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AMARNATH ON REFILLING THE SPR: One of the brains behind the administration’s new fixed-price acquisition rule for the Strategic Petroleum Reserve wants the Department of Energy to think twice about its hesitancy to court bidders to begin refilling the reserve.
Secretary Jennifer Granholm told a congressional committee last month that maintenance at DOE’s reserve sites and its 2023 mandatory sale make it “difficult” for the department to take advantage of lower oil prices to initiate repurchases for the SPR (Prices aren’t so low two weeks later, adding additional difficulty, as we’ll discuss below.)
DOE let pass nearly weeks of WTI holding in its preferred $67-72 price range without issuing a notice, which Skanda Amarnath, executive director of economics research outfit Employ America and big proponent of DOE’s acquisition plan, said doesn’t mesh with the White House’s pledge to repurchase oil for the reserve when prices reach the range.
“No one’s reasonable expectation was they’re going to refill it super quickly,” Amarnath told Jeremy. But he said DOE should have jumped to issue a notice when prices were right in keeping with the White House’s refill plan.
Amarnath acknowledged there are operational constraints with the reserve — it moves more at the pace of an “oil tanker” than a “speedboat” — but said those limitations don’t preclude offering contracts to sellers for deeper future delivery.
The department’s unsuccessful “pilot” effort sought deliveries in February, just a month after it was to announce awards. That kind of timeline would seem to be just what Granholm wrote off due to the logistical challenges.
Amarnath said DOE should have offered to buy now and take delivery later this year or some time next year, something that would provide demand and create a market stabilizing force in line with the purpose behind the fixed-price contract and do so in a window producers used to dealing in futures markets would be accustomed to.
The fixed-price option was created as an alternative to index-priced contracts and designed with the intention of incentivizing investment in additional production while reducing downside risk to producers by guaranteeing them a price.
“The logic behind the regulation they changed was we can take delivery later and we can probably do that in a way that actually lowers the price of purchase but still provides a lot of certainty to the market,” Amarnath said.
“It’s a pretty ambitious thing to like put out there,” he said of the White House’s acquisition plan, “but you didn’t say ‘if the SPR happens to be open and if these logistical constraints will allow.’”
The price point: The effects of OPEC+’s production cut have driven prices well beyond DOE’s range, and forecasters say further rises could be in store throughout the year, meaning prices may not be back down to $72 or below for a while.
DOE must also compete with a futures market that right now is pricing barrels at a higher premium than it wants to buy through at least next July.
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HOUSE OVERSIGHT REPUBLICANS PROBE EPA WELL CLEANUP PROGRAM: Top Republicans on the House Oversight Committee requested more information on EPA’s proposed rule that seeks to measure oil and gas sector emissions and set performance standards for energy production sites––reiterating their request for the EPA to provide documents and information about how the proposed rule would affect consumer prices and how facilities would be monitored.
In their letter, shared first with the Washington Examiner, House Oversight Committee Chairman James Comer of Kentucky and Pat Fallon of Texas, the head of the Subcommittee on Economic Growth, Energy Policy, and Regulatory Affairs, cited concerns over the program costs, noting that EPA’s own estimate suggests it will shift more than $14 billion in compliance costs to producers––as well as a provision that would allow third-party entities to monitor well sites, centralized production facilities, and compressor stations for so-called “super-emitter emissions events.”
Such entities “could potentially include activist entities ideologically opposed to the very existence of the oil and natural gas sector,” they said, who could therefore make determinations about such sites that are “biased and improper.”
In the letter, lawmakers requested documents and information about the intent and cost of the agency’s proposed rule, and reiterated their call for EPA to brief committee staff in-person on the proposal. Read more here.
HARRIS TO ANNOUNCE LARGEST US COMMUNITY SOLAR VENTURE: Korean-based Qcells and Summit Ridge Energy, a solar project developer, will team up on a 1.2-gigawatts community solar order, which the White House said is the largest community solar order in American history.
Vice President Kamala Harris will make the announcement this afternoon in Dalton, Georgia, some 90 miles northwest of Atlanta, where QCells will spend $2.5 billion to expand its footprint in manufacturing photovoltaic modules.
The project will require the manufacturing of 2.5 million solar panels, most of which will be installed at project sites in Illinois, Maryland, and Maine and together generate enough clean electricity to power 140,000 homes.
WALMART TO BUILD ITS OWN ELECTRIC VEHICLE CHARGER NETWORK: Walmart announced today that it will build out its own network of EV charging stations at thousands of stores across the U.S. by 2030, seeking to accommodate the growing number of EVs on the roads.
Walmart will roll out its new network of EV fast-charging stations across the country, though it did not provide additional details on planned locations. The chargers will add to the nearly 1,300 stations it currently has at more than 280 of its stores in the U.S. under an existing agreement with the public charging network Electrify America.
“With a store or club located within 10 miles of approximately 90% of Americans, we are uniquely positioned to deliver a convenient charging option that will help make EV ownership possible whether people live in rural, suburban or urban areas,” Walmart’s vice president of energy transformation, Vishal Kapadia, said in a statement.
INSURANCE GIANT PULLS OUT OF GLOBAL NET-ZERO ALLIANCE: Zurich Insurance Group, a major global insurer, announced yesterday it will withdraw from the Net Zero Insurance Alliance, one of several sector-specific voluntary alliances within the larger Glasgow Financial Alliance for Net Zero with members that commit to reducing emissions in line with the Paris agreement.
The company said it initiated the withdrawal “to focus our resources to support our customers with their transition” but said it does not change its commitment to sustainability, which a spokesperson said pre-dated the alliance.
Zurich is one of several companies to initiate or consider initiating a pullout of voluntary net-zero alliances citing a desire for independence, as well as antitrust concerns and worries that the commitments expose them to legal liability.
NYC PENSIONS LAYS OUT PATH REACH NET-ZERO BY 2040: New York City Comptroller Brad Lander announced a plan yesterday for the New York City Employees’ Retirement System and the Teachers Retirement System to reach a net-zero investment portfolio by 2040.
As part of the plan, the pension funds will disclose Scopes 1, 2, and 3 emissions and invest in more renewable and other clean energy technologies to reach $50 billion of investments by 2035.
The plan also provides that the pension plans will initiate more engagement with companies in its portfolio and floated bringing shareholder resolutions to compel them to set emissions targets and reduce lending to fossil fuels.
Lander’s announcement also took a swipe at Republicans’ anti-ESG campaign and fiduciaries deemed to be weak on acting aggressively to reduce financed emissions.
“Given the prevalence of ‘greenwashing’ by corporations and investors who announced net zero goals, but show no intention of actually reaching them as well as rollbacks in the face of myopic right-wing pushback against responsible fiduciary investing, the pension funds adopted a measurable and transparent plan that could serve as a model for other investors,” the announcement said.
Lander has been especially critical of BlackRock, which as of September of last year managed more than $43 billion of NYC investments and where chairman and CEO Larry Fink has defended its continuing investment in fossil fuel projects.
Lander requested last year that Fink provide a plan to “keeping fossil fuel reserves in the ground” and phasing out high-emitting assets.
RUSSIAN CRUDE IMPORTS FUEL INDIA’S SHIPMENTS OF REFINED PRODUCTS TO THE WEST: India has imported record amounts of Russian crude since the start of the war in Ukraine, allowing it to significantly boost its volumes of diesel and other refined petroleum products to Europe despite the EU’s harsh sanctions packages and import bans on Russian products.
India was the biggest buyer of Russia’s flagship Urals grade crude during March, ship-tracking data shows, which allowed it to refine and ship large volumes of refined petroleum products to the West, including the U.S., where it has boosted its shipments of vacuum gas oil, or VGO.
India’s diesel exports to Europe accounted for 30% of the country’s total refined petroleum product exports in 2022-2023 fiscal year, according to Reuters’ analysis of Kpler and Vortexa ship-tracking data, compared to just 21-24% the year before. (Europe also accounted for 50% of India’s jet fuel exports.)
The U.S., meanwhile, imported 65-81% of India’s overall VGO exports during the same period––averaging around 11,000-12,000 bpd, compared to just 500 bpd the previous year.
The Rundown
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E&E News States challenge utility costs backed by ‘fleet of lawyers’
