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SPR REFILL LATEST: The Department of Energy said today it is looking to purchase up to 3 million additional barrels of oil to refill its Strategic Petroleum Reserve, in an effort to replenish the nation’s emergency stockpile after it was drained last year to a 40-year low.
DOE officials are seeking to purchase up to 3 million barrels of oil for the SPR to be delivered in March 2024, Breanne reports. More specifically, they are looking to purchase sour crude, to be delivered to the Big Hill storage facility in Texas.
Last week, it also announced a similar solicitation for up to 3 million barrels of SPR oil for delivery in February 2024. DOE has already purchased roughly 9 million barrels for the SPR at an average of $75 per barrel, and secured nearly 4 million barrels in accelerated exchange returns.
To date, DOE has already purchased roughly 9 million barrels for the SPR at an average of $75 per barrel, and secured nearly 4 million barrels in accelerated exchange returns, the department noted in a statement.
In an interview on BloombergTV this week, Deputy Energy Secretary David Turk said physical constraints limit purchases to 3 million barrels a month. “We are refilling as much as we can,” he said. “We’ve been doing that for the last several months. And at this price level, we’ll keep doing it.”
Read more from Breanne here.
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EU REACHES DEAL TO STOP RUSSIAN LNG IMPORTS: The European Union reached a tentative deal Friday that would allow countries to effectively ban Russian shipments of liquefied natural gas without new energy sanctions, Bloomberg reports.
The European Parliament and the EU Council supported a portion of a package that sets common rules for natural gas, renewable gases, and hydrogen, preparing the bloc to transition away from fossil fuels. The measure would also allow governments to temporarily block Russian and Belarusian exporters from booking the infrastructure capacity needed for the shipments of LNG and natural gas.
“The regulation will contain provisions allowing member states to adopt restrictions to the supply of natural gas, including liquefied natural gas (LNG), from Russia or Belarus, with the aim of protecting the essential security interests of the member states or of the EU, while taking account of security of supply and diversification objectives,“ the EU Council said in a statement.
Why it’s important: Although there are no EU-wide sanctions on Russian gas, the latest move is part of the bloc’s push to shift supplies from Russia following its invasion of Ukraine. While pipeline flows of natural gas have dropped to record lows, LNG shipments from Moscow have increased. Some EU officials have called for Russian shipments to be stopped, arguing countries shouldn’t renew long-term contracts once current ones end.
The ban still needs formal approval from the European Parliament and member states in the Council to become law. More on that here.
COP TALKS HEATING UP: World leaders are entering their second and final week of negotiations at the largest global climate conference, otherwise known as COP28. The issue on the table: Whether countries can commit to phasing out fossil fuels.
The U.N. published a new draft of negotiation text today, offering five different options.
Here’s what they are:
Option 1: A phase out of fossil fuels “in line with the best available science;”
Option 2: Phasing out of fossil fuels in line with the “best available science,” while adhering to the principles and provisions laid out in the 2015 Paris Climate Accords;
Option 3: A phase out of unabated fossil fuels, while recognizing the need for a consumption “peak” within this decade, and advocating for the energy sector to be predominately free of fossil fuels well ahead of 2050;
Option 4: Phasing out unabated fossil fuels to achieve net-zero carbon emissions in energy systems by or around 2050;
Option 5: No language on the future use of fossil fuels.
Our analysis: While it’s obvious that the last option is the least aggressive, the first and second option are arguably the most ambitious, as they are the broadest provisions that can be applied to a large range of sectors emitting greenhouse gases. The rest of the options allow possibilities for the prolonged use of fossil fuels. For example, options three and four explicitly mention the “energy sector” to be free of fossil fuels or net zero by a certain deadline – which excludes other sectors that produce a significant amount of carbon emissions, such as transportation.
During a press conference on Friday, COP28 president Sultan Al Jaber pressed for the phase-down of fossil fuels, calling it “essential” while promising to facilitate the “most ambitious outcome” for an agreement.
“The phase down of fossil fuels is inevitable, it is essential, and the decline of fossil fuel consumption is going to happen for sure over time,” Al Jaber said. “We must be orderly and responsible when it comes to the energy transition.”
His public remarks stand in contrast to his conversations with world leaders during the conference, where he claimed there is “no science” to back the idea that phasing out fossil fuels will keep average global temperatures from rising above 1.5 degrees Celsius. Following a Guardian report outlining his remarks, Al Jaber claimed that his comments were misinterpreted.
The significance: The fossil fuel debate could feasibly be the most contentious issue at the summit. The conference is now shifting from celebrating early wins, such as an agreement to a climate fund helping vulnerable countries recover from natural disasters, to a slow-walk of tough negotiations.
Over 100 countries want an agreement to phase out the use of coal, oil and gas. If agreed on, it would mark the first time fossil fuels are specifically mentioned in a decision from the conference, sending a united message from global leaders on their approach toward combating emissions.
ENVIRONMENTAL GROUPS PROTEST U.S. LNG EXPORTS AT COP28: Climate protesters outside the summit yesterday pressed the Biden administration to halt its support for LNG—and, in particular, the new LNG export terminals the U.S. is preparing to build as it looks to send more of the chilled gas to its European allies.
More than 300 green groups across some 40 countries also sent a letter to Biden yesterday asking him to stop new U.S. LNG permitting, and to halt financial and diplomatic support for such projects.
The U.S. has approved five new LNG export licenses in the 21 months since Russia’s invasion of Ukraine in an effort to help alleviate a feared supply crisis in the EU as the bloc looked to wean itself off of Russian fossil fuels. U.S. exports are also slated to double by 2027.
But LNG exports also emit lots of CO2, and U.S. LNG exports alone have soared by a whopping 81% since 2019.
“Any push for a phase-out of all fossil fuels at COP28 risks falling flat if the world’s leading LNG exporter shows no signs of changing course,” the letter said.
OIL PRICES HEADING FOR SEVEN-WEEK DECLINE FOR THE FIRST TIME SINCE 2018: Oil prices are slated to see a seven-week decline today for the first time in five years, thanks to sluggish Chinese demand and fears of oversupply, a trend that defies recent OPEC+ production cuts aimed at pushing prices higher.
Futures for Brent crude gained nearly $2 by mid-morning, nearing $76 per barrel, and futures U.S.-based West Texas Intermediate rose by 2%, above $71 per barrel. But both are heading for seven straight weeks of losses for the first time since 2018.
Demand in Beijing fell an additional 10% in November, according to data from S&P Global, putting investors on edge at a time when many are already concerned about potentially over-supplied markets.
“Crude oil prices have steadied with Brent trading around $75 but remains on track to record its longest weekly losing streak since 2018 amid ample global supply and doubts some OPEC+ producers will deliver their promised cuts, while a further drop towards $70 will likely raise the risk of an emergency OPEC+ meeting,” Saxo Bank commodity analyst Ole Hansen said in a note to clients. Read more from MarketWatch here.
…Meanwhile, India is hoping to take advantage of the cheaper prices to snatch up even more Russian crude oil: Futures for Russia’s flagship Urals-grade crude consistently trade lower than Brent, and current Urals prices stand at just $58.48—lower than the $60-per-barrel Russian price cap imposed by the G-7-led coalition.
That’s important, since it allows India and other buyers to take advantage of Western shipping services and insurers—which under the price cap are prohibited from shipping any Russian crude sold above $60 per barrel.
India has emerged in the last two years as the biggest buyer of Russian crude. Its imports rose to an average of 1.76 million bpd between April and September of 2023, more than double its imports front the same period last year.
The U.S. recently sanctioned three vessels — Kazan, Ligovsky Prospect and NS Century—that regularly shipped Russian crude to New Delhi, according to Reuters.
It remains to be seen how much India will ramp up its purchases of Urals, which it has continued to refine and sell back to EU countries in recent months, sparking concern from some in the bloc.
WYOMING STALLS ON SELLING GRAND TETON LAND: The Wyoming State Board of Land Commissioners voted Thursday to delay a decision on a proposed sale of 640 acres of trust land within the border of Grand Teton National Park, E&E News reports.
The five-member board, chaired by Republican Gov. Mark Gordon, tabled a recommendation to sell the land at a public auction for $80 million to fund the state’s public schools.
“I think we just need more time to work on this,” said Megan Degenfelder, the state’s superintendent of public instruction and one of the board members who voted to delay action until the fall of 2024. She recommended that the state begin talks with the Interior Department in an attempt to exchange other federal land in the state for the area, which is near Jackson Hole, a popular vacation destination.
The significance: Thousands of residents had urged the board to either block or delay the sale, with many hoping that the land, known as the Kelly Parcel, would be preserved and ultimately sold to the National Park Service.
The Kelly Parcel is one of four plots of school trust lands owned by Wyoming since it became a state, before the creation of the Grand Teton National Park. NPS has already bought the other three parcels. Read more on that here.
The Rundown
E&E News What’s in and what’s out of the final NDAA package
Politico Another win for oil states? Azerbaijan gets boost in bid to host next climate talks.
E&E News Climate law renewable credits hit nonprofit roadblock
