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ENERGY DIPLOMACY MODE: Europe’s extremely tight gas market is pushing the Biden administration into energy diplomacy mode, with EU allies staring down an even more dire supply situation due to a prospective Russian invasion of Ukraine.
President Joe Biden told reporters yesterday the United States could help the bloc through this period of volatile geopolitics and high and at times record prices, although he didn’t divulge just how.
“I think there’s ways in which we can be of some value added in terms of the price of gas — natural gas and the like — to take the burden off of European countries that are now totally dependent on Russia,” Biden said.
The EU gets around 40% of its gas from Russia. That level of reliance means Europe would likely see electricity rationing and rolling blackouts in the event of a complete cut-off of Russian gas, while even a partial disruption “could have sizeable impacts on prices and industrial production in Europe,” Citi analysts said this week.
Reuters also reported last week that State Department officials, including senior adviser for energy security Amos Hochstein, have approached and probed energy companies operating in the EU about what they plan to do if Russia invades Ukraine and gas supplies are cut off or severely restricted.
One source told the outlet the U.S. pledged “to have Europe’s back if there is an energy shortage due to conflict or sanctions” and said Hochstein has been talking with heavyweight firms in the liquified natural gas market and major LNG exporter Qatar “to see if they can help the United States.”
Market forces are already doing the work on their own. European gas prices have fallen this month, with futures contracts for February on the Dutch TTF trading for less than half of where they peaked in December.
Analysts with the Energi Danmark Group assessed in a market report yesterday, “Over the last couple of weeks, liquified natural gas supply to Europe has ramped up significantly with several big tankers now heading to Europe as it has turned more profitable for producers to sell their gas here.”
U.S. LNG operators have been a big part of that and have been projected to play an even bigger role throughout the year, with more export growth in store associated with Cheniere’s expanded liquefaction capabilities at its Sabine Pass facility.
Gas and geopolitics: With more specifics outstanding, it should be noted that the Biden administration’s decision last month to reject calls for a ban on fuel commodity exports — something a number of congressional Democrats asked Biden to do — suggested separately that it sees the benefits associated with exported oil and gas outweighing any that may come from keeping it at home.
The oil and gas industry has been scoring big with exports at current prices, but they’ve also made the case that U.S. product is a big help to friends who need fuel, perhaps a rare point of agreement between Biden and the industry.
“We have allies, geopolitical allies, who need energy right now, and we are energy secure in this country right now. We produce more than we consume,” Dave Callahan, president of the Marcellus Shale Coalition, told Jeremy last month. “Again, do we want to leave our friends out in the cold and in the dark? Do we want them to rely upon energy from OPEC energy from Russia?”
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BIDEN ON OIL: Biden also said during his press conference yesterday there’s more work to do to bring down energy prices in the U.S. and that the administration will “continue to work on trying to increase oil supplies that are available.”
But Biden asserted several times doing so would be “hard.”
The administration’s previous action on oil via opening the Strategic Petroleum Reserve is still unfolding. The Department of Energy announced bid awards for the 18 million barrels of SPR crude last week, and shares of the 32 million other SPR barrels made available via its exchange authority continue to be distributed.
National Security Council spokeswoman Emily Horne said this week the administration still has “tools” available to affect prices. The administration said at the time of its first announcement on opening the SPR that it may return to the font if prices warrant doing so.
Brent crude remains above $88 per barrel as of this writing, and the West Texas Intermediate stands above $86.
Build Back Better: Biden also said yesterday he has an expectation that parts of Democrats’ Build Back Better Act could be extracted from the overall proposal as passed on their own.
“I think we can break the package up, get as much as we can now, and come back and fight for the rest later,” he said.
That could bode well for the hundreds of billions in spending for provisions related to energy and climate change mitigation, as holdout vote Sen. Joe Manchin said those have a good chance for agreement across the caucus.
VIRGINIA OUT OF EPA EMISSIONS REGULATION CASE: Virginia has withdrawn its involvement in the pending Supreme Court case challenging EPA’s authority to regulate emissions from power plants.
Jason Miyares, the newly-minted Republican attorney general of Virginia, said yesterday on Twitter the state “is no longer participating in West Virginia v. EPA,” and state Solicitor General Andrew Ferguson filed a letter with the court saying Virginia has changed its position in the case.
“Virginia is no longer of the view that EPA’s repeal of the [Obama’s Clean Power Plan] was unlawful,” Ferguson wrote. “Virginia is now of the view that [Clean Air Act] Section 111(d) did not grant EPA authority to issue the CPP, and its repeal was therefore required.”
To recap, multiple states and coal companies are challenging the D.C. Circuit Court of Appeal’s ruling last January vacating the Trump administration’s ACE Rule (which repealed the Clean Power Plan) and rejecting the Trump EPA’s reading of a more limited authority under the Clean Air Act to impose “outside the fence” emissions regulations.
Oral argument in the case is scheduled for Feb. 28.
EMISSIONS TO RISE: Energy-related greenhouse gas emissions are expected to rise over the next two years, the Energy Information Administration said in estimates detailed in its “Today In Energy” blog.
EIA said economic activity, including more travel and associated petroleum-related emissions, will drive emissions up another 2% this year after rising 6% year over year in 2021. Notably, though, EIA still projects total emission to remain below 2019 levels.
DEMOCRATS INCREASING SCRUTINY OF BITCOIN: Democrats are increasingly pressuring the crypto industry over its emissions.
The Subcommittee on Oversight and Investigations of the Committee on Energy and Commerce is holding a hearing today on the industry’s energy use. Blockchains and Bitcoin, in particular, use vast amounts of energy in “mining,” that is, the production of new coins.
And Sen. Elizabeth Warren of Massachusetts is making it clear that she’s interested in regulating the industry to lower emissions.
“The extraordinarily high energy usage and carbon emissions associated with Bitcoin mining could undo much of our work to tackle the climate crisis — not to mention the harmful impacts cryptomining has on local environments and electricity prices,” Warren said in a statement to Politico.
The Rundown
E&E News How FERC, courts may change pipeline industry in 2022
Bloomberg What does a gas country do without gas? The Dutch can answer
Calendar
THURSDAY | JAN. 20
12-3:45 p.m. The National EV Charging Initiative will host a first-of-its-kind electric vehicle summit.
