Industry Rundown: Steelboso’s Ongoing Projects + Industry News
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Oil, Gas and Petrochemicals
Shell is intensifying its exploration efforts offshore Malaysia, focusing on its MLNG and SK 437 production sharing contracts in Sarawak, East Malaysia. The company has enlisted Trinity Offshore’s Geo Sovereign vessel for geotechnical investigations on five potential structures: Selasih B24, Latok, Lemang, Habanero, and J3. The survey is expected to be completed by year-end. Shell’s exploration targets in the region include Berembun, Pechu, Teja, Pepulut, Nonsoom, Misai Kuching, Roselle, Mengkedu, and Habanero, as reported in August, reinforcing its commitment to Malaysia’s exploration and production sector since 1891.
Despite a decrease in the number of rigs, U.S. oil and gas production has continued to rise, reaching a record 13.1 million barrels per day (b/d) in August, surpassing the previous peak set in November 2019. Output from the Lower 48 states, excluding federal waters in the Gulf of Mexico, reached a record 10.8 million b/d, with a year-on-year increase of 955,000 b/d. The industry has improved efficiency, allowing production to increase even as prices retreated from mid-2022 highs. While drilling rates fell, longer horizontal drilling sections and a focus on promising well sites have enhanced productivity.
The stability in oil prices, averaging above $80 per barrel in real terms, is expected to keep U.S. production flat or slightly rising in the remainder of 2023 and 2024. In contrast, U.S. gas output has seen a more pronounced slowdown in growth due to lower prices, with production increasing by just 3% in August 2023 compared to a year earlier. The decline in gas prices has led to a reduction in drilling for gas, but stabilization in prices has resulted in a more stable rig count in recent months. The combination of factors, including reduced drilling, slower production growth, increased exports, and low prices stimulating consumption, has significantly reduced surplus gas inventories from 2022.
Steel
Dalian iron ore futures fell on Friday due to ongoing concerns about China’s property market and trading volume limits, but losses were mitigated by signs of recovering steel demand. The most-traded January iron ore on the Dalian Commodity Exchange closed down 0.4% at 963.5 yuan ($132.96) per metric ton, but still recorded its fifth consecutive week of gains, rising 1.4% for the week. China’s new home prices fell for a fourth consecutive month in October, contributing to the market’s concerns. The Dalian Commodity Exchange set a limit on daily trading volumes for iron ore futures, and steel benchmarks on the Shanghai Futures Exchange showed mixed results.
Tokyo Steel Manufacturing, Japan’s leading electric-arc furnace steel maker, has announced that it will maintain its steel product prices in December, marking the fifth consecutive month of unchanged prices. The decision is attributed to lackluster demand in the domestic construction and manufacturing sectors. Tokyo Steel’s pricing is closely monitored by competitors such as South Korea’s Posco and Hyundai Steel, as well as China’s Baoshan Iron & Steel Co Ltd (Baosteel).
Power Generation
The Manila Electric Company (Meralco), the Philippines’ largest electric distribution utility, has signed a cooperation agreement with the Ultra Safe Nuclear Corporation (USNC) to explore the deployment of Micro-Modular Reactor (MMR) Energy Systems. The agreement involves a four-month pre-feasibility study conducted by USNC to familiarize Meralco with MMR systems.
The MMR is a high-temperature gas-cooled reactor with a 45 MW thermal and 15 MW electrical capacity. The agreement is seen as a significant step towards exploring clean and sustainable energy options in the Philippines, aligning with the government’s commitment to reduce greenhouse gas emissions and increase resilience to climate change. Additionally, a historic ‘123’ civil nuclear cooperation agreement was concluded between the US and the Philippines during the APEC Leaders’ Summit sideline meetings, aiming to deepen the partnership in building a global clean energy economy.
Shipbuilding/Marine
South Korean shipyard HD Korea Shipbuilding & Offshore Engineering Co. has secured a 444.4 billion-won ($340 million) order to build two very large ethane carriers for an undisclosed Asian shipper. The vessels, with a capacity of 98,000 cubic meters each, will be constructed by HD Hyundai Heavy Industries Co. at its shipyard in Ulsan and are expected to be delivered by the first half of 2027. This order contributes to HD Korea Shipbuilding’s successful year, with $21.23 billion worth of orders secured, surpassing its yearly target of $15.74 billion.
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