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THE PRECARITY OF EUROPEAN GAS SUPPLIES: European leaders are scrambling to take advantage of a warm summer and secure gas supplies for this winter, fearing the catastrophe that would ensue if Russian gas to the continent is cut off in the coming months.
The German government issued an “early warning” on gas supplies last week and began urging consumers to cut back on use, and leaders there have been among the most publicly resistant to sanctioning Russian energy for what it would do to their economy.
Meanwhile, a number of Europe’s smaller economies are in the same dire situation, where leaders warn of a humanitarian crisis if they are faced with a situation later this year where freezing temperatures collide with a need to ration gas.
Vaclav Bartuska, ambassador-at-large for energy security for the Czech Republic, said during the Transatlantic Energy Security Forum IV hosted by LNG Allies yesterday that his career-long mission to “make energy boring” is being challenged like never before.
“In my particular work, boring is good. For Americans, boring is bad,” Bartuska said. “For us — we are in a region which has far too much history for its own good.”
The Czechs have been especially reliant on Russian gas imports for its fuel mix, which would put them in a difficult position in the event of a cutoff.
“Europe imported last year 155 [billion cubic meters] in Russian gas. There is no way in hell that anyone can replace that in the short term,” Bartuska went on to say. “I really don’t know how we will pass this winter if we get in trouble, if Russian gas is cut off. It will be even less boring and are now — much less.”
Slovakia is in much the same position as its neighbor. Both are landlocked, which to an extent limits their ability to turn to liquefied natural gas imports from the likes of the U.S. and Qatar.
The Slovaks do have interconnections with Poland, which would allow them to partake of LNG delivered there. Expanding those interconnections and signing new contracts with LNG suppliers would be central to its energy strategy, said Juraj Sivacek, energy ambassador for the Slovak Republic.
Sivacek emphasized privately to Jeremy that the war in Ukraine has “completely flipped” the conversation around energy and energy security. He also told the event’s attendees that there won’t be any going back.
“The situation in the field of European security will never be the same as before,” he said. “That’s true for all other countries. Reducing and eliminating energy dependence on Russia has become a matter of national security.”
To be sure, the Europeans have made clear they prefer to phase out Russian gas on their own terms and don’t favor a swift break from imports. But neither disruptions nor an outright cut off are out of the question as the war rages on and threatens pipeline infrastructure.
The gas-for-ruble demand issued by an unpredictable Vladimir Putin also looms.
A ‘medium term’ solution: Officials from Estonia and Latvia were also present at the LNG forum, and all they made clear they are ready to negotiate with natural gas and LNG companies, several of which were also represented in the room.
Bartuska, for his part, said he doesn’t expect U.S. LNG to be a save-all and said several times that it’s a “medium-term solution” because of the sheer volume of Russian gas on which EU members rely.
The outliers: Marti Haal, chairman of Estonian energy holding company Alexela Group, told Jeremy his country and immediate neighbors are a bit better off than some fellow EU states because of their access to LNG infrastructure along the Baltic sea.
The Baltics are facing higher prices but are less strapped than the likes of Slovakia and Czech Republic, he said.
Leaders in both Lithuania and Latvia said in recent days the Baltics are no longer bringing in gas from Russia as of the beginning of April.
Welcome to Daily on Energy, written by Washington Examiner Energy and Environment Writers Jeremy Beaman (@jeremywbeaman) and Breanne Deppisch (@breanne_dep). 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.
OIL EXECUTIVES PLAY DEFENSE AT GOUGING HEARING: Chief executives from some of the nation’s top oil companies testified this morning before lawmakers on the House Energy and Commerce Committee, where they faced a series of tough questions from Democrats over the cost of gas prices in the U.S., which soared last month to their highest point since 2008.
Democrats have sought to blame energy companies for the price increases, accusing them of price gouging or artificially inflating prices for political gain. Meanwhile, at least 20 U.S. states have introduced gas tax holiday bills that would help temporarily drive down gas prices.
President Joe Biden called on oil and gas producers last week to increase their output, saying that U.S. companies “have an obligation that goes beyond just their shareholders to their customers — to their communities and their county.”
“We are here to get answers from the oil companies about why they’re ripping off the American people,” the panel’s chairman, Frank Pallone, said at the start of today’s hearing. “At a time of record profits, Big Oil is refusing to increase production to provide the American people some much-needed relief at the gas pump. Instead, they’re buying back their stock at an estimated cost of about $40 billion this year.”
Energy executives pushed back on that, however: “No single company sets the price of oil or gasoline,” Exxon CEO Darren Woods said at the outset of the hearing. “The market establishes the price based on available supply, and the demand for that supply.”
Meanwhile, Chevron CEO Mike Wirth argued that fuel prices are set by market dynamics, which he said companies in the U.S. do not have much—if any—room to control. “Changes in the price of crude oil do not always result in immediate changes at the pump,” Wirth said in his opening remarks, noting that “it frequently takes more time for competition among retail stations to bring prices back down at the pump.”
“I want to be absolutely clear,” Wirth added. “We do not control the market price of crude oil or natural gas, nor of refined products like gasoline and diesel fuel, and we have no tolerance for price gouging.”
Republicans, meanwhile, used their time to air grievances about Democrats’ policies, and to side with industry officials in blaming the Biden administration’s policies.
“Rather than deflect blame, President Biden should consider his own culpability,” said Rep. H. Morgan Griffith, a Virginia Republican on the committee. “As a direct result of President Biden’s anti-American energy agenda, prices have rapidly risen for more than a year.”
SCOTUS REINSTATES TRUMP CLEAN WATER ACT RULE: The Supreme Court today reinstated a rule implemented during former President Donald Trump‘s administration that restricts the authority of states to block federal permits under the Clean Water Act.
The Trump rule was initially removed by a federal court in October, which limited state and tribal authority to block projects by giving them a one-year time limit to do so. If the time limit was not met, the government maintained the ability to determine it had relinquished veto power.
The 5-4 decision came from the court’s conservative majority via the so-called shadow docket. Of note, Justice John Roberts joined the court’s liberal justices in dissent and specifically criticized the use of the shadow docket, the Washington Examiner’s Kaelan Deese reports.
Biden’s administration had asked the U.S. District Court for the Northern District of California to remand the dispute over the U.S. Environmental Protection Agency because it planned to replace the Trump-era regulation with a new rule by the second quarter of 2023.
“We have serious water challenges to address as a nation and as EPA Administrator, I will not hesitate to correct decisions that weakened the authority of states and Tribes to protect their waters, ” EPA administrator Michael Regan said in a May 2021 press readout.
The Trump rule, known as the “certification rule,” arose after several rejections to fossil fuel projects in left-leaning states. For example, Washington state denied a coal shipping port in 2018 and New York denied a natural gas pipeline in 2020.
SENATE GOP TRYING TO STAVE OFF CLIMATE EMERGENCY DECLARATION: Republicans want to preempt Biden’s declaration of a national climate emergency, something liberal Democrats have pressed him to do in the last month.
Senators introduced the Real Emergencies Act yesterday designed to “clarify the president cannot use climate change as the basis to declare a national emergency,” per a summary from Sen. Shelley Moore Capito’s office. It would prohibit the president from using the National Emergencies Act, the Stafford Act, and section 319 of the Public Health Service Act to declare a climate emergency.
Declaring a climate emergency is one among a list of actions which the Congressional Progressive Caucus said it wants Biden to take since the Build Back Better Act negotiations faltered.
The action plan also called on him to put a ban on crude oil exports and ban new oil and gas leasing on federal lands.
STATE DEPARTMENT’S DIPLOMACY WITH GAS INDUSTRY: A top Biden administration official sought to reassure a room full of skeptical natural gas industry players yesterday that the administration wants to work with them to address the energy supply crisis going on in Europe, but he emphasized that it is charging ahead with its green energy agenda.
Jose Fernandez, undersecretary for economic growth, energy, and the environment at the State Department, said during remarks at yesterday’s LNG event that the administration “believes that we can address the energy security crisis and at the same time, keep our focus on the overall goal of decarbonizing.”
“We understand that the transition is not going to happen overnight, but we can’t waste the opportunity to ensure energy security in Europe while advancing the clean energy transition,” he said.
Leaders representing multiple energy companies spoke up during the forum, boasting the U.S. gas industry’s emissions footprint relative to competitors and saying they wish to see more and faster approvals of pipeline infrastructure.
“We can drill all the wells we want to drill in Pennsylvania and there’s nowhere for the gas to go,” Nick Dell’Osso, president and CEO of Chesapeake Energy, said during a Q&A with Fernandez.
Yergin on SPR: S&P Vice Chairman and energy maven Daniel Yergin also made an appearance at the event to talk over global supply issues, where he cast aside the word “crisis” in favor of “emergency” to describe Europe’s energy outlook.
Yergin also endorsed Biden’s decision last week to open the Strategic Petroleum Reserve. “We have disruption going on right now,” he said. “I think the use of the Strategic Petroleum Reserve — this is what it was created for.”
EQT’S VISION FOR ‘UNLEASHING’ US LNG: Executives with EQT, the largest producer of natural gas in the U.S., were in Washington yesterday promoting their plan to increase LNG exports by 50 billion cubic feet per day.
“We realized that if you care about the climate, the biggest source of emissions around the world is foreign coal,” EQT CEO Toby Rice said during the LNG Allies event. “And this fortunately — the United States has the only solution to address, and that is unleashing U.S. LNG on a world stage to retire foreign coal.”
Will Jordan, EQT’s executive vice president and general counsel, said during an energy roundtable hosted by Transportation Committee Republicans yesterday afternoon that 50 bcf volume is “basically adding another LNG market to the world.”
FERC pipeline policy decision welcome: Jordan said separately that FERC’s recent decision to redesignate its recent policy statements, which would have introduced new environmental hurdles to gas infrastructure projects, was a “positive move” for enabling more gas production and transport.
“There definitely have been some signals of a positive appreciation of natural gas and the role that it will play in the transition and energy security for our allies,” Jordan told Jeremy. “That is what we need in order to generate the long term demand that will drive supply.”
EAGLE SLAUGHTER: A U.S. wind power developer pleaded guilty to multiple violations of the Migratory Bird Treaty Act this week after its wind turbine blades allegedly resulted in the deaths of more than 135 bald and golden eagles across the country.
The company, ESI Energy, pleaded guilty to three counts over golden eagles which were killed due to blunt force trauma after being struck by wind blades at its facilities in Wyoming or New Mexico, though Justice Department officials said that more than 135 bald and golden eagles have been killed by a blade strike at the company’s 50 different U.S. facilities since 2012. As part of its plea deal, federal prosecutors said ESI has agreed to pay a hefty settlement––including nearly $1.9 million in fines, $6.2 million in restitution, and an additional fee of up to $27 million, paid over the next five years, to help mitigate future eagle deaths at its facilities. Read more from Breanne here.
The Rundown
AP Storms batter aging power grid as climate disasters spread
The Hill EPA proposes ban on common type of asbestos
New York Times Forecasters face loss of data as weather balloon flights are cut
Reuters Cuba struggles to buy fuel as imports from Venezuela dwindle
Calendar
WEDNESDAY | APRIL 6
10:00 a.m. Dingell 2123 The House Energy and Commerce Committee will hold a hearing with six oil company executives titled, “Gouged at the Gas Station: Big Oil and America’s Pain at the Pump.”
THURSDAY | APRIL 7
9:00 a.m 1334 Longworth The House Select Climate Crisis Committee will hold a hearing on investing in energy efficiency.
10:00 a.m. 366 Dirksen The Senate Energy and Natural Resources Committee will hold a hearing on the scope and scale of critical mineral demand and recycling in the U.S.
