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INDUSTRY SEES BIG YEAR FOR GAS: Strong global demand, low storage levels in Europe, and lots of competition between the continent’s markets and those in Asia are causing the natural gas industry to anticipate a strong year ahead for U.S. producers.
Industry group heads told fellow members during yesterday’s State of the Energy Industry meeting hosted by the United States Energy Association that demand has turned a 180 after the coronavirus pandemic’s disruptive effects, which has driven U.S. liquified natural gas production to peak capacity.
Charlie Riedl, vice president of the Natural Gas Supply Association, said LNG is in a particularly strong position.
Riedl detailed the “demand destruction” U.S. LNG faced during 2020, with demand in July of that year reaching a low of 3.1 billion cubic feet per day.
It has since seen multifold growth. Demand hit 12.1 billion cubic feet per day in December and stands right now over 13 billion cubic feet per day.
“Our facilities are running here in the U.S. at above name-plate capacity, meaning we’re producing literally as much possible LNG as the facilities are capable of safely doing so at this point,” Riedl said.
Strong demand for gas is also being buttressed by countries’ ambitions to reduce carbon emissions for gas’s significantly cleaner emissions profile in comparison to coal.
The European Commission has (not without controversy – see below) recognized gas as an important, lower-emissions bridge fuel for EU members, proposing to include natural gas projects as “green” under its sustainable finance taxonomy. Furthermore, gas is integral to individual members’ energy transition plans, including Germany.
“There will be a place for U.S. LNG in Europe for the foreseeable future,” Reidl said. “And that’s evidenced by what we’ve seen in some of the contractual agreements that have been put in place in the recent months between European buyers and U.S. LNG suppliers.”
What else is going on at home: Beyond the LNG market, U.S. natural gas production has reached a record this winter. Production was up by 4 billion cubic feet per day in November and December versus 2020.
NGSA President and CEO Dena Wiggins praised the achievement but said insufficient new pipeline capacity in conjunction with the growth was problematic, especially in the Northeast, where grid operator ISO New England named a lack of pipeline capacity as a reason the region faces a heightened risk of blackouts this winter.
More than 7 billion cubic feet per day of pipeline capacity in the region has been cancelled or put on hold since 2018.
“We obviously need pipelines to get our gas to market. We obviously need pipelines in the Northeast to serve that market,” she said. “There’s plenty of gas sitting there in the Marcellus Shale, if we did only get it to the Northeast, I think it would be helpful to the people who live there.”
Welcome to Daily on Energy, written by Washington Examiner Energy and Environment Writer Jeremy Beaman (@jeremywbeaman). Email [email protected] for tips, suggestions, calendar items, and anything else. If a friend sent this to you and you’d like to sign up, click here. If signing up doesn’t work, shoot us an email, and we’ll add you to our list.
EUROPEAN FIGHT OVER WHETHER GAS AND NUCLEAR COUNT AS GREEN: A showdown over whether natural gas and nuclear count as green and should be included in clean-energy measures is looming in Europe. A group of advisers to the European Commission are set to recommend against including gas and nuclear in its draft plan for the EU’s “sustainable finance taxonomy, ” according to Reuters.
Also, on Thursday, Austria, Spain, Luxembourg and the Netherlands issued a joint letter warning against the proposal, saying, per Euractiv, that, “Given the long lifespan of both nuclear energy and natural gas facilities, an inclusion in the taxonomy risks to lead to a technological lock-in for many decades and divert investments away from renewables.”
Remember: This fight has been on a low simmer in the U.S., too. Left-wing climate activists opposed Democratic efforts to include nuclear and carbon capture in any clean electricity standard, back before Sen. Joe Manchin killed the most recent attempt at crafting a standard in the Democratic spending proposal. The battle is on pause for now, but the stakes are very high.
ELECTRIC VEHICLE CHARGING DOLLARS DUE ‘IN COMING MONTHS’: Shares of the bipartisan infrastructure law’s $7.5 billion in funding for electric vehicle charging stations will start to flow soon, Deputy Transportation Secretary Polly Trottenberg said yesterday during a National EV Charging Initiative summit.
Trottenberg said the new Joint Office of Energy and Transportation expects to issue guidance to states during the second week of February as planned and will then accept detailed plans from states as to how they intend to use funds.
The office is also shooting for May for the issuance of standards for the EV industry associated with the funding.
“We will be, once the state plans come to us and we approve them, we will be apportioning formula dollars, and then we will be also conducting at some point this year, a discretionary grant program as well,” Trottenberg said. “A lot of guidance coming on our side and then dollars hopefully floating, you know, by the middle of this year.”
The infrastructure law provides $5 billion in formula funding for states to build new chargers and a further $2.5 billion for a competitive grant program. President Joe Biden is targeting 2030 for 50% of all new vehicle sales to be zero-emissions and has ordered federal agencies to acquire 100% zero-emission vehicle fleets by 2035, or 2027 for the government’s light-vehicle fleet.
Granholm highlight: Energy Secretary Jennifer Granholm opened the summit yesterday, saying, “We’ve got to make sure that every American can get an electric vehicle and can get wherever they want to go in that electric vehicle.”
She also emphasized that the grid needs more clean power in order to power those vehicles.
“Electric vehicles are only as clean as the electrons that are going into them,” she said.
BPC RECOMMENDS NEW BODY FOR ENERGY DEMONSTRATIONS: The Bipartisan Policy Center is recommending Congress create a new government body to better enable successful demonstration and deployment of novel clean energy technologies that get funding from the federal government.
BPC’s American Energy Innovation Council, a group of current and former utility CEOs and technology and labor leaders, issued a report proposing a new “Energy Demonstration and Finance Corporation” with an initial $60 billion in funding to manage cooperative agreements, grants, and technical support for demonstration projects, and to provide financing tools for large-scale, higher-risk early project deployments.
“There is a need for a sort of public-private collaboration on these sets of issues around commercialization because it’s hard for one company to handle the risks of demonstrating a whole new technological platform on its own,” Sasha Mackler, executive director of the BPC’s Energy Program who oversaw the drafting of the recommendations, told Jeremy.
While the Department of Energy’s new Office of Clean Energy Demonstrations and its Loan Programs Office each serve their own demonstration and deployment function currently, Mackler said successfully scaling new clean technologies would be served by marrying the demonstration and deployment duties under common leadership in the near term before then building out a new, separate institution to handle it.
Mackler emphasized, “It’s really not a critique. It’s just sort of giving advice [to lawmakers]: Since you’re thinking about this, this is what we think you should do.”
US KEY TO EASING OIL PRICES: Oil and gasoline prices are high but access to spare capacity has enabled the market to avoid price hikes on the scale that coal and LNG have seen around the world, IHS Markit assesses in a new report looking at where the “great supply chain disruption” is headed this year.
But the firm expects demand growth to continue, as do OPEC and the IEA, and for that spare capacity to be used up, saying the global market needs more from U.S. producers.
“If there is not significant supply growth from the United States and other sources outside of the OPEC+ agreement in 2022, then spare capacity could shrink further, which will make the oil market more crisis prone,” the report says.
And on export ban: The Biden administration already nipped the prospect of an export ban in the bud, but IHS nonetheless says, as other opponents have, that it would worsen the situation.
“If you were to rip out that 3 million barrels per day from the global oil market, what’s going to replace it?” it asks.
OVERSIGHT LOOKING DEEPER INTO OIL FIRMS: The House Oversight Committee is asking member of the boards of directors at ExxonMobil, BP, Chevron, and Shell to appear before the committee on Feb. 8 to testify to “the role of the fossil fuel industry in preventing meaningful action on global warming,” the Washington Post reports.
Democrats on the committee aren’t letting up on the industry, having accused the firms and industry groups, including the American Petroleum Institute and the U.S. Chamber of Commerce, of misinforming the public about the science of climate change and greenhouse gas emissions from fossil fuels.
The committee already heard testimony from top executives of each company in October, after which Chairwoman Carolyn Maloney pledged to subpoena the firms for more documents with internal communications about climate science and business practices.
ENERGY FIRMS PULL OUT OF MYANMAR: French oil and gas giant TotalEnergies and U.S.-based Chevron said they will cease drilling in Myanmar’s Yadena gas field, citing human rights abuses by the Burmese government.
“TotalEnergies has not been able to meet the expectations of many stakeholders … who are calling to stop the revenues going to the Burmese state,” the company said of its recent operational strategy in the country since a military coup in February of last year. It had halted all ongoing projects but was still producing gas from the Yadana field, it said.
Chevron said it would leave the country “in light of circumstances.”
Firms operating in the country had been subject to outside pressure, including from some U.S. lawmakers. Democratic Sen. Ed Markey of Massachusetts last month called on the Biden administration to cut off oil and gas revenues to the military government after leader Aung San Suu Kyi, who was elected but then overthrown by the coup, was sentenced to prison.
WEST VIRGINIA LAWMAKERS EYEING NUCLEAR RESTART: The state Senate’s Economic Development Committee advanced a proposal Wednesday to remove parts of state law restricting the construction of nuclear power plants, the Intelligencer reports.
“This is a change for West Virginia to be an all-of-the-above energy state,” said Senate Minority Whip Michael Woelfel.
The Rundown
Bloomberg Germany Courts BMW, Airbus in Bid to Speed Up Green Shift
E&E News Tesla looks to northern Minnesota for nickel
Euractiv EU ministers mull carbon border tax, argue over nuclear’s green credentials
Calendar
TUESDAY| JAN. 25
9 a.m. The Department of Energy’s Solar Energy Technologies Office will host the second National Community Solar Partnership Annual Summit.
11 a.m. Resources for the Future’s Richard Newell will host a one-on-one conversation with FERC Commissioner Allison Clements about grid resilience, environmental justice, and Biden’s clean energy agenda.
