44c0bad45fecebd754fa4&elq=392dbdafc3c
On Tuesday 23rd October 2018, energy and clean growth minister, Claire Perry, said that EU countries have a “strong commercial reason” to maintain gas and electricity trade across the English Channel.
Read the article published on Climate Home News here – http://www.climatechangenews.com/2018/10/23/eu-strong-interest-safeguarding-post-brexit-energy-supply-uk-minister/
On 31st July 2018, the Department for Business, Energy and Industrial Strategy launched a £15M call for Carbon Capture Utilisation Storage Innovation projects that lead to significant reductions in the cost and deployment of CCUS in UK & internationally.
Funding of up to £5 million will be considered for feasibility studies, industrial research or experimental development projects; and up to £7 million for research infrastructure that enables the UK to conduct world-leading research and innovation into CCUS. Project funding will be available for up to 24 months, with projects finishing by 31st March 2021.
Applications are due by email to Industry.Innovation@beis.gov.uk by Sunday 11th November 2018.
Further details can be found here – https://www.gov.uk/guidance/funding-for-low-carbon-industry
On 19th July 2018, the Carbon Capture Usage and Storage (CCUS) Taskforce presented its report, “Delivering Clean Growth” to Government. It set recommendations on how the UK can becoming a world leader in CCUS technology.
The Taskforce is chaired by Charlotte Morgan, a Partner in the Global Energy & Infrastructure Group at Linklaters, and is comprised of stakeholders and expertise from industry, academia, NGOs, and international organisations.
A copy of the report can be found here – https://ukccsrc.ac.uk/sites/default/files/documents/news/CCUS_Cost_Challenge_Taskforce_Report.pdf
The United Kingdom’s wind sector witnessed significant M&A activity over the past 18 months – with 47 deals agreed involving UK wind assets for a combined $54 billion.
The scope of Evaluate Energy’s M&A data has expanded to include global power sector deals, including wind, solar, hydro and biomass. For more information on the new data, please click here.
The data illustrates that since the start of 2017 the UK was easily Europe’s most active market for wind power deals with Germany (24 deals) and France (20) the next most active.
Source: Evaluate Energy M&A Database – Power deals.
“The UK is adding tremendous capacity offshore, with the number of turbines and their sheer size growing all the time,” said Paul Harris, chairman of UK Energy Strategies Ltd. (link to www.ukenergystrategies.com), a UK consultancy. “Wind, together with solar, are at the forefront of changing attitudes towards energy within the UK.”
Included in the UK’s total count is E.On’s acquisition of Germany’s Innogy SE – a $44.8 billion acquisition that is easily the largest deal including wind power assets worldwide since January 2017.
Innogy, whose current majority shareholder is RWE AG, has assets all over Europe. The vast majority of the company’s power generation capacity is in the wind sector (72% at year-end 2017). Its onshore and offshore farms in the UK and Germany make up the lion’s share of this capacity.
Aside from E.On, other recent UK wind deals with significant purchase prices saw Macquarie Group (via a consortium) acquire the Green Investment Bank Ltd. from the UK Government, while Norway’s Statkraft AS parted with stakes in two wind farms off the coast of Norfolk with a combined capacity of just under 250 MW, net to the stakes being sold.
Just this week, EDF announced the third largest UK wind deal since January 2017, a $942 million (£701 million) sale of a 49% stake in 24 wind farms.
Top 10 deals including UK wind power assets, Jan. 1, 2017 – Jul. 2, 2018
| Acquirer | Target Company | Description | Total Acquisition Cost (US$ billion) inc. debt assumption if applicable |
| E.ON | innogy SE | E.On acquires a 100% stake in innogy SE | 44.80 |
| Macquarie Group | UK Green Investment Bank Limited | A Macquarie-led consortium comprising Macquarie Group Limited, Macquarie European Infrastructure Fund 5 and Universities Superannuation Scheme acquires UK Green Investment Bank Limited from HM Government | 2.98 |
| Dalmore Capital Limited and Pensions Infrastructure Platform | EDF | EDF sells a 49% stake in 24 UK wind farms | 0.94 |
| Equitix Ltd. | Statkraft AS | Equitix acquires Statkraft’s 40% stake in the Sheringham Shoal offshore wind farm, which is located in the Greater Wash area off the coast of Norfolk, United Kingdom | 0.75 |
| China Resources (Holdings) Company Limited | Statkraft AS | A consortium led by China Resources (Holdings) Company Limited acquires Statkraft’s 30% stake in the Dudgeon offshore wind farm, built off the coast of Norfolk in the UK | 0.75 |
| UK Green Investment Bank plc | Centrica | Centrica sells its 50% interest in the 270 MW Lincolnshire wind farm to the UK Green Investment Bank Financial Services managed entities and the UK Green Investment Bank plc | 0.61 |
| PKA Ltd. | Ørsted | PKA Ltd. acquires a 25% ownership interest in the Walney offshore wind farm from Ørsted | 0.44 |
| PFA | Ørsted | PFA acquires a 25% ownership interest in the Walney offshore wind farm from Ørsted | 0.44 |
| UK Green Investment Bank plc | Siemens Project Ventures | Siemens Project Ventures sells its 25% interest in the 270 MW Lincolnshire wind farm to the UK Green Investment Bank Financial Services managed entities and the UK Green Investment Bank plc | 0.31 |
| Tenaga Nasional Berhad | GVO Wind Limited and Bluemerang Capital Limited | Tenaga Wind Ventures UK Ltd, a subsidiary of Tenaga Nasional Berhad acquires an 80% interest in two renewable energy companies registered in the UK; GVO Wind Limited and Bluemerang Capital Limited | 0.24 |
Source: Evaluate Energy M&A Database – Power deals.
