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BIDEN TO SAUDI ARABIA: In announcing President Joe Biden’s visit to Saudi Arabia next month, administration officials are seeking to drive home one key message: the trip is about more than just oil.
“To view engagement with Saudi Arabia and energy security as asking for oil — is simply wrong,” White House press secretary Karine Jean-Pierre told reporters at a press briefing yesterday.
Biden insisted as much this weekend: “The commitments from the Saudis don’t relate to anything having to do with energy.” he told reporters. “It happens to be a larger meeting taking place in Saudi Arabia. That’s the reason I’m going.”
But is it? News of Biden’s trip comes as national average gas prices climbed to $5 per gallon for the first time in history, ramping up pressure on the administration to act—even if that means making nice with a kingdom Biden previously vowed to reduce to “pariah” status.
Meanwhile, OPEC production actually fell during the month of May, according to the group’s newly-published monthly oil report. In total, OPEC produced 28.508 million barrels per day (bpd) last month—roughly 176,000 bpd less than it produced in April.
In the report, OPEC cited declines in production from Equatorial Guinea, Gabon, Iran, Iraq, Libya, Nigeria, and Venezuela.
Several OPEC members increased production month over month, including Algeria, Congo, Saudi Arabia, and the United Arab Emirates. The Saudis and UAE had the largest increases and together raised production by an average of 91,000 barrels per day.
The new OPEC numbers come less than two weeks after OPEC+ agreed to modestly increase production for July and August by roughly 648,000 bpd, a rate that looks out of reach at the cartel’s current performance levels.
Though that new output increase is minimal and unlikely to have any impact on U.S. prices, some have suggested it could be more of a symbolic gesture—paving the way for possible cooperation and signaling Saudi Arabia might be willing to play ball.
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.
API ASKS BIDEN TO BACK PRODUCTION NEW WITH 10-POINT PLAN: The American Petroleum Institute circulated a 10-point policy plan today that it says would encourage investment in new oil and gas production and lower energy prices if acted upon.
The “10 in 2022” plan, which API also sent to Biden this morning, asks the administration to reinstate the offshore lease sales it canceled last month, enable more LNG exports, support a walk-back of the SEC’s climate-related risk disclosure rule, and lift tariffs on steel imports.
Mike Sommers, API’s president and CEO, criticized the energy-related proposals that Democrats have put on the table so far, including a windfall profits tax that would target more of energy companies’ earnings when oil reaches a certain price.
“It would limit investment in oil and gas, and I would argue it would limit investments in alternatives from the American oil and gas industry as well,” Sommers told reporters when asked whether the windfall tax would result in less investment in renewables by affected energy companies.
Biden has endorsed more oil and gas production, while his administration has also sought to limit the industry’s growth, such as by shrinking acreage that will be made available this month across multiple onshore oil and gas lease sales.
FREEPORT LNG EXTENDS TIMELINE FOR RESTARTING OPS: Freeport LNG announced today that it doesn’t expect its liquefaction terminal to be fully operational again until “late 2022” following last week’s explosion, worsening the outlook for prospective (and desperate) European buyers.
The company said it expects partial operations at the Gulf Coast facility to resume in approximately 90 days and that none of its liquefaction trains, dock facilities, or process areas were affected by the explosion.
An investigation is underway to determine what exactly led to the explosion, Freeport said, adding that “preliminary observations suggest that the incident resulted from the overpressure and rupture of a segment of an LNG transfer line.”
The extended timeline worsens the prospects for European gas buyers, who have been increasingly turning to Freeport for LNG since the war began and seeking to increase gas storage before the winter arrives.
PERMIAN BASIN EXPORTS EXPECTED TO HIT RECORD-HIGH OUTPUT IN JULY: Oil output from the Permian Basin is slated to rise to a record-breaking high of 5.316 million barrels per day in July, according to a new U.S. Energy Information Administration report — an increase that comes even as a lack of refining capacity threatens to keep prices largely unchanged.
According to the EIA’s Drilling Productivity Report, Permian oil output is expected to increase by 84,000 bpd in July. Total output from major U.S. shale oil basins, meanwhile, is expected to rise to 8.901 million bpd, the highest point since March 2020.
Meanwhile, the number of drilled but incomplete, or DUC, wells, is at its lowest point since 2013, the EIA said. As Reuters notes, the number of available DUCs has fallen for 23 consecutive months.
The record-high Permian output levels come after a months-long push from the Biden administration to increase drilling and domestic production in a bid to drive down fuel costs, which climbed this week to a national average of $5 per gallon for the first time.
Despite the higher-than-anticipated EIA forecast, however, analysts say the impact of the new crude supply is expected to be limited. For consumers to see a decrease in prices, more drilling must occur — and producers can’t rely on existing DUCs to avoid the cost of purchasing more wells. Read more from Breanne here.
NEXTERA DROPS ‘REAL ZERO’ BY 2045 PLAN: Energy giant NextEra went public with a new “real zero” emissions goal this morning, which envisions a zeroing out of Scope 1 and Scope 2 emissions by 2045.
The Florida-based holding company, which owns utility Florida Power & Light Company and renewables-focused NextEra Energy Resources, said its plan would displace greenhouse gas-emitting sources with wind, solar, battery storage, nuclear, and others rather than offset them, as “net-zero” plans do.
NextEra said the plan, in addition to mitigating climate change, would “substantially eliminate fuel price volatility and drive U.S. energy independence.”
As for Scope 3 emissions, the company said it intends to be more transparent and “ultimately, eliminate these emission sources.”
‘YOU JUST CAN’T IGNORE THOSE IMAGES’: IN TEXAS, GOP WOMEN ARE LEADING THE FIGHT ON CLIMATE CHANGE: On this week’s “Plugged In” podcast, host Neil Chatterjee and Breanne were joined by Sarah Davis and Courtney DeBrower to discuss their role in starting Clear Skies Texas, a nonprofit founded in 2021 by seven prominent conservative Texas women.
In the interview, Davis and DeBrower addressed early hurdles they faced in starting the organization—and what opposition they’ve encountered in trying to stand up a climate-focused group in the deep-red state of Texas.
Davis, who served five terms in the Texas state legislature, was motivated to take action after Hurricane Harvey hit her home district of Houston. “I had thousands and thousands of constituents who lost everything,” Davis said. “I watched Apache helicopters going into my neighborhoods, rescuing constituents off the roofs of their houses. … You just can’t ignore those images.”
Of Clear Skies Texas, she said, “Our mission is really to try and create a space for conservatives in Texas who are concerned about the environment and climate change—to [let them] know that we exist. Because it seems like, at least in Texas, no Republicans really want to talk about the climate. And I think that’s unfortunate, because I don’t think it’s an issue that we should just cede to the Democrats.” Ultimately, she said, “We just need to talk about it more. We need Republicans to feel safe to talk about it.” Listen to the full episode here.
The Rundown
Washington Post ‘Vomiting. The loss of strength’: Southwest heat drives health fears
Wall Street Journal Some European factories, long dependent on cheap Russian energy, are shutting down
E&ENews Trump holdout resigns from embattled chemical board
Calendar
WEDNESDAY | JUNE 15
10:00 a.m. 1300 Longworth The House Agriculture Committee will hold a hearing on climate research and agricultural resiliency.
10:00 a.m. 106 Dirksen The Senate Environment and Public Works Committee will convene to consider pending conservation legislation, including the Coastal Habitat Conservation Act of 2021, the Great Lakes Fish and Wildlife Restoration Reauthorization Act of 2021, and the Delaware River Basin Conservation Reauthorization Act of 2022.
THURSDAY | JUNE 16
3 p.m. 1201 Pennsylvania Ave. Citizens for Responsible Energy Solutions (CRES) will hold a forum examining the SEC climate disclosure rule and role of U.S. plastics in global climate mitigation. A networking reception will follow. Find out more and register here.
