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TRUMP EPA VS BIG OIL ON METHANE: The EPA is set to unveil a rescission of Obama-era methane limits later this week that pits the Trump administration against many of the world’s biggest oil companies, including BP, Shell, and ExxonMobil.
In fact, those oil companies see the EPA’s plans, expected to eliminate direct federal regulation of methane from the oil and gas sector, as a threat to their business, Abby reports in a story for this week’s Washington Examiner magazine. That’s because large multinational oil companies are worried about investor pressure and climate activists’ scrutiny, both of which could make natural gas less politically acceptable as a cleaner fuel.
“We need to control methane emissions now to maximize the advantages of gas and secure a role for decarbonized gas in the future energy system,” BP wrote in November comments to the EPA, filed by Joe Ellis, the company’s head of U.S. government affairs. “Otherwise, we risk losing the confidence of investors, consumers, policymakers, and other shareholders.”
Methane, the main ingredient of natural gas, is a greenhouse gas dozens of times more potent than carbon dioxide.
EPA, though, appears more attuned to the concerns of smaller U.S. producers: “There are some of the large multinational oil and gas companies who prefer us to take one approach, but we’re looking at what the impact would be on small- and medium-sized American companies,” EPA Administrator Andrew Wheeler said of the pending rule in late July, during a virtual event hosted by the Heritage Foundation.
Wheeler is expected to sign the new methane rules in the Pittsburgh area, in the heart of the Marcellus Shale, one of the country’s largest natural gas reserves, the Wall Street Journal reports. In addition to eliminating direct regulation of methane, the EPA is expected to finalize changes relaxing Obama-era leak detection and repair requirements, which would now apply only to emissions of volatile organic compounds, or VOCs, a precursor to smog, from new and modified oil and gas wells.
Smaller U.S. oil and gas producers say they can’t absorb the regulatory costs of methane requirements like big oil majors can. The oil and gas sector is a “food chain industry,” meaning larger companies don’t tend to retain low-production wells, which have lower profit margins and would have the hardest time taking on the costs of new regulations, said Lee Fuller, executive vice president of the Independent Petroleum Association of America.
One of the big questions will be how oil majors respond: Especially those like BP and Shell that have recently set ambitious goals to achieve net-zero emissions by 2050. Those commitments include not only strengthened methane targets, but also pledges to more actively lobby for policies consistent with their climate ambitions.
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.
SUMMERTIME OF SADNESS FOR US LNG EXPORTS: U.S. exports of liquefied natural gas fell from a record of 8 billion cubic feet per day in January, to an average of 3.1 Bcf/d in July 2020, a drop of about 60%, the EIA reported Tuesday.
Things got so bad that during the week of July 12, only four vessels loaded U.S. LNG, carrying about 2 Bcf/d, the same levels as the second week of December 2016, before the U.S. became a major exporter.
This summer, EIA forecasts U.S. LNG facilities will have utilization rates of 35%, compared to the normal in recent years of more than 90% during summertime.
EIA expects U.S. LNG exports to remain low for a few more months before returning to normal by November as global demand has dried up due to the pandemic and Europe and Asia have a buildup of inventories.
A BAD SECOND QUARTER FOR PERMIAN POWERHOUSE: Occidental Petroleum, the largest oil producer in the Permian Basin, reported a second quarter net loss of $8.4 billion Monday. The Houston-based company also announced a $6.6 billion write-down in the value of its assets, which is equivalent to more than 40% of its market value, according to Bloomberg. It’s one of the largest of many writedowns that have occurred among oil companies during the price crash, relative to the company’s size.
Occidental was already struggling with a large debt load after purchasing rival and major shale player Anadarko Petroleum last year. It was one of the most vocal U.S. companies calling for the federal government to provide liquidity support to producers during the price crash.
Occidental has slashed its capital budget for 2020 to between $2.4 billion to $2.6 billion, down from previous estimates of between $5.2 billion to $5.4 billion. The company said it will only operate one rig in the Permian for the rest of the year.
BROUILLETTE TO TAKE ‘ALL OF THE ABOVE’ VISIT TO COLORADO: Energy Secretary Dan Brouillette is visiting Golden, Colorado, Wednesday to tour the agency’s National Renewable Energy Laboratory and “announce a new, visionary energy research platform,” the department said.
Brouillette will also participate in a roundtable discussion hosted by the American Petroleum Institute in Denver. He will be joined by API President and CEO Mike Sommers and other oil and gas industry leaders.
DOE FACES LAWSUIT THREAT OVER DELAYED EFFICIENCY STANDARDS: The attorneys general of 15 states, D.C., and New York City, as well as six environmental groups, say they’ll sue the Department of Energy in 60 days if it doesn’t update energy efficiency standards for more than two dozen consumer and industrial appliances.
The attorneys general and the environmental groups, in separate notices of intent to sue Monday, identify 25 products for which the Energy Department has fallen behind, including refrigerators and freezers, dishwashers, and room air conditioners. Under law, the Energy Department must review the appliance efficiency limits every six years. According to the notices, the agency is as much as four years behind schedule for some of the products.
Appliance standards could pack a big punch: The Natural Resources Defense Council, leading the environmental coalition threatening to sue, says updating the limits for 15 of the listed products (the ones where recent projections are available) would avoid nearly 80 million metric tons of carbon emissions by 2035. Those updates could also provide $22 billion each year in energy savings.
SENATE DEMOCRATS UNITE AGAINST PENDLEY: Every Senate Democrat is opposing William Pendley, President Trump’s controversial nominee to lead the Bureau of Land Management, the entire caucus wrote in a letter to the president Monday.
The letter, led by Sen. Martin Heinrich of New Mexico, cited Pendley’s “decades of opposition” to the agency’s mission of supporting access to public lands.
Pendley has been leading the Bureau of Land Management on a temporary basis for nearly a year. He previously urged the sale of public lands and has made comments dismissive of climate change, the Endangered Species Act, and the Black Live Matters movement.
The united opposition of Democrats puts the spotlight on Republican Energy Committee members such as Cory Gardner and Steve Daines, who are touting their conservation credentials from leading passage of the Great American Outdoors Act. The committee has not yet scheduled a confirmation hearing for Pendley.
SENATORS ASK FOR EXTENSION OF TAX CREDITS FOR OFFSHORE WIND: A bipartisan group of senators led by Republican Bill Cassidy of Louisiana wrote the Treasury Department asking for a safe harbor extension for offshore wind projects that qualify for the production tax credit and the investment tax credit.
The Internal Revenue Service has already extended the so-called “safe harbor” provisions under the wind and solar tax credits to account for delays companies have faced because of the virus outbreak.
The letter, released by Cassidy’s office Tuesday, says the revised guidance is “too narrow” and asks for a further extension.
“Extending the continuity safe harbor by a total of three years, in addition to the standard four-year period, for all open offshore wind projects will fully address interruptions resulting from COVID-19,” the letter says.
SIERRA CLUB BACKS BIDEN: Presumptive Democratic presidential nominee Joe Biden on Monday picked up the endorsement of one of the top environmental groups in the United States, the Washington Examiner’s Spencer Neale reports.
Executive Director Michael Brune said the group was “confident” the former vice president is the person most qualified to “champion” environmental justice issues. “We are confident that Joe Biden will be the champion for climate justice that America needs in the White House,” Brune said in a statement.
The endorsement is obviously not surprising, given Trump’s inaction on climate change, but it demonstrates the extent to which Biden has consolidated support of environmental groups, including the political organizations of the League of Conservation Voters and Natural Resources Defense Council.
AGRICULTURE PRODUCING MORE SULFUR EMISSIONS THAN FOSSIL FUELS: Agricultural applications of sulfur (as a fertilizer for crops and as a pesticide) are producing up to 10 times the sulfur load seen during the peak days of acid rain pollution in the 1960s and 1970s, according to new research from scientists at University of Colorado Boulder and Syracuse University.
The high levels of sulfur from agricultural uses raises concerns about whether it will have similar harmful effects as acid rain, said Eve-Lyn Hinckley, assistant professor of environmental studies at CU Boulder and lead author of the study.
Already, studies of specific agricultural areas in California and Florida have found downstream effects from sulfur applications, including higher concentrations of toxic methylmercury (sulfur can convert mercury into its organic form) in fish, said Charles Driscoll, a civil and environmental engineering professor at Syracuse and co-author of the research. Higher concentrations of sulfur can also negatively affect wetlands, as is the case in the Everglades, and soil nutrients, Driscoll told Abby.
What’s next: Hinckley and Driscoll said the next steps for research are to better characterize the effects of agricultural use of sulfur. They aren’t advocating for stopping the use of sulfur in farming, but are hoping to determine in what quantities it should be used and how to curb the negative effects.
“This is an issue that we can work now to get ahead of and addressed in an expedited way, bringing together researchers, the farming communities, and policy and regulatory communities around this issue,” Hinckley told Abby. “Hopefully we can start a new wave of research on sulfur in agriculture, and connect that work to action.”
ANOTHER PUSH FOR CLEAN ENERGY STIMULUS: “Hundreds of thousands of clean energy jobs are at stake,” 250 clean energy business leaders wrote in letters to House and Senate leadership Monday, led by the Clean Energy Business Network.
The requests in the letter aren’t anything new. The clean energy leaders are calling for an extension of tax credits for wind, solar, carbon capture, and other low-carbon energy, as well as allowing those tax credits to be refundable or available as direct payments. The letter also requests increased research and development spending and investments in climate resilient infrastructure.
The Rundown
Reuters Duke takes $1.6 billion charge to exit Atlantic Coast natgas pipe
Politico The man determined to deliver Trump’s Alaskan oil promise
New York Times Delta Air Lines bought an oil refinery. It didn’t go as planned.
Reuters Oil companies start to take back crude from US emergency reserve
Washington Post The $16 billion plan to beam Australia’s Outback sun onto Asia’s power grids
Calendar
TUESDAY | AUG 11
The House and Senate are out.
