What to Watch

SpaceX Lifts Two of Its Own Prototype Satellites Into Orbit

Tesla Inc. Chief Executive Elon Musk’s venture Space Exploration Technologies Corp. launched two prototype communications satellites into space this week.

SpaceX’s Falcon 9 rocket lifted off on Thursday at 6:17 a.m. local time from Vandenberg Air Force Base in California, with a main mission to carry a Spanish radar-imaging satellite into a 320-mile high orbit.

The takeoff marked the 18th consecutive successful commercial launch for the firm.

Along for the ride were two of SpaceX’s smaller experimental satellites. The firm plans to test their antennas and other systems.

The demonstration satellites are intended to pave the way for an eventual constellation of thousands of similar internet-via-space satellites SpaceX hopes to deploy in coming year.

Energy News

Oil Falls

Oil prices edged down Friday morning. Brent crude, the global benchmark, was down 0.66% at $65.94 a barrel on London’s Intercontinental Exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading down 0.59% at $62.41 a barrel.

U.S. Investors Are Still Waiting to See Returns from Their Shale Investments

U.S. shale producers are responding in varied ways to pressure from investors who want a payout. Some firms have moved to pay dividends while others have never offered a payout or have not restored dividend cuts since the oil crash in 2014, Reuters reports.

“In the next few years, new [battery] chemistries are being introduced to wean off expensive metals, particularly Cobalt”

– Analysts for Sanford C. Bernstein Research

Trump Is Set to Hold a Meeting About Biofuels Policy

U.S. President Donald Trump announced a meeting scheduled for next week with lawmakers and cabinet officials to potentially revise U.S. biofuels policy, after a Pennsylvania refiner cited the regulation as the cause of its demise.

Energy Journal Exclusive

South Sudan Seeks to Pump Up Its Oil Output

South Sudan’s Minister of Petroleum Ezekiel Lol Gatkuoth stopped by London this week to shop around for partners to help kick-start the east African country’s oil industry.

The sector has been hampered by internal violence following the country’s secession from Sudan in 2011.

International firms began prospecting for oil in unified Sudan more than three decades ago. In 2010 the country was the third biggest oil producer in Africa.

Last year, South Sudan ranked as the eleventh biggest producer in the region, according to the International Energy Agency.

South Sudan, which has 3.5 billion barrels of proved oil reserves, has largely made peace with its internal warring factions and patched up its relationship with its northern neighbor, Sudan, said Mr. Gatkuoth.

Last year 139,000 barrels per day of the landlocked country’s crude flowed through a vital pipeline that crosses Sudan, said the minister. Mr. Gatkuoth wants to increase the country’s production to 480,000 barrels a day by 2019.

The following are edited excerpts from an interview on Tuesday with The Wall Street Journal.

Q: How does South Sudan’s oil compete in an oversupplied market?

A: The incentives are definitely there. The oil is very cheap to produce…[at] $5 to $7 a barrel onshore. We have heavy crude and light crude and the oil is actually sweet. The laws of taxation are friendly to investors. We give them a grace period or we exempt them.

Q: What’s the relationship between South Sudan and the U.S. and what is affecting the investment from American companies?

A: Well historically we are allies to the U.S…because without the support of the U.S., South Sudan would not have achieved independence.

Of course friends always differ in different areas. [The U.S. State Department announced] a unilateral arms embargo [in February] for South Sudan not to buy arms from the U.S…because they want to pressure us to make peace. But I was telling them this is actually not the best way to advise friends.

Q: Are you concerned about the surge in U.S. shale oil production?

A: I am concerned about it because it has an impact on the oil price. We have agreed that since the United Arab Emirates is now the president of OPEC, they will engage with our friends in the U.S. to see how we can work together instead of us stabilizing the market and them enjoying the market.

Big Number

200,000

The Diesel market was hit by weak demand in January mostly because of mild weather in Europe, according to analysts for Energy Aspects “Combined European demand for heating oil and off-road diesel fuel, which averaged 1.2 million barrels per day in January 2017, could easily have fallen year on year by over 0.2 million barrels per day last month,” said the analysts in a recent note. The demand is expected to recover in the second quarter of 2018.

FutureCurve

Today: Baker Hughes releases weekly data on the number of rigs drilling for oil in the U.S.

March 5-9: Cambridge Energy Research Associates hosts the CERAWeek energy conference in Houston. The speakers include IHS Markit Vice Chairman Dr. Daniel Yergin and Amin Nasser, president and CEO of Saudi Arabia Oil Co., or Saudi Aramco.

June 5-6th: The London Crude Oil Summit. The speakers include Shell Vice President of Crude Trading Mike Muller and Franco Magnani CEO, of Eni Trading and Shipping.

Reporter’s Notebook

The WSJ’s Reporter Christopher Matthews on gas prices. Cheniere Energy is optimistic about returns this year because of soaring LNG demand in Asia. The company raised its top line earnings guidance for the year to a range of $2 billion to $2.2 billion from $1.9 billion to $2.1 billion. The company’s marketing arm has increased profitability because of increased spot LNG cargo prices in Asia, it said. CEO Jack Fusco said Chinese demand will provide longer-term demand growth in the region.

WSJ Correspondent Neanda Salvaterra on oil exploration. The waters off the coast of the west African countries of Guinea Bissau and Senegal have attracted the attention of several energy explorers looking for oil in unproven territories because of the good fiscal terms investors are getting from governments there said Rob Tims the CFO of Rhino Resources while at the IP Week Conference in London. “Our experience has been very positive,” said Mr. Tims, whose exploration firm is involved in several additional African countries including Namibia and South Africa.

The WSJ’s Mining Reporter Rhiannon Hoyle on the future for BHP. After a roundtable with BHP Billiton executives, Macquarie still thinks the company’s most likely option is selling its US shale acreage in one or more deals. As the big miner continues to review its options, the investment bank believes an asset swap for offshore acreage is probably the least likely option “given that BHP would require in return a Tier 1 asset.” Macquarie for months has been estimating the shale assets could get BHP some US$8-10 billion.