Subscribe today to the Washington Examiner magazine and get Washington Briefing: politics and policy stories that will keep you up to date with what’s going on in Washington. SUBSCRIBE NOW: Just $1.00 an issue!
ONE THEME FROM CERA WEEK: Russian has been repeatedly described as a wild card in public and private discussions at the CERAWeek conference in Houston, expected to cause Europe gas markets pain for the next two years as China’s demand recovers, and limit global crude supplies – especially after Russia threatened last month to cut some 500,000 barrels per day of supply.
Anders Opedal, the CEO of Norwegian energy giant Equinor, said yesterday he expects Europe to struggle for the next two winters to replace Russian natural gas.
“There is very small spare capacity available so small changes in supply have impact,” he said.
Norway overtook Russia as Europe’s largest natural gas supplier last year after Russia throttled its gas supplies via its Nord Stream pipeline, which were then cut off completely following explosions on the pipeline last fall. (More on that below.) Equinor, for its part, increased its deliveries to the continent last year by about 8% to help offset the lost supply.
And while he said he is impressed by how Europe handled itself amid the reduction of 150 bcm of Russian gas, Opedal said: “The same uncertainty we had before this winter will repeat itself in 2024. And probably also 2025.”
“It’s only in 2026-2027 that we see new meaningful new energy supplies from the U.S. and Qatar,” he added.
Meanwhile, U.S. energy executives and OPEC officials spent the majority of a closed-door dinner on Monday discussing concerns about the lack of spare global production capacity, according to Devon Energy CEO Rick Muncrief, who attended the dinner. OPEC+ countries including Russia announced a production cut of 2 million barrels per day last October, defying U.S. efforts to increase production and prompting ongoing concerns about spare capacity in the market.
“We may have gotten through this winter surprisingly well, but I don’t think we’re out of the woods yet,” Michael LaMotte, a senior official at the investment firm Guggenheim Partners, told reporters in regards to replacing lost Russian capacity. “And things actually could get worse before they get better.”
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.
CORRECTION FROM YESTERDAY: Yesterday’s Daily on Energy quoted Rivian senior policy adviser, Beau Whiteman, as saying “Global companies like Tesla and Rivian are not going to change their business strategy for what is in effect 1% of the American population.” That quote was actually from Joey Fillingane, a Mississippi state senator, during debate last week on the Senate floor. Our apologies…
GERMAN REPORTING PROPS UP NYT FINDINGS ON NORD STREAM BLASTS: German broadcast outlets and the print publication Die Zeit published reports last night appearing to bolster the New York Times report yesterday that Western intelligence officials believe that a pro-Ukrainian group was behind the Nord Stream 1 and 2 explosions last September.
The Die Zeit and German broadcaster ARD reports also included additional details on the boat apparently used to lay the explosives—a yacht rented by a company based in Poland—as well as the six-person crew onboard.
According to Die Zeit, that group consisted of a captain, two divers, two diving assistants and a doctor, believed to have used professionally forged passports to rent the boat, and believed to have transported the explosives and placed them at the crime scenes. (Die Zeit also reported that investigators found traces of explosives at a table in a cabin of the yacht…)
Remember: There are still many unknowns about who carried out the Nord Stream explosions. As the New York Times report said there are “still enormous gaps” in the understanding of who is responsible. (Last month, the famed but controversial journalist Seymour Hersh reported that the U.S. carried out the blasts, though that was denied by the White House.)
Ukraine has denied any involvement in the explosions, and both the NYT and German reports say there is no evidence linking the group to Ukrainian President Volodymyr Zelensky or any Ukrainian government officials.
“Although I enjoy collecting amusing conspiracy theories about Ukraine’s government, I have to say: Ukraine has nothing to do with the Baltic Sea mishap and has no information about ‘pro-Ukrainian sabotage groups,'” Zelensky adviser Mykhailo Podolyak said yesterday on Twitter. Read more from Breanne here.
MANCHIN LASHES OUT OVER INTERIOR OSC PROGRAM DELAY: Sen. Joe Manchin castigated the Biden administration over news that it doesn’t expect to finalize the next five-year offshore oil and gas leasing program until at least December.
The department said as much in a court brief filed on Monday in the American Petroleum Institute’s lawsuit over the delayed program.
Manchin said Interior was falling behind because it’s prioritizing a “radical climate agenda” over energy security.
Interior plans to issue a proposed final program in September and finalize it in December. It has said litigation is contributing to delays.
The news about Interior’s timeline went a bit under the radar (there’s something going on in Houston), going unnoticed by even some leading industry players.
“First I’m hearing it,” one offshore industry source told Jeremy. “But not surprised because 259 and 261 are scheduled this year pursuant to the IRA.”
The source was referring to the two Gulf of Mexico oil and gas lease sales scheduled for this year. Both were ordered by the Inflation Reduction Act.
Remember, the Inflation Reduction Act constrains Interior’s ability to issue offshore wind leases unless it hold oil and gas lease sales during the prior year covering at least 60 million acres.
The department can meet that requirement with 259 alone, meaning the pressure is off in terms of finalizing the program to meet the requirement to issue wind leases.
MANCHIN OPPOSES WERFEL OVER IRA PROVISIONS: Manchin also said today he is planning to vote against confirming President Joe Biden’s nominee, Daniel Werfel, to be IRS commissioner, citing what he described as the administration’s decisions to “[ignore] Congressional intent” while implementing the Inflation Reduction Act.
“First and foremost, the IRA is an energy security bill with clear and direct guidelines to ensure we are able to onshore our supply and manufacturing chains. But instead of adhering to Congressional intent and prioritizing our nation’s energy and national security, the Treasury Department has pandered to automakers and progressive extremist groups and continued to sacrifice the national security of the United States of America,” Manchin said in a statement.
The “no” vote is just the latest in Manchin’s feud with the administration over the implementation of the electric vehicle tax credits in the IRA…and an increasing number of other issues as well.
NINE MILE POINT BEGINS CLEAN HYDROGEN PRODUCTION: The operators of the Nine Mile Point nuclear power facility in Oswego, New York have started up demonstration-scale clean hydrogen production this week using nuclear power, the Department of Energy announced yesterday.
The production is part of a $14.5 million cost-sharing program between DOE and operators Constellation Energy to demonstrate how nuclear power plants can help lower costs and scale-up production of clean hydrogen, DOE said in a statement. It is believed to be the first operation of its kind in the nation.
“This accomplishment tangibly demonstrates that our nation’s existing reactor fleet can produce clean hydrogen today,” Dr. Kathryn Huff, DOE’s Assistant Secretary for Nuclear Energy, said in a statement. “DOE is proud to support cost-shared projects like this to deliver affordable clean hydrogen. The investments we’re starting to make now through the Bipartisan Infrastructure Law and Inflation Reduction Act will further expand the clean hydrogen market to create new economic and environmental benefits for nuclear energy.”
NTSB PROBES FATAL NORFOLK SOUTHERN ACCIDENT IN CLEVELAND: The National Transportation Safety Board is investigating a fatal Norfolk Southern train collision yesterday in Cleveland, the third such investigation it has conducted on the railroad in the state in the last two months alone.
Bloomberg reports that the conductor of the Norfolk Southern train was killed at the Cleveland-Cliffs Cleveland Works facility after the train’s first car was struck by a dump truck while moving through a crossing.
The dump truck company, TMS International, is also investigating the crash. Still, the timing comes at a difficult time for Norfolk Southern, little more than a month after a 150-car freight train derailed in East Palestine, Ohio, leaking toxic materials into the air and water. Norfolk Southern CEO Alan Shaw is slated to appear tomorrow before the Senate Environment and Public Works Committee to testify about the derailment and ongoing cleanup efforts, which the freight operator has been ordered to pay for.
U.S. POWER USE TO SLIDE THIS YEAR AMID SLOWER ECONOMIC GROWTH: U.S. power consumption is slated to fall from its record-high last year in 2023 amid slower economic growth and milder weather, the U.S. Energy Information Administration said yesterday in its Short-Term Energy Outlook.
In the report, the EIA projects demand will fall from the record-high consumption of 4,048 billion kilowatt-hours (kWh) in 2022 to 3,999 billion kWh in 2023. (Demand is expected to increase again in 2024, up to 4,065 billion kWh.)
Still, the EIA expects U.S. dependence on natural gas for power reliance will remain unchanged, with the supply still making up 39% of the total energy mix in 2023, the same as 2022, before falling slightly the following year. Read more from the report here.
WASHINGTON GREENHOUSE GAS AUCTION RAISES AN ESTIMATED $300M: Washington state’s first greenhouse-gas pollution allowance auction last week raised an estimated $300 million, according to the state’s Department of Ecology, a major profit that was praised by proponents of the carbon-pricing program in the state.
According to the state Department of Ecology, it sold almost all of its 6.2 million allowances, with each representing one metric ton of greenhouse emissions, for a price of about $48 per ton. According to the Seattle Times, the auction prices settled higher than those in similar programs in California and Quebec, which closed at roughly $28 per ton.
“It demonstrates the strength of the cap in Washington state,” Michael Mann, executive director of the state climate policy group Clean and Prosperous Washington, told the Seattle Times. “We also shouldn’t read too much into the first auction. … But I think it’s a good measure of a point of time.”
FOR YOUR RADAR: ENERGY AND COMMERCE COMMITTEE CONVENES FOR MARKUP SESSION: The House Energy and Commerce Committee is gathering tomorrow for a full committee markup of 20 pieces of legislation, including bills aimed at lowering energy prices and removing regulatory hurdles for U.S. energy production.
“This is just the beginning of our work to advance solutions that lower prices, remove regulatory barriers, and strengthen our energy security, all while ensuring we continue to be good stewards of the environment and reduce emissions,” House Energy and Commerce Chairwoman Cathy McMorris Rodgers said in a statement. Learn more and see the full list of bills being marked up here.
The Rundown
E&E News How Ohio train wreck could complicate permitting overhaul
Bloomberg EU trade hawks warn that US climate law may cost Europe billions
Calendar
THURSDAY | MARCH 9
10 a.m. 406 Dirksen. The Senate Environment and Public Works Committee will hold a hearing to examine efforts to protect public health and the environment in the wake of the East Palestine train derailment and chemical release. Details and witnesses are expected to be announced in the coming days.
