Oil Daily | Exxon Eyes Iraq's Majnoon, Chevron Fire Impacts CA Refining, Shell's Q3 Earnings Surge

【Company News】

UK North Sea oil and gas producer Serica Energy plc has reduced its production guidance due to ongoing issues with the Triton FPSO platform, operated by Dana Petroleum. Production was temporarily suspended on September 30, and the resolution is pending, affecting the company's output expectations. Serica is negotiating with the operator for improved performance. Meanwhile, Serica is expanding its North Sea presence by acquiring assets from Prax Group, including stakes in multiple oil and gas fields.

Exxon is considering re-entering Iraq to develop the Majnoon field, one of the world's largest with reserves of 38 billion barrels. Negotiations with the Iraqi Oil Ministry are underway, focusing on field development and export infrastructure. This move comes amid broader interest from U.S. and European oil giants in Iraq's oil industry.

Commonwealth LNG's Louisiana project, initially planned for a 2027 start, is delayed until 2031 due to a temporary ban on new LNG capacity under the Biden administration. The project will have an annual capacity of 9.5 million tons and generate significant export revenues. Commonwealth LNG has secured long-term supply deals but needs more contracts to ensure the project's viability.

Chevron's El Segundo refinery in California is operating at reduced capacity following a major fire. The refinery continues to produce transportation fuels, with PADD V inventories higher than usual. The incident may affect West Coast gasoline prices, as the state faces reduced refining capacity due to other planned refinery closures.

Shell expects strong third-quarter earnings driven by robust gas trading, higher upstream production, and improved refining margins. LNG volumes and upstream production forecasts have been raised, while refining margins have increased. Despite challenges in its Renewables business, Shell's stock has performed well, with a 10% gain this year.

【Industry News】

Electricity generation from natural gas in Texas decreased by 1% in the first nine months of the year, while wind and solar generation rose by 14%. Solar power contributed significantly to this increase, though winter may reduce solar output. Non-hydrocarbon sources now account for 46% of ERCOT's electricity generation. Texas faces rising electricity demand due to data center growth, potentially boosting gas generation. The state is preparing for a possible supply shortage by 2027.

Argentine shale basin Vaca Muerta is experiencing stagnation due to low oil prices, rising costs, and policy constraints. Drilling activity has plateaued, threatening Argentina's energy export ambitions. Major producers are urging government reforms to attract foreign investment and build necessary infrastructure. Despite challenges, state oil company YPF continues to expand operations in the basin.

【Others】

The U.S. government is reconsidering previously awarded funding for clean-energy and carbon management projects to shift climate investment strategies. The DOE is reviewing various projects, including those for EV manufacturing and direct air capture. Critics argue these moves are politically driven. Earlier cuts targeted carbon capture and hydrogen infrastructure projects, potentially impacting the fossil fuel sector.

U.S. crude oil inventories rose by 2.78 million barrels in the latest weekly report, with gasoline and distillate inventories also declining. Cushing inventories remain low, increasing market vulnerability to supply disruptions. The U.S. is on track to break oil production records, but the resulting surplus could lower prices. The EIA forecasts increased production but warns of potential market imbalances.

The U.S. is entering the winter heating season with strong propane inventories, but regional demand spikes, particularly for grain drying, could affect prices. Propane inventories are above the five-year average, but regional factors like weather and crop moisture can lead to price volatility. The Midwest, heavily reliant on propane for heating, could see price fluctuations based on harvest conditions.

Alberta's Premier Danielle Smith is negotiating with the federal government on a new oil pipeline to the West Coast, aiming to enhance Canada's energy exports. The proposed pipeline could transport up to 1 million barrels daily. Alberta plans to engage Indigenous communities and submit a formal proposal to the Federal Major Projects Office for consideration.

The EU plans to sanction companies providing false flags to Russian tankers, part of its 19th sanctions package targeting Russia. The sanctions also aim to phase out Russian LNG imports earlier than planned and remove exemptions for Russian oil producers. Some EU states are increasing inspections to counter shadow fleet movements.