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SWING-STATE ENERGY PLAY: Deputy Energy Secretary Mark Menezes, fresh off Senate confirmation, touted the Trump administration’s support of a “petrochemical renaissance” during a visit Thursday to a ethane cracker plant proposed in Eastern Ohio.
“The Trump Administration and the Department of Energy are committed to supporting this project as part of our vision for an energy and petrochemical renaissance in Appalachia,” Menezes said. The event was not livestreamed but DOE shared his comments with us.
The visit is the latest of swing state stops in recent weeks for Trump administration officials, who are trying to demonstrate support for union jobs in the oil and gas industry. Representatives from the Plumbers and Steamfitters Local Union 83 attended the event.
Menezes, as we write this, is en route to Pittsburgh, the heart of the Marcellus Shale, where he will join EPA Administrator Andrew Wheeler to announce a rollback of methane rules (see more on that below).
The Ohio petrochemical plant would take ethane, a component of natural gas, and use it to produce ethylene, which is used in chemical and plastics manufacturing. The project is being developed by Thailand-based PTT Global Chemicals America, but the company’s partner, South Korea-based Daelim Chemical USA, recently backed out, citing economic struggles from the pandemic.
Trump all in on petrochemicals: Menezes’ visit was intended to show federal support for the project, as PTT moves towards a final investment decision by the end of this year or early next. The White House is even banking on its success. If you recall, President Trump visited a petrochemical plant in western Pennsylvania, known as the “cracker,” last August to make the case for the growing demand for oil and gas for petrochemicals used in plastics — in high demand during the coronavirus — and other everyday products, and how that contrasts with pledges from Democrats to phase out fossil fuels.
“The President remains committed to the success of the Ohio Petrochemical Complex Project and the continued development of the Appalachian region’s natural gas resources,” Kayleigh McEnany, the White House press secretary, told Josh. “This project and others will enhance American energy security, create thousands of jobs and spur economic development in a region that was devastated by the destructive job-killing policies adopted by the previous administration.”
In his address, Menezes cited several Trump administration initiatives supporting the project, including transportation grant funds for improving rail along the Ohio River, where the plant would be located, and loans and grants to improve nearby water and sewer infrastructure.
Welcome to Daily on Energy, written by Washington Examiner Energy and Environment Writers Josh Siegel (@SiegelScribe) and Abby Smith (@AbbySmithDC). Email [email protected] or [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.
EPA TO PEEL BACK OIL AND GAS METHANE LIMITS: Wheeler is expected to sign two regulations in Pittsburgh today, one that eliminates the direct regulation of methane from oil and gas equipment and another that reduces the frequency with which industry operators must survey their equipment for leaks.
The rules are the Trump administration’s latest undoing of Obama-era climate regulations, and they culminate a multi-year effort by the agency to avoid having to set controls for emissions of methane, the main ingredient of natural gas and a potent greenhouse gas, from oil and gas equipment built before 2016.
The Obama EPA had begun crafting those regulations before leaving office, an effort former EPA Administrator Scott Pruitt quickly abandoned.
The oil industry isn’t united against existing source regulations anymore: Several big oil companies, including BP, Shell, ExxonMobil, and large independents such as Pioneer Natural Resources, had called on the EPA to drop its plans to eliminate methane curbs, as Abby reported for this week’s magazine. Many of those companies also explicitly called on the EPA to set controls for all existing equipment.
Something else to watch for: The EPA’s push to eliminate direct methane controls could also set the stage for the Trump administration to limit the agency’s ability to set climate regulations in the future, the Wall Street Journal reports.
The agency is expected to argue that the Obama administration didn’t make a necessary legal finding that oil and gas methane emissions contributed significantly enough to greenhouse gas pollution to warrant regulation. If oil and gas methane didn’t make the cut, sectors with smaller emissions, such as refiners, steel production, cement makers, and other industrial manufacturers, likely wouldn’t meet that legal bar, either.
OIL DEMAND WILL STAY GROUNDED IN 2020, IEA SAYS: The International Energy Agency reduced its 2020 oil demand expectations Thursday for the first time in months, signaling the market’s recovery from the pandemic price crash “remains delicate.”
IEA expects global oil demand to be 91.9 million barrels per day this year, down 8.1 million b/d from a year ago, and about 140,000 b/d from its forecast last month.
The agency cited the inability of countries to blunt the rise of coronavirus cases, along with continued weakness in jet fuel demand as people avoid flying. IEA also revised down its 2021 global demand projection by 240,000 b/d to 97.1 mb/d, mainly due to aviation sector weakness.
“Jet fuel demand remains the major source of weakness,” IEA said.
Data cited by the IEA shows the number of kilometers travelled by plane was still 67% less in July than a year ago.
IEA says demand for global jet fuel and kerosene (used in jet engines) will be 39% below the 2019 level this year.
Despite the demand uncertainty, U.S. oil production is starting to rise again, and output is also increasing in Canada and Brazil. OPEC+ has begun easing its historic supply cut agreement, which could put downward pressure on prices, which have stayed consistently in the low $40s for weeks.
“Ongoing uncertainty around demand caused by Covid-19 and the possibility of higher output means that the oil market’s re-balancing remains delicate,” IEA said.
ANOTHER REFINER MOVES TO RENEWABLE FUELS: Phillips 66 plans to convert a San Francisco-area oil refinery to the “world’s largest” renewable fuels plant, the company announced Wednesday.
The move is the latest example of some fuel-makers moving into cleaner alternatives as consumption of traditional oil-based fuels lags, and the potential for more environmental regulations looms.
Phillips 66 is transforming its Rodeo refinery into “Rodeo Renewed,” reconfiguring the facility to produce 800 million gallons per year of renewable diesel, renewable gasoline, and sustainable jet fuel using cooking oils, fats, greases, and soybean oils. The new plant will begin producing these fuels in early 2024 after the company invests $800 million into the conversion.
Phillips 66 cited California’s low-carbon fuel standard, which aims to cut emissions and reduce petroleum in transportation fuels, as a reason for the change.
“Phillips 66 is taking a significant step with Rodeo Renewed to support demand for renewable fuels and help California meet its low-carbon objectives,” said Greg Garland, Phillips 66 chairman and CEO.
Phillips 66 also announced it plans to shut down its Santa Maria refining facility in Arroyo Grande, California, starting in 2023.
Marathon, the largest U.S. fuel maker, HollyFrontier Corp, and CVR Energy also begun or have pledged similar conversions.
VENEZUELA’S FALL TO ZERO OIL: The country with the largest oil reserves in the world could soon be producing none of it, the research group IHS Markit projected Thursday.
Crude oil production in Venezuela, one of the world’s earliest, and at one time, largest oil producers, is currently around 100,000 to 200,000 barrels per day, and falling.
Venezuelan production was around 650,000 barrels per day just a year ago, and was as high as 2 million barrels per day in 2017. The country is now the third smallest producer among OPEC’s 13 producers, ahead of Equatorial Guinea and war-torn Libya.
“It is now conceivable that the country could soon be producing zero barrels, or very close to it,” IHS Markit said.
The biggest reason for Venezuela’s production fall is decades of poor management by the country’s socialist government, but the problems have been exacerbated by the oil price crash and U.S. sanctions.
Venezuela’s demise as an oil producer, however, will have “little to no impact” on global oil markets given there is plenty of production capacity across the world to satisfy the decline in demand.
ENERGY DEPARTMENT TO EASE SHOWERHEAD RULES AFTER TRUMP COMPLAINTS: The Energy Department is proposing to change the regulatory definition for a “showerhead” in a way that would loosen decades-old water conservation standards for the appliance, after Trump has repeatedly complained about showers’ water pressure.
“You take a shower, the water doesn’t come out. You want to wash your hands, the water doesn’t come out. So what do you do?” Trump said during remarks last month about his administration’s deregulatory efforts. “You just stand there longer or you take a shower longer? Because my hair — I don’t know about you, but it has to be perfect.”
What DOE’s proposal does: It doesn’t change the level of the water conservation standards, set back in 1992, but it alters a definition set by the Obama administration requiring the entire showerhead fixture to meet a limit of 2.5 gallons of water per minute. Under the Trump administration’s proposed definition, each showerhead nozzle, even if there are multiple in a single fixture, would have to meet the 2.5 gallons per minute standard.
With a four- or five-nozzle fixture, “you could have 10, 15 gallons per minute powering out of the showerhead, literally probably washing you out of the bathroom,” Andrew deLaski, executive director of the Appliance Standards Awareness Project, told the Associated Press of the proposal.
SIX FORMER EPA ADMINISTRATORS CALL FOR AGENCY ‘RESET’: As the EPA approaches its 50th anniversary in December, the agency should adjust its work to confront new challenges, including climate change and the disproportionate effects pollution has on minority and low-income people, former EPA chiefs for the Reagan, H.W. Bush, Clinton, W. Bush, and Obama administrations wrote in an open letter Wednesday.
Part of that “reset” should mean greater funding for the agency, the former administrators say. The Trump administration has repeatedly proposed cutting the EPA’s budget by around a third, though Congress hasn’t matched that request, keeping the agency’s funding largely flat over the last few years.
The former administrators say, adjusted for inflation, EPA’s budget was 50% higher than its current funding under former President Ronald Reagan. “The steady deterioration of resources has undermined EPA’s readiness for the ability to adapt and respond to emerging needs,” they wrote.
MAYORS SEEK CLEAN ENERGY TAX CREDIT EXTENSIONS: “Federal clean energy tax incentives play a critical role in advancing solutions that reduce air and water pollution, improve our health and enhance our quality of life,” 64 mayors, joined by Environment America, wrote in a letter to Congress on Thursday.
The local leaders are calling on Congress to extend federal tax credits for onshore wind and solar, electric cars, offshore wind, and energy efficiency, as well as create a new federal incentive for energy storage.
The Rundown
Bloomberg Home of the oil sands eyes cleaner future as hydrogen superpower
Reuters European battery makers power up for a green recovery
Associated Press US says Iran briefly seizes oil tanker near Strait of Hormuz
Washington Post Baghdad’s heat offers glimpse of world’s climate change future
Calendar
THURSDAY | AUG 13
The House and Senate are out.
