The Five Most Important Oil Stories Of 2019

2. Aramco IPO

In early December, Aramco finally carried out its long-awaited initial public offering. The company initially traded at a valuation of $1.7 trillion, but quickly ran up to the $2 trillion value that had been suggested by Saudi Crown Prince Mohammed bin Salman.

3. OPEC cuts production to prop up oil price

OPEC continued to respond to swelling U.S. shale oil production by reducing its own production. As I have argued before, this is really the only strategy that makes sense for the cartel. The group made two production cuts this year in conjunction with Russia and other oil-producing nations. This brings the total production cuts from OPEC and its allies to 1.7 million BPD.

4. U.S. oil production sets a new record of 12.8 million BPD

This could have been the top story of the year, because of its impact on the rest of the world’s oil markets. We would be living in a very different world today if not for the massive increase in U.S. oil production over the past decade. The new record was 1.2 million BPD higher than last year’s record, and it pushed the U.S. to net exporter status for crude oil exports and finished products for the month of October.

5. Norway announces fossil fuel divestment

The Top 4 were pretty clear to me, but beyond that there were several stories that could have landed in the fifth spot. I chose Norway’s announcement early in the year that its Government Pension Fund Global (GPFG) would divest certain fossil fuel investments. The announcement was symbolically important, given the size of the fund and the fact that the fund itself is a product of Norway’s oil and gas history. Most of the reporting missed major context over the story — namely that the fund would actually retain most of its oil and gas investments. But the move follows similar moves around the globe, so I chose it as a representative example of the push to divest fossil fuel investments.

OTHER NOTEWORTHY STORIES

Beyond the Top 5, here were other 2019 energy stories of significance, in no particular order.

• XOM wins climate lawsuit

The state of New York sued ExxonMobil, charging that the company engaged in “a longstanding fraudulent scheme” on the the economic risks of climate change. In early December the verdict came down, which read in part that the: “Office of the Attorney General failed to prove, by a preponderance of the evidence, that ExxonMobil made any material misstatements or omissions about its practices and procedures that misled any reasonable investor.”

• Occidental acquisition of Anadarko

Chevron initially attempted to acquire Anadarko, but Occidental ultimately offered more in a transaction valued at $55 billion. The market deemed that Occidental overpaid, punishing shares mercilessly following the transaction.

• Permian becomes top oil field

Ahead of its IPO, Aramco lifted the veil of secrecy around its oilfields. Production at the Saudi Ghawar oilfield — which has long been the world’s largest conventional onshore oil field — was reported at only 3.8 million BPD. That meant that the Permian Basin had surpassed Ghawar to become the world’s biggest oil-producing region. Related: Is The Shale Boom Running On Fumes?

• Green New Deal

There were a number of important stories in the renewable/environmental space this year, but one of the most talked-about stories was the so-called “Green New Deal.” This referred to a pair of resolutions from Rep. Alexandria Ocasio-Cortez (D-NY) and Sen. Ed Markey (D-MA) to transition the United States to 100% renewable, zero-emission energy sources within 10 years. The deal received a lot of criticism — including from within the Democratic party — that many of the ideas didn’t represent realistic policy proposals. However, the story itself received quite a lot of coverage.

• Greta Thunberg

As with the last story, there are lots of questions around whether real action will arise from this story. But the rise of 16-year-old Swedish environmental activist Greta Thunberg and the “strike for climate” received considerable media attention throughout the year. During the year, as she traveled the globe to challenge political leaders to take serious action on climate change, Thunberg addressed the United Nations and earned Time magazine’s ‘Person of the Year’ award. She even got the attention of President Trump, who singled her out more than once on Twitter.

• Renewable capacity surpasses coal

The U.S. has been increasing renewable power capacity at a rapid clip over the past decade. A number of milestones have fallen in the process, as renewable energy and natural gas worked together to slash U.S. coal consumption. During the year, the Federal Energy Regulatory Commission (FERC) reported data that showed that renewable energy’s share of total available installed U.S. generating capacity had surpassed coal’s share for the first time ever.

• Trade war impact on ethanol

Over the past couple of years, there has been a constant battle between ethanol producers and oil refiners over how much ethanol must be blended into the nation’s fuel supply. But this year, another factor had a major impact on ethanol’s market. The trade war with China caused ethanol exports to that country to dry up, which put pressure on ethanol producers all year.

• Russia’s Floating Nuclear Power Plant

A story that received far more coverage internationally than it did in the U.S. was Russia’s deployment of the world’s first floating nuclear power plant, the Akademik Lomonosov. The plant was deployed to Pevek, a port town on the remote Chukotka Peninsula in the Russian Arctic and will provide power to about 100,000 homes. Greenpeace opposed the project, dubbing it “Chernobyl on ice”, while staging publicity stunts to get the message across.

Those are my picks for the year’s top energy stories. In the next story, I will offer up my energy sector predictions for 2020.

By Robert Rapier

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