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GAS SUPPLY TROUBLE FOR EUROPE? Europe is at risk of gross gas supply shortages this winter, its second largely without Russian piped gas, due to supply volatility and chillier weather.
A new study, published by Cornwall Insights, said that these conditions, combined with higher gas demand from Asian buyers, could leave Europe vulnerable to a “range of swing factors.” Among them:
Weather: Last winter was an aberration for Europe and allowed for a “relative level of fortune” due to record-high temperatures, as Breanne reported previously. These conditions are unlikely to repeat themselves, however.
Competition for imports: China’s economy is recovering from pandemic lockdowns, driving up demand and price pressure for LNG. Beijing’s demand remained suppressed in 2022, with LNG imports 19% lower than the previous year, researchers said—allowing Europe to snap up record amounts of LNG on the spot market.
Supply stability: Recent events—including worker strikes at three LNG plants in Australia, and the Israel-Hamas war—have also risked supply instability.
Why it matters: European Union leaders have touted their above-average gas storage capacity heading into the 2023-2024 winter heating season. Levels currently stand at 99% capacity, nine percentage points above the level the bloc sought to achieve before the start of winter. They’re also investing heavily in long-term LNG supplies and long-term contracts.
Most recently, Chevron said yesterday it is in talks with Europe to secure a 15-year LNG supply contract. Europe has struck at least six long-term LNG purchase agreements since last winter, including last month’s 27-year deal between France and QatarEnergy announced last month.
While these deals help ensure the EU has enough gas to meet near-term demand, they also risk compromising the bloc’s goal of reaching net-zero emissions by 2050, the researchers warned. Therefore, “the current build-out of the infrastructure necessary to meet short-term energy security goals must be balanced against the longer-term decarbonisation trajectory,” they said.
Welcome to Daily on Energy, written by Washington Examiner Energy and Environment Writers Breanne Deppisch (@breanne_dep) and Nancy Vu (@NancyVu99). 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.
UPDATE – A DELAY IN RUBIO’S CR: A vote on Sen. Marco Rubio’s disapproval resolution overturning the Biden administration’s decision to waive “Buy America” requirements for government-funded electric vehicle charging stations has been pushed to next week, according to the Florida Republican.
In a brief interview with Nancy, Rubio said he intends to move on the measure “early next week,” stating that a few absences in the Senate complicated the timing of the vote.
Just a reminder: Disapproval resolutions under the Congressional Review Act have a limited window to be considered before the measure expires. Read more about the resolution here.
SHELL PROFITS DROP ON LOWER DEMAND: Shell reported third-quarter profits of $6.2 billion today, a 34% drop in earnings compared to the same period last year, which stood at $9.45 billion— though its losses were buffered slightly by stronger LNG trading.
The Q3 profits were broadly in line with investors’ projections of $6.25 billion, and are an increase from Shell’s Q2 earnings, which stood at just $5 billion.
“Shell delivered another quarter of strong operational and financial performance,” Shell CEO Wael Sawan, who took the helm of the company at the start of the year, said in a statement.
“We continue to simplify our portfolio while delivering more value with less emissions,” he added.
Sawan also reiterated plans to focus the company on higher-margin profits—including keeping oil production steady through 2030 and increasing natural gas production, as he seeks to boost investor confidence and boost profits.
In accordance with those goals, Shell last week announced plans to cut at least 15% of the workforce at its low-carbon solutions division and scale back its hydrogen division, Reuters reports.
Still, the earnings wrap a somewhat lackluster earnings period for U.S. oil majors across the board. Competitors BP, Chevron, and Exxon have posted sharp year-on-year declines in Q3, as energy prices and global demand have cooled in the 20 months following Russia’s invasion of Ukraine.
MANCHIN BASHES BIDEN ADMINISTRATION ON DELAYED LEASE SALE: Sen. Joe Manchin bashed the Biden administration this morning for a delayed oil and gas lease sale in the Gulf of Mexico, stating that the delay was “entirely the administration’s fault,” Nancy reports.
During his opening remarks for a Senate Energy and Natural Resources committee hearing, the chairman expressed frustrations on the postponement of Lease Sale 261 – a project that would span nearly 73 million acres across the Gulf of Mexico – which was announced by the Bureau of Ocean Energy Management moments earlier. Although BOEM cited legal issues to explain the delay, Manchin placed the blame on the Biden administration.
“BOEM is once again blaming the courts for delaying the sale, but the delays are entirely the Administration’s fault,” Manchin said. “The Department of the Interior was so eager to meet the demands of environmental groups to restrict the sale that it bypassed important legal requirements leading to this litigation.”
In a statement issued Thursday morning, BOEM announced that it would be postponing Lease Sale 261 in “response to judicial orders” from the U.S. Fifth Circuit Court of Appeals.
“Until the court rules, BOEM cannot be certain of which areas or stipulations may be included in the sale notice,” the statement reads. BOEM advised potential bidders to not place offers until the agency is given additional instruction from the courts, and that the agency will hold any bids already received. The agency said it will hold the sale after it receives further direction from the court of appeals. Read more from Nancy here.
SECOND TOYOTA RECALL WITHIN LAST WEEK: Toyota recalled more than 1.8 million RAV 4 sport utility vehicles spanning several model years on Wednesday, due to a fire risk posed by a replacement battery.
The New York Times reports that the voluntary recall covers 1.85 million vehicles from model years 2013 to 2018, according to a company statement. Some of the vehicles could be equipped with replacement 12-volt batteries that have dimensions that are too small, the automaker said.
“If a small-top battery is used for replacement and the hold-down clamp is not tightened correctly, the battery could move when the vehicle is driven with forceful turns,” it said.
However, it’s unclear whether any fires or accidents have occurred related to the recalled batteries.
The RAV 4 recall announced Wednesday was the second announced from Toyota in the span of a week. Just last Thursday, the company recalled 814,000 Highlander sport utility vehicles because the front bumper could fall off.
NEW CHANGES AT ERCOT: The Electric Reliability Council of Texas is changing its requirements for declaring emergencies, making it easier to take action in order to keep the grid stable. The shift in requirements could mean enacting rotating outages earlier than before.
The new requirements have increased the baseline minimum operating reserves before emergency alerts are issued.
“The generation resource mix that powers the grid has changed, and how we operate the grid has evolved with it,” said ERCOT Senior VP and COO Woody Rickerson. “By increasing the minimum reserve levels for the different EEA levels, we are better representing system requirements during emergency conditions.”
The changes are as follows:
- Energy Emergency Alert 1, or EEA 1, will be initiated when reserves fall to 2,500 megawatts and are not expected to recover within 30 minutes. The previous threshold was 2,300 MW.
- EEA 2 will be issued if reserves reach 2,000 MW (previously 1,750 MW) and are not expected to recover within 30 minutes. The alert will also be issued if the frequency has dropped below 59.91 Hz for 15 minutes – with the previous threshold standing at 30 minutes.
- EEA 3 will be initiated if reserves drop below 1,500 MW and are not expected to recover within 30 minutes, or if the frequency drops below 59.8 hz for any period of time. If either situation occurs, ERCOT would require the Transmission and Distribution Service Providers to implement controlled outages.
INTERIOR AND ENVIRONMENT APPROPS BILL HEADS TO THE FLOOR: The House Rules Committee considered the Interior, Environment, and related agencies appropriations bill Wednesday night, approving a rule for floor consideration. The funding in the bill – which provides $34.8 billion for the Interior Department, the Environmental Protection Agency, and other related agencies – stands to be 10% below the 2023 fiscal year, and offers a large number of funding cuts across the board. For example, the bill would rescind $9.3 billion from the EPA, Interior, and the Council on Environmental Quality provided by the Inflation Reduction Act.
The chamber is currently considering amendments to the bill, and will later vote on the bill. Read the amendments here.
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