Alboran Energy Strategy Consutlatns

September 2023

  • Energy Musings, September 14, 2023

    Written by

    Allen Brooks

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    in

    Energy Musings contains articles and analyses dealing with important issues and developments within the energy industry, including historical perspective, with potentially significant implications for executives planning their companies’ future.

    Download the PDF

    September 14, 2023

    Will New BP CEO Toe The Green Agenda Or Target O&G?

    BP CEO Bernard Looney has resigned over disclosure issues of past dalliances with company employees and previous assurances he made to the Board of Directors about his future actions. Given the details and timing of the resignation, some wonder if the poor stock price performance reflecting Looney’s commitment to more green energy also played a role in his leaving. BP directors have an opportunity to reset the company’s strategy, but will it or will it continue the current push for a greater role by renewable energy with its lower profitability? READ MORE

    Will New BP CEO Hue The Green Agenda Or Target O&G?

    Tuesday, the BP family was rocked with news that CEO Bernard Looney was resigning immediately to be replaced on an interim basis by current CFO Murray Auchincloss. The company’s press release, “bp CEO resigns,” outlined the basics of the story. Two years after Looney was appointed CEO, the Board of Directors received information from an anonymous source that he had personal relationships with company employees that had not been previously disclosed. With the assistance of outside counsel, the Board reviewed the allegations.

    During the Board’s investigation, Looney told the directors of a “small number of historical relationships with colleagues prior to becoming CEO.” The Board’s review of the information concluded no breach of the Company’s Code of Conduct had occurred. At that time, the Board was given assurances by Looney about the details of these relationships and his future behavior. Recently, another anonymous source provided information questioning Looney’s assurances that reopened the investigation that is reportedly still ongoing. We assume the ongoing investigation is involved in helping the Board determine what compensation is owed to Looney.

    As the BP press release stated: “Mr. Looney has today informed the Company that he now accepts that he was not fully transparent in his previous disclosures. He did not provide details of all relationships and accepts he was obligated to make more complete disclosure.”

    According to Wikipedia, Looney married British life coach Jacqueline Hurst in October 2017. They separated in 2018 and divorced in 2019, three months before Looney became CEO. According to her 2021 book, in a chapter on anxiety, Hurst claims Looney only married her to get promoted at BP. She also said that he ended the marriage with a WhatsApp message.

    At the time, The Sunday Times interviewed a friend of Looney’s who said, “He was briefly married during a period in which he wasn’t promoted. So, if he married her to get promoted, that didn’t seem to have worked. Maybe he divorced her to get promoted.”

    For the second time in two decades, BP has lost its CEO over undisclosed personal relationships that question honesty and judgment. It also raises questions about the integrity of the Board’s CEO search process. Interestingly, the other CEO, Lord John Brown, had his previously undisclosed personal relationship publicized by a London newspaper. Some investors are wondering whether another judgment issue is playing a greater role in Looney’s departure than his dalliances. This question underlays a recent Wall Street Journal article about BP’s future strategy.

    Read the full article on Energy-Musings.com »

  • Energy Musings, September 11, 2023

    Written by

    Allen Brooks

    on

    in

    Energy Musings contains articles and analyses dealing with important issues and developments within the energy industry, including historical perspective, with potentially significant implications for executives planning their companies’ future.

    Download the PDF

    September 11, 2023

    The Changing Electric Vehicle Landscape

    The EV revolution is continuing with all the support and directives governments can mount. Still, we have seen some slowing of the momentum, which promotors will say is more about overall economic growth trends and concerns. But the biggest news about this revolution is that the Chinese are becoming larger players with better and cheaper vehicles than they previously offered. Fifty Chinese EV companies, twice the previous number and the largest contingent to attend any global auto show, were at the recent Munich auto show. The EV landscape is changing, and like how China has taken over the solar panel market, onshore and offshore wind components and installations, and the lithium-ion battery market, EVs are their next target. The legacy auto company managers are beginning to wake up to the new competitive landscape. What can they do about it? READ MORE

    The Changing Electric Vehicle Landscape

    A recent article by INSIDEEVs reported on June 2023 global sales of electric vehicles (EV) along with how they fared during the first six months of the year. The headline summed up the market’s health: “Global EV Sales In June 2023: Over 1.26 Million Plug-In Cars Sold – It was almost a new record, marginally behind December 2022.” That sounds pretty good, no? But no record? Is that because there is no Christmas in June? Or maybe it’s because EV buyers, wanting to maximize subsidies they can receive when buying these costly vehicles and fearing reductions in 2023 rushed to buy in December?

    With June sales falling below last December’s, is there a problem in EV land? The June and year-to-date EV sales figures would suggest that if there is one, it is not obvious. June sales were up 38% over last year, and the six-month figures were 40% higher than for the first half of 2022. Sounds like a healthy market. Unfortunately, because not all automakers release monthly sales it is hard to know about market conditions monthly.

    What is changing is the competitive landscape for EVs. China is leading the charge both as the largest EV market on the planet and now as its auto companies are crashing western automobile markets ‒ except the U.S. The IAA Mobility auto show in Munich, Germany demonstrates just how much the EV playing field is changing in Europe, and is a precursor of a changing worldwide market.

    Chinese EV manufacturers stormed the auto show, setting up in 50 company booths. That is not only twice the number that showed up at the last show, but it also is the largest number of Chinese EV companies to attend any global auto show. Forget Paul Revere’s cry “The British are coming!” Now it’s “The Chinese are coming!” And because the Chinese EV companies have prized battery efficiency over vehicle bigness, the industry hopes to gain market share with lighter, cheaper models.

    Before the Munich auto show, Luca de Meo, CEO of auto manufacturer Renault, told a French radio show audience, “It’s clear that they are more competitive in the electric car value chain. I think they are a generation ahead of us.” His message to his competitors was: “We need to catch up very, very quickly.”

    Yes, global auto manufacturers are coming to understand that China’s autos and its EVs are suddenly in a different league than they were a few years ago. Their cost and quality progress are reminiscent of how the Japanese auto industry evolved – from small, poor quality cars to now providing some of the highest quality vehicles in the global market covering the entire range of models, and they are lower cost.

    Read the full article on Energy-Musings.com »

  • Energy Musings, September 5, 2023

    Written by

    Allen Brooks

    on

    in

    Energy Musings contains articles and analyses dealing with important issues and developments within the energy industry, including historical perspective, with potentially significant implications for executives planning their companies’ future.

    Download the PDF

    September 5, 2023

    Weather Versus Climate Change

    This summer has been dominated by news of record-setting heat waves. Houston, our home, was prominently featured in those record heat stories. In Rhode Island, the state set a record – fourth year in history ‒ without a 90-degree temperature during June, July, and August! When we started looking at how temperatures in Houston, Rhode Island, and nationwide compared with history, we found some interesting surprises. The biggest being was this past winter when temperature records were being broken in Houston and Rhode Island. READ MORE

    Weather Versus Climate Change

    Climate change is a hot topic (pardon the pun), and not just because much of the country has been living under a heat dome. We have avoided the worst of the nation’s heat waves by spending the summer at our vacation home in Rhode Island. Last week, The Providence Journal posted a headline saying that there had not been any 90-degree temperatures registered officially during June, July, and August at the state’s weather station at T.F. Green Airport in Providence. Wow! We knew it had been a cool summer here, but we were unaware of just how cool it was. The Providence Journal article pointed out that since 1905, only three other years did temperatures fail to reach 90 degrees: 1962, 1951, and 1932.

    A local meteorologist said that while the chances of 90-degree temperatures in September are low, the month averages about one 90-degree day. The rarity was September 1983 which experienced nine 90-degree days. The current weather forecast for this week is targeting temperatures to reach 90 degrees for one day before a cooling trend moves in sending temperatures down about 8-10 degrees on average.

    All summer, the media reported how these U.S. heat waves were unprecedented. Yes, we had record temperatures in places, but history shows that they were not as pervasive as reported. But for a media intent on accentuating the worst of the weather and trying to link it to climate change, it was not hard for reporters to find one-off episodes of how much people’s lives were impacted by hot temperatures.

    Our home in Houston experienced significant heat this summer along with a lack of rainfall. The latter became serious enough that the City of Houston instituted a watering ban in late August, something we don’t remember happening for many years. Population and business growth in Houston and Texas are putting increased pressure on local water systems. In the Houston area, the gumbo soil is sensitive to moisture content, so movement associated with drier conditions can cause water mains to leak or break resulting in thousands of gallons of water being lost. More money and workers will be needed to address this problem. And more rain would help.

    But heat is our focus. A chart from the Houston Chronicle showed the number of 100-degree days in Houston by year. Through September 3, there have been 41 days of century temperatures. That total still trails 2011’s record of 46 days of triple-digit temperature days. Will 2023 catch 2011?

    Exhibit 1. Houston’s 100-degree Days First Record Summer Was In 1902

    Read the full article on Energy-Musings.com »

  • Energy Musings, September 1, 2023

    Written by

    Allen Brooks

    on

    in

    Energy Musings contains articles and analyses dealing with important issues and developments within the energy industry, including historical perspective, with potentially significant implications for executives planning their companies’ future.

    Downdoad the PDF

    September 1, 2023

    NJ Calls It “Choice” But It Is Really About “Free Money”

    The Governor of New Jersey is telling his residents that the legislation to ban the sale of internal combustion vehicles by 2035 is all about improving their choices in buying cars. Buy used or go next door are the answers for those who do not want an EV or hybrid. His climate director gave away the game: there is so much free money residents would be short-changing themselves if they didn’t grab some of it. Washington’s money printing press drives government policies. READ MORE

    Last Tuesday’s Duds For Offshore Wind

    BOEM’s Gulf of Mexico offshore wind lease sale received only two bids for the single Louisiana lease offered, while the two leases off Texas received no bids. The offshore wind movement took a hit. There are numerous reasons why developers were reluctant to bid. The same day, leading offshore wind developer Ørsted announced a $2.3 billion impairment of its U.S. offshore wind portfolio, the second impairment in 12 months. Inflation, capital costs, and reduced subsidies are the reason. The company is having similar problems with its North Sea projects. Ørsted’s stock fell by 25% as investors question if the bad news is over. READ MORE

    August Market Doldrums Are Over And Energy Did Well

    Energy was the best-performing sector for August, giving the sector a second consecutive month in the top spot. Fundamentals for the sector continue to improve, which enabled oil prices to rise over August. It appears global oil demand is growing, and supply is restrained supporting higher oil prices and energy company earnings, which drive stock prices. The balance of 2023 may see these trends continue. Enjoy the ride. READ MORE

    NJ Calls It “Choice” But It Is Really About “Free Money”

    New Jersey Governor Phil Murphy is a big green energy promoter. As the Wall Street Journal pointed out in an editorial, he wants to force residents to buy electric vehicles (EV) to save the planet. He has pushed the state to adopt California’s ban on the sale of new internal combustion engine (ICE) vehicles by 2035, barely over a decade from now. Murphy has not only championed EVs, but he also led the charge to give the state’s share of federal tax revenues from offshore wind destined for residents’ pocketbooks back to Ørsted, the Danish developer of the Ocean Wind project which has become a lightning rod of political outrage.

    By wanting to burnish his green credentials, Murphy pushed to have New Jersey, one of the 17 states that routinely follow California’s auto standards, join the dozen states that have also signed onto the ban on ICE vehicle sales. Murphy is selling his proposal as expanding the vehicle choice options for residents while disguising the reality that their ability to purchase a new ICE vehicle is going to be restricted as the state heads toward the 2035 ban.

    Read the full article on Energy-Musings.com »

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