The Chinese government announced that it will put a cap on coal consumption so that the Asian country will not consume more than the equivalent of 5 billion tons of coal annually after 2020.

Last year the US exported 74 million tons of coal, a 23% decline from 2014. This marked the third consecutive year for declines in US coal exports.

The rapid growth in China’s passenger car ownership in the last ten years is believed to have accounted for two-thirds of the increase in China’s demand for crude oil in the last decade. Analysts at Deutsche Bank believe that such a rate will moderate sharply in the next few years as that country’s streets become saturated with cars, air pollution grows worse, and the Chinese economy slows. By 2020, the growth in China’s demand for oil may only be half of what it has been in recent years.

A new report on the future of Russia’s oil industry predicts that current output of 10 million barrels per day could drop anywhere from 1% to 46% over the next 20 years. Russia has a time worn oil industry with some fields going back over 100 years. It came as no surprise that Russia is willing to participate in a freeze agreement with Saudi Arabia to raise international crude oil prices as it has few prospects for growing its oil production in the immediate future.

Market watchers are expressing concern about the potential demise of the large major oil companies. Financial analysts are worried about high production costs, future global crude oil demand, and low reserve replacement ratios.

Chevron Corp. has cancelled all but one major crude oil project for the foreseeable future as collapsing world oil prices make most new investments unprofitable. The world’s third largest private owned oil exploration company plans to reduce spending on drilling rigs, oil platforms, and other developments by about 26% over the next two years.

The Latin American state-run oil companies, whose largesse filled government coffers from Mexico to Brazil during the crude oil boom of the previous decade, are quickly becoming dangerous liabilities as soaring debt levels scare off investors. Politicians are being forced to sharply cut back on plans to spend petro-cash on popular social projects and are instead grappling with mounting bills at their state owned companies. As an example, Cotemar, one of Mexico’s largest oil service providers, will lay off as many as 2,000 workers after state-owned Pemex suspended two of the company’s contracts amid massive budget reductions.

Petroleum exploration activity in Australia has collapsed in the wake of the plunge in global crude oil prices over the last 18 months. The country’s crude oil production has fallen to its lowest level in 45 years. The total number of oil and gas exploration and development wells drilled in the country was halved to 821 in 2015, down from 1,534 in 2014.

The US total rig count has fallen to the lowest level since at least 1940, oil services company Baker Hughes said, as energy firms continued to slash activity amid the deepest energy price rout in a generation.

Chevron has started up its massive Gorgon liquefied natural gas (LNG) project in Australia and will soon be shipping more of the fuel into an oversupplied market, eroding producer revenues but also likely hastening the advent of a liquid Asian spot market. The $54 billion project is seen by some as the last piece required to establish a truly global natural gas market.

The US Energy Information Administration reported that renewable energy sources accounted for nearly 13.5% of that nation’s utility-scale electrical generation in 2015. This is an increase of more than 2% over 2014.

 

 

with h/t Tom Whipple

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