U.S. OIL HITS NEW RECORD WHILE IMPORTS DROP: The U.S. oil industry is setting new records for production and exports, while foreign imports have been cut — balancing the oil trade for the first time in 50 years, according to the oil industry’s lead trade group, the American Petroleum Institute.
A good year: The U.S. has reached a record 10.6 million barrels per day of oil production this year, while increasing exports to 2.1 million barrels per day in May, according to the trade association’s latest quarterly industry report, released Thursday morning
What does it mean for OPEC? The report comes one day before OPEC and non-OPEC members, such as Russia, convene in Vienna to hash out a deal on oil production cuts. President Trump has said on Twitter that oil prices are too high as he scolded OPEC.
Foreign import cuts: The oil group’s report said the U.S. supplied the majority of new global oil demand growth in 2018, while reducing its foreign imports. U.S. net oil imports averaged 3.2 million barrels per day in the first five months of 2018, which is down by more than 1 million barrels a year ago.
Soaking up demand: The 100 million barrel- per-day increase in global oil demand has been met by U.S. production, according to the group’s chief economist. The U.S. has compensated for waning oil supplies from Venezuela and has shown that America has become a key global player, thanks to shale.
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SAUDIS ‘OPTIMISTIC’ ABOUT OPEC DEAL: Saudi Arabia Energy Minister Khalid Al Falih said Thursday he’s “optimistic” that OPEC will reach a deal to boost oil production.
OPEC and Russia are nearing a deal to lift crude output, perhaps by as much as one million barrels per day, the Wall Street Journal and other news outlets reported.
Because of output constraints in major producing countries such as Iran, Venezuela, and Iraq, the increase could amount to just 600,000 barrels a day.
Double your fun: OPEC with Russia and other non-member countries are meeting Friday in Vienna. Crude oil prices have more than doubled since January 2017, when OPEC and Russia cut production by 1.8 million barrels a day, a deal that has lasted 18 months.
The Trump administration is pressuring OPEC to boost production because higher global oil prices have led to rising gasoline prices for U.S. drivers.
Consumers first: “The most important thing is the consumers,” Al Falih said Thursday. “We’re not going to allow a shortage to materialize to the point that markets will be squeezed and consumers will be hurt.”
Iran backs off: The progress on a deal comes after Iran softened its threat to veto an agreement to raise output. Iran argues the U.S. has created higher oil prices by its foreign policy moves, including promising to renew oil sanctions on Tehran after pulling out of the nuclear deal with the country.
BUT API SAYS THE SAUDIS WANT THEIR MARKET BACK: The Saudis saying they will increase production is more of a response to the U.S. absorbing a big chunk of their market, API’s chief economist Dean Foreman told the Washington Examiner.
What they are really saying is “the U.S. has stepped up and taken a lot of market share from OPEC,” Foreman said. The Saudis want to protect that by injecting more of their oil into the market.
The most recent projections from the U.S. government say the U.S. will become even more competitive going into 2019, according to Foreman.
Russia wagging the OPEC dog: Russia has already raised its output ahead of the meeting, Foreman says, and it would behoove the Saudis to do the same, referring to the OPEC meeting with Russia as “ROPEC.”
TARIFFS COULD ‘ROCK’ NATURAL GAS EXPORTS: Chemical and petrochemical tariffs that China is looking to impose on U.S. products would slow export growth for new natural gas from Pennsylvania, Ohio, West Virginia, and the Gulf Coast.
Lost investments: That chemical sector has been counting on exports for growth in the shale regions, and companies are investing billions of dollars in building the infrastructure to support that, Foreman said.
Trade war casualty: Ethane, a key component in plastics, is one of those products. If U.S. producers can’t export because of a 25 percent price increase from the tariffs, it would be much easier for China to find an alternative supplier than for the U.S. to find an alternative market, Foreman said. That has “the potential to rock” the U.S. petrochemical sector for companies looking to make major investments in infrastructure.
Another success story: Like crude oil, natural gas exports are increasing, underscoring another success story. The report says the price of U.S. natural gas is still much lower that the global price, which makes the U.S. more competitive.
HOUSE JOINS WITH ETHANOL INDUSTRY IN PRESSURING PRUITT: A dozen House members upped the pressure on Environmental Protection Agency Scott Pruitt Wednesday afternoon with a strongly worded letter accusing him of harming the nation’s farmers by undermining the nation’s ethanol program.
What has he done? “The Environmental Protection Agency (EPA) continues to hurt farmers and undermine the biofuels market by extending waivers to an unusually large number of refineries,” the letter stated, led by the Iowa delegation’s Democrats. “Additionally, your implementation of the [Renewable Fuel Standard] program is undercutting the market for renewable fuels, and inflicting further economic pain in rural communities and throughout the agriculture sector.”
Refinery waivers: Pruitt has been granting waivers to oil refiners to help them reduce costs by not having to blend corn ethanol in the gasoline they produce. That has reduced demand by more than one billion gallons.
ETHANOL BOB VS. REFINERY PRUITT: Bob Dinneen, the ethanol industry’s top lobbyist and head of the Renewable Fuels Association, welcomed the letter, saying it will help the industry in court.
“We appreciate the effort of these members to bring attention to EPA’s woeful disregard of the statute and its indiscriminate granting of hardship waivers,” Dinneen said.
Complete silence: He also noted EPA’s “lack of transparency” in granting relief to oil refineries under the small refinery hardship waiver process. That prompted Dinneen’s group to file a Freedom of Information Act request to obtain the details. But that has been met by “complete silence.”
Court action: “We have also filed suit in the 10th circuit [court] challenging specific waivers and in the D.C. Circuit contesting EPA’s failure to reallocate gallons,” Dinneen noted. Reallocating refers to the lost ethanol demand after Pruitt granted the waivers to refiners.
Help with suits: “The leadership shown by these 12 members should elicit a more timely and satisfactory resolution,” Dinneen said.
Rumor mill: A rumor is floating around Washington that the EPA is going to require other refiners to blend the lost ethanol. But refinery supporters are pushing back, saying the EPA made clear recently that it would not likely take such action.
It would be ‘illegal’: “Just a few days ago, EPA made a clear statement: dealing with reallocation of small refiner exemptions on a retroactive basis is illegal. Period,” said Scott Segal, partner at Bracewell Law, representing the industry.
CHINESE ENERGY OFFICIALS CANCEL TRIP TO WEST VIRGINIA: Chinese energy executives canceled a trip to West Virginia this week because of the trade dispute between the Trump administration and Beijing, Reuters reported Thursday.
China Energy Investment Corp. was planning to discuss a planned $83.7 billion investment in West Virginia’s shale gas, power, and petrochemicals.
Made in America: The investment was the biggest among a bunch of deals signed during Trump’s visit to China in November. The China Energy investment was its first overseas venture. The newly formed company is among the world’s largest power companies.
Back at ya: Trump and Beijing are locked in a trade dispute after the U.S. announced $50 million in tariffs on Chinese goods last week. China retaliated by threatening to impose tariffs on U.S. energy exports.
NEW YORK TO ANNOUNCE NEW RENEWABLE TARGET: The New York State Energy Research and Development Authority is set to make a “a major clean energy announcement” Thursday afternoon.
50×30 or fight: The announcement will support Gov. Andrew Cuomo’s 50×30 renewable energy goal, according to the state’s energy agency. The goal is for 50 percent of the state’s electricity to come from renewable energy by 2030. The specifics of the announcement are being kept close to the Cuomo administration’s vest.
ENERGY DEPARTMENT RECOMMENDS RENEWABLES, MICROGRIDS FOR PUERTO RICO: The Energy Department Thursday released a report recommending ways to make Puerto Rico’s power grid more resilient to future disasters after Hurricane Maria left nearly the entire island in the dark.
Cheap renewables: The report says Puerto Rico should get more of its power from renewables, as required by local law, and lessen its dependence on imported fossil fuels. Puerto Rico law requires 20 percent of electricity sales to be supplied by renewable energy by 2035. The island gets 4 four percent of its power from wind, solar, and hydro combined.
Storage and microgrids: The Energy Department also says Puerto Rico should implement rules to facilitate the development of microgrids that can operate independently of the main power system. The agency says Puerto Rico must incorporate battery storage technologies that can capture renewable power for use during times when the sun isn’t shining and wind is not blowing.
Up to speed: It criticizes Puerto Rico for waiting six weeks after Hurricane Maria to request mutual aid from mainland utilities to help restore power after the storm. Puerto Rico should review its emergency response procedures to make sure it acts faster, the Energy Department said.
Management problems: And it describes various problems that challenge Puerto Rico’s recovery, including the performance of the island’s bankrupt state-run utility, the Puerto Rico Electric Power Authority. PREPA is short-staffed, and has been vulnerable to political favoritism and corruption.
The grid-related workforce has shrunk by more than 30 percent over the past decade, with many moving to the mainland U.S.
Hopeful note: “Despite such adversity, the people of Puerto Rico have shown tremendous strength and resilience as they restore and rebuild their homes and communities,” the Energy Department said.
TRUMP TALKS ENERGY SECURITY WITH KING OF SPAIN: President Trump and King Felipe VI of Spain discussed finding new sources of energy for Europe this week at the White House.
Diversify the energy supply: In addition to reaffirming the countries’ military and cultural ties, the president and the king discussed “balancing transatlantic trade and diversifying Europe’s sources of energy,” the White House said Wednesday.
Trump’s export agenda: Increasing crude oil and natural gas exports is a major part of Trump’s energy dominance agenda, with Europe seen as a top market for those resources. Trump reportedly has been trying to re-balance trade with other countries by urging them to buy more energy from the U.S.
TRUMP SAYS HE WILL ALLOW MINING IN MINNESOTA NATIONAL FOREST: Trump said Wednesday he will soon allow mining on U.S. Forest Service land in Minnesota’s Superior National Forest.
“We will soon be taking the first steps to rescind the federal withdrawal in Superior National Forest and restore mineral exploration,” Trump said at a rally with supporters in Duluth, Minn., Wednesday night.
Change in policy: The Obama administration’s Forest Service had proposed removing 234,000 acres of Superior National Forest out of consideration for future mining projects. It declined to renew existing leases by a Chilean company for copper and nickel mining there.
In January, the Trump administration curtailed a review of how the proposal would affect a neighboring wilderness area and how mining could taint nearby waters. It also renewed the expired mining leases.
Mining ‘carefully’: Boundary Waters, which abuts the forest, contains lakes and streams where 100 species of migratory birds live.
Trump Wednesday said his administration will overturn the mining ban and proceed “carefully.” He later hedged. “Maybe, if it doesn’t pass muster, we won’t do it at all. But it is going to happen, I will tell you.”
Companies sue: Nine local recreational businesses sued the Interior Department in federal court Thursday morning for reinstating the expired mining leases, saying that mining near Boundary Waters will threaten the recreational economy that relies on it, such as fishing and canoeing.
INTERIOR PUSHES BACK ON ZINKE’S TIES TO HALLIBURTON CHAIR’S DEAL: Interior Secretary Ryan Zinke is rejecting reports that he is still overseeing a real estate deal between a veterans organization run by his wife and the chairman of global oil services firm Halliburton.
Politico reported Tuesday that Zinke was still involved in the transaction, but Zinke’s spokeswoman, Heather Swift, rejected that report.
“The Politico accusations that the secretary is still a member of the board are easily proven false,” Swift said in a statement to the Washington Examiner on Wednesday. “In accordance with all federal ethics guidelines, the secretary resigned from his position with the Great Northern Veterans Peace Park in March 2017.”
RUNDOWN
Bloomberg Deepwater drilling is back, as Big Oil develops cheaper methods
Reuters U.S. shale executive pushes OPEC to gradually boost output
Wall Street Journal Giant oil field set to bring Guyana riches. Maybe
New York Times Climate change brought a lobster boom. Now it could cause a bust.
Washington Post A giant wave of plastic garbage could flood the U.S., a study says
CALENDAR
THURSDAY, JUNE 21
The summer solstice and longest day of the year.
10 a.m., 2167 Rayburn. House Transportation and Infrastructure Committee Railroads, Pipelines and Hazardous Materials Subcommittee hearing on “PIPES (Protecting our Infrastructure of Pipelines and Enhancing Safety) Act of 2016 Implementation: Oversight of Pipeline Safety Programs.”
10 a.m., 1324 Longworth. House Natural Resources Committee holds legislative hearing on federal land management bills.
naturalresources.house.gov/calendar/
10 a.m., 2123 Rayburn. House Energy and Commerce Committee Energy Subcommittee markup of the “Nuclear Utilization of Keynote Energy Act”; the “Advanced Nuclear Fuel Availability Act”; to require the energy secretary to develop a report on a pilot program to site, construct, and operate micro-reactors at critical national security locations; and the “Advancing U.S. Civil Nuclear Competitiveness and Jobs Act.”
10 a.m., 2318 Rayburn. House Science, Space, and Technology Committee’s Environment Subcommittee holds a hearing on “State Perspectives on Regulating Background Ozone.”
10 a.m., 888 First St. NE. The Federal Energy Regulatory Commission holds its monthly public meeting on agency administrative matters, customer matters, reliability, and security and market operations.
11 a.m., Conference call. The Woodrow Wilson Center’s Canada Institute and Polar Initiative holds a briefing on “Energy Innovation in Remote Arctic Communities.”
Call-in, 888-942-8140; passcode, 13304.
2 p.m., 1324 Longworth. House Natural Resources Committee holds legislative hearing on mineral leasing bills.
naturalresources.house.gov/calendar/eventsingle.aspx?EventID=405004
6 p.m., 1616 Rhode Island Ave. NW. The Center for Strategic and International Studies holds a discussion on “Energy Challenges and Future Opportunities.”
FRIDAY, JUNE 22
Vienna. Meeting between OPEC and non-OPEC members about whether to increase crude oil production.
MONDAY, JUNE 25
All day, The 27th World Gas Conference in Washington June 25-29.
1 p.m., 1615 H St. NW. The U.S. Chamber of Commerce’s U.S.-Israel Business Initiative will host Energy Secretary Rick Perry and Israeli Energy Minister Yuval Steinitz to open the newly formed U.S.-Israel Energy Center.
