Energy's talent shortage

OIL AND GAS

Energy industry’s talent shortage

• Talent crisis in the oil industry as young workers are not interested despite plentiful jobs and high salaries

• Pool of new entrants for petroleum-engineering programs at U.S. colleges and European universities is shrinking

• Concerns about industry's role in climate change and long-term job security in transition away from fossil fuels

• Number of petroleum-engineering graduates decreased by more than half between 2016 and 2021

• Undergraduate petroleum-engineering enrollments dropped 75% since 2014

• Students attracted by other engineering possibilities as industry transitions to different energy sources

• Oil-and-gas companies offering fellowships and programs to cultivate new talent

• Focus on dynamic and creative aspects of the industry such as carbon capture and geothermal projects

• Competition from startups and fast-growing companies in clean energy fields

• Industry needs to articulate energy transition strategies to attract workers

• Talent shortage affects efforts to curb emissions and develop clean-energy businesses

• Universities ending or rebranding petroleum engineering degrees in response to changing demand

• Steady flow of talent crucial for infrastructure development and innovation in the industry

No shocker here—Gen Z showing less love for the oil and gas scene. Time to amp up that energy advocacy game, folks.

We're talking about snagging that top-tier US oil and gas with enviro-friendly standards, meeting energy needs, and riding the wave of global demand. But hold up, it's not just about the black gold—carbon capture and geothermal are on the menu too.

And guess what? A bunch of those energy transition ventures need good ol' petroleum engineering chops. So, if we're serious about hitting that net zero target, you bet your bottom dollar we're gonna need that talent in the mix.

If you’re looking for a book to recommend, check out Harold Hamm’s Game Changer (Not sponsored. I promise.)

CARBON CAPTURE

North Dakota Public Service Commission rejects Summit’s permit application for CO2 pipeline

• The North Dakota Public Service Commission rejected Summit Carbon Solutions' permit application for a 320-mile pipeline to transport captured carbon dioxide from ethanol plants to an underground storage site.

• Summit Carbon Solutions, along with Navigator CO2 Ventures and Wolf Carbon Solutions, aims to build Midwest carbon pipelines to decarbonize the ethanol sector and demonstrate carbon capture and storage (CCS).

• The commission stated that Summit failed to prove that the project would have minimal adverse effects on the environment and the citizens of North Dakota.

• Summit respects the decision and plans to reapply for a permit in the state.

• Concerns from North Dakota residents included potential damage to farmland, property values, and safety issues related to transporting and storing carbon dioxide.

• The Sierra Club in Iowa, opposing carbon pipelines, views this decision as significant and hopes it will influence similar disputes in other states.

• Summit intended to store up to 18 million tons of CO2 annually in a North Dakota storage site and had secured easement agreements with 375 landowners for 70% of its pipeline route.

We're confident that this will eventually get resolved, but for now, it's a bit of a setback. The ongoing challenge of advancing infrastructure projects in our country persists, whether we're talking about CO2, natural gas, or even transmission lines.

LOW-CARBON FUELS

P66 and ADM in talks on biofuel JV

• Phillips 66 and Archer-Daniels-Midland (ADM) are in talks for a biofuels joint venture focused on producing lower-carbon jet fuel

• Oil and corn-based ethanol industries are collaborating to produce lower-carbon biofuels

• Discussions involve putting ADM's dry corn mill operations into the venture to convert grain-based alcohol to jet fuel

• ADM, a top U.S. ethanol producer, is downsizing its role and has spun off its dry corn mills

• Phillips 66 plans to produce renewable fuels, including jet fuel, at a converted California refinery

• Several U.S. states have established low-carbon fuel markets that reward producers for developing fuels with lower carbon emissions

• Axens SA provides ethanol-to-fuels conversion technology, contributing to the venture's plans

• ADM previously formed a renewable diesel joint venture with Marathon Petroleum Corp

• Other companies like Bunge and Chevron have also formed joint ventures to make renewable fuels from soybeans and canola

NATURAL GAS AND LNG

Woodside sells LNG Japan 10% interest in Scarborough LNG for $500 million

• Woodside Energy Group has entered a deal with LNG Japan to sell a 10% participating interest in its $12 billion Scarborough liquefied natural gas (LNG) project in Australia for $500 million

• Woodside will retain a 90% interest and continue as the operator after the deal's completion, expected in Q1 2024

• The Scarborough project will feed gas into Woodside's Pluto LNG plant, with the first LNG cargo targeted for 2026

• The development of the Scarborough gas field and expansion of the Pluto LNG plant is Woodside's biggest growth project

• Woodside and LNG Japan have also agreed on the sale and purchase of 12 LNG cargoes per year for 10 years starting 2026

• LNG Japan is a joint venture between Sumitomo Corp and Sojitz Corp

• Woodside also plans to collaborate with Sumitomo and Sojitz on global opportunities in new energy such as ammonia, hydrogen, and carbon capture and storage

• The move is seen positively by analysts, as it helps de-risk Woodside's exposure to Scarborough and reduces future development expenditure and technical risk

Persisting pattern of divesting non-operated interests through partnerships and joint ventures, given the current scenario of low oil and gas prices coupled with high interest rates.

RENEWABLES

Wind industry facing challenges

• Wind industry facing crisis due to rising prices and logistical issues

• Developers and buyers scrapping contracts, delaying projects, and postponing investments

• Over $30 billion in planned spending delayed for offshore wind projects in the U.S. and Europe

• European offshore wind projects hit by setbacks due to cost increases and delays

• Offshore wind targets for 2030 likely to be missed for Biden administration and European governments

• President Biden aims for 30 gigawatts of offshore wind power this decade

• Challenges include inflation, supply-chain backlogs, rising interest rates, and permitting delays

• Avangrid pays $48 million to exit offshore wind deal due to changing conditions

• European countries accelerate offshore wind plans while supply costs rise

• Short-term challenges for industry; long-term potential remains promising

• Wind installations on land halved in Q1 compared to last year

• Manufacturers facing profitability issues due to larger and more advanced machines

• Siemens Energy estimates up to $1.75 billion in costs for turbine quality issues

• Blade supplier TPI Composites issues profit warning due to higher inspection and repair costs

METHANE REDUCTION

Farmers breed low-methane cattle

• Canadian dairy farmer Ben Loewith is breeding calves with a low-methane genetic trait to reduce methane emissions from cattle

• Semex, a genetics company, offers bull semen with a low-methane trait that could decrease emissions from Canada's dairy herd by 1.5% annually, potentially up to 20%-30% by 2050

• The low-methane trait could have a significant global impact on cattle emissions

• Low-methane breeding could be a more permanent and cumulative solution compared to feeding additives to cattle

• Some dairy industry officials express concerns about low-methane breeding causing digestive problems in cattle

• Methane is a significant greenhouse gas produced by microbes in cattle's guts during digestion

• Research involved capturing cattle's breath to measure methane and comparing data with genetic information and milk samples

• While the Canadian government does not currently provide incentives for low-methane cattle breeding, it's working on offset credits for methane reduction

• Some countries and food companies are addressing methane emissions in their supply chains by changing cattle diets

• Genetic changes from low-methane breeding could have a significant long-term impact on emissions.

Don’t see them adding this to the menu at Pappas off Westheimer anytime soon.

DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.