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THE STATE OF BIDEN’S RELATIONSHIP WITH OIL AND GAS: Oil and gas players, facing attacks from the Biden administration last year for sitting on leases and permits and spending conservatively on new production, implored the White House for more “positive signals” that encourage investment in a sector whose marketshare President Joe Biden ultimately seeks to diminish over time.
They’re getting more and more of those signals with calls to increase production, the administration’s LNG export campaign, and pronouncements from officials that global markets need more American oil and gas now and for decades to come.
But some executives still question the depth, or more pointedly the length, of the administration’s commitment to this approach to energy security.
Who’s saying what: The overall premium on U.S. oil and gas, if not the spot price at the moment, continues to rise steadily alongside the war in Ukraine.
Officials from Amos Hochstein to Secretary Jennifer Granholm and Ryan Peay, one of Granholm’s deputies in the Department of Energy, made clear overtures to industry leaders during remarks at CERAWeek that their updated, post-invasion energy and climate policy makes room for fossil fuels.
Granholm said yesterday she’s been satisfied with the direction of oil production and brought up forecasts showing oil and gas demand remaining considerable through 2050. “We need both traditional and new energy,” she said, although she stressed emissions abatement as a necessary condition of oil and gas sticking around.
The sector’s fortunes quickly turned after the war in Ukraine began, something Hochstein, who’s helping to lead the U.S.-EU joint energy task force, said without saying on Monday. One executive drew attention to the predominant themes of CERAWeeks in years prior, including 2022’s five-day conference, which kicked off days after fighting began.
“You arrive on Monday to a conversation that feels very much a singular mandate to decarbonize at all costs. By Wednesday, we’re back realizing we’re going to need oil and gas for a long time,” said David Harris, executive vice president of Devon Energy.
Had the aggressor been another power, one that doesn’t compete to lead the world in oil exports and provide a plurality of imported energy supplies to the strongest U.S. allies, the administration’s policy response might have been vastly different.
Still some wariness in the oil patch: Industry executives projected confidence in the longer-term prospects of oil and gas with this support from Biden and officials in Europe but raised doubts about the efficacy of other parts of their post-invasion energy strategy, which pushes efficiency and demand reduction measures to reduce prices and emissions.
“Where the industry is pushing back right now is that we’re just going to start using less energy,” Brandon Spencer, president of energy technology company ABB Energy Industries, told Jeremy. “That’s just not feasible.”
Still others stressed an ongoing challenge of underinvestment, including in new gas infrastructure, something unstable pricing doesn’t help.
Pioneer Natural Resources, one of the largest independents operating in the Permian and predominantly an oil producer, wants to grow its gas production and supply more product for LNG exports, but investors are being scared off by instability in gas markets, president and chief operating officer Rich Dealy told Jeremy.
Volatile oil prices, even though they’re higher and providing for healthier margins than gas right now, don’t help either, he said.
WTI is down ~35% from its peak last year, and gas has tanked from a high near $10 per MMBtu last year to below $3.
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MANCHIN VS. THE BIDEN ADMINISTRATION: Sen. Joe Manchin has publicly opposed the Biden administration on a number of energy items of business recently. To review:
- He blasted the Interior Department after it said it needs until December to publish its offshore oil and gas leasing program.
- He said he would vote against Biden’s pick for IRS commissioner, Daniel Werfel, over the administration’s implementation of the electric vehicle credits in the IRA.
- He broke with the Treasury Department over the EV tax credit implementation, accusing it of pandering to automakers and “progressive extremist groups” at the expense of energy security.
- He voted with Republicans to cancel the Labor Department retirement rule allowing for consideration of ESG factors in investment.
- He bucked efforts to ban or otherwise regulate gas stoves.
- He said he will vote with Republicans to cancel the administration’s WOTUS rule.
It’s worth noting that, apart from his disagreements with Democrats and his party over energy and climate legislation and regulation, Manchin has also crossed them by voting to block a controversial D.C. crime law and opposing Biden’s pick for FCC commissioner, Gigi Sohn, prompting her to withdraw her nomination on Tuesday.
NORFOLK SOUTHERN CEO TESTIFIES BEFORE SENATE COMMITTEE: Norfolk Southern CEO Alan Shaw appeared before the Senate Environment and Public Works Committee today to testify over its role in last month’s East Palestine train derailment and ongoing environmental and public health threats in the town as a result of the derailment.
Shaw, who was appointed as CEO just 10 months ago, noted in testimony that Norfolk Southern has pledged $21 million in cleanup efforts in East Palestine, and an additional $7.5 million for cleanup in Pennsylvania. He described both as “just a down payment,” adding that “we will be in the community for as long as it takes.”
Sen. Bob Casey of Pennsylvania called on lawmakers to pass the Railway Safety Act, which he introduced last week alongside a bipartisan group of senators, including J.D. Vance and Sherrod Brown of Ohio. The legislation would enhance safety requirements for trains carrying hazardous materials and increase frequency of freight car inspections, and establish new requirements for wayside defect detectors and other safeguards to help prevent wheel bearing failures or overheating risks, the latter of which NTSB determined were a factor in causing the derailment in East Palestine.
Vance said that while most Republicans have discussed the legislation “in complete good faith,” he blasted a “particular slice” of GOP leaders whom he said “seem to think that any public safety enhancement for the rail industry is a violation of the free market.”
Such claims are a “farce,” he argued, saying that the rail industry enjoys special federal subsidies and legal carve-outs “that almost no [other] industry enjoys.”
“I believe that we are the party of working people, but it’s time to be the party of working people,” Vance said of Republicans. “[Now], we have a choice: Are we for big business and big government, or are we for the people of East Palestine? It’s time for choosing. Let’s make the right one.”
Others who testified before the Senate panel today included EPA Region 5 Administrator Debra Shore, Ohio EPA Director Ann Vogel, and Richard Harrison, the executive director and chief engineer of the Ohio River Valley Water Sanitation Commission.
HOUSE COMMITTEES CONVENE FOR MARKUP SESSIONS ON KEY ENERGY BILLS: The House Energy and Commerce Committee and the House Natural Resources Committee held full committee markup hearings today, where Republicans on both panels sought to advance an energy legislative package that includes 20 separate bills aimed at helping ensure U.S. energy security, support new pipeline construction, and boost U.S. LNG exports.
House Energy and Commerce Chairwoman Cathy McMorris Rodgers said the bills were aimed at helping lower U.S. energy costs, prevent America from becoming “dangerously reliant” on China, and building out domestic energy supply chains to secure energy independence. “We want to lift barriers to expanding our energy supplies, remove red tape over exportation and importation of LNG, and build more pipelines with our North American allies and across the states,” she said this morning in opening remarks.
What’s next: House Majority Leader Steve Scalise said yesterday that the House will vote on energy issues during the last week of March, which he said will “show the country how we can be energy independent again and lower costs for those hard-working families who are struggling.”
He stopped short of saying which bills would be included in that set, though bills advanced would face the Democrat-led Senate.
(The ranking Democrat on the Energy and Commerce Committee, Rep. Frank Pallone, accused the new majority of attempting to push forward a partisan agenda and a slate of bills that have “no chance of becoming law.”
“Republicans love to talk about taking an-all-of-the-above approach to building out our energy assets,” Pallone, a New Jersey Democrat, said today. “But none of the bills we are marking up today address, or even reference, clean energy.”
EUROPEAN COMMISSION ADVANCES EXTENSION OF GAS DEMAND REDUCTION MEASURES THROUGH NEXT YEAR: The European Commission is slated to advance its gas demand reduction targets through next year to ensure it is prepare for the coming winter, Energy Minister Kadri Simson said today, just weeks before the bloc’s current 15% reduction target is slated to expire at the end of the month.
Extending the gas reduction targets is “the best guarantee to achieve another great level of storage by November,” Simson told lawmakers today. “This year will be challenging, and the year after that as well. Many uncertainties remain.”
The bloc’s member countries had remained stubbornly split on the idea of extending the reductions, as we reported last week, pitting countries such as Spain, Greece, Portugal, Italy, and Cyprus, who all depend less on Russian supplies, against countries such as Germany, who leaned more heavily on Russia for fossil fuels and had pushed the reduction target to be even higher.
Simson also urged European countries not to sign new contracts for Russian LNG, to wean the bloc as quickly as possible off of Russian fossil fuels.
EDF EXTENDS OPERATING LIFE OF TWO UK NUCLEAR PLANTS BY TWO YEARS: French-owned energy utility EDF said today it will extend the life of two nuclear plants in Britain for an additional two years, allowing them to operate through March 2026 in an effort to keep online a stable source of energy as Europe seeks to navigate an ongoing supply crisis caused by Russia’s war in Ukraine.
The two nuclear plants, which had been slated for closure in 2024, have a combined capacity of 2.3 GW and provide up to 5% of Britain’s power supply, EDF said today.
EDF said the decision to extend the life of both plants was made after a “rigorous” review, which it began last year. “Supplying zero-carbon and affordable electricity, whatever the weather, has never been more important than right now,” Matt Sykes, managing director of EDF Energy’s generation business, told Reuters.
The news comes after Britain was forced earlier this week to fire up two of its coal-fired plants to meet demand during a cold snap. Forecasters have warned that lower-than-expected temperatures could extend through parts of Europe for most of March, an abrupt departure after an otherwise mild winter.
SOLAR’S HIGHS AND LOWS IN 2022: Solar energy accounted for half of all new electricity-generating capacity additions in the U.S. in 2022, according to the new SEIA-Wood Mackenzie joint year-in-review out today.
At the same time, growth slowed immensely and the sector underperformed 2021. Total capacity additions were 16% lower than the year before. Utility-scale capacity additions were particularly low, down 31%.
“The last time utility solar shrank that much was in 2017, when the industry had been expecting the expiration of the [investment tax credit],” the report said.
A residential bright spot: +40% vs. 2021.
Saw that coming: SEIA and the sector more broadly came into 2022 facing higher prices and a worsening outlook. Then Commerce opened its trade investigation, which cost some solar companies their import sources and drove prices up further.
The industry got a win with Biden’s solar trade emergency, which will protect imports from expanded tariffs through next summer, but much damage was already done, leaders in the sector have said.
On the politics: A bipartisan group of lawmakers is pushing to cancel Biden’s solar emergency, and therefore allow Customs and Border Protection to implement tariffs on imports once it finalizes its determination in the solar investigation in May, although Biden is expected to veto the measure.
BIDEN BUDGET SEEKS TO BEEF UP EPA STAFF: The White House’s new budget proposal provides for 2,400 new full staff at EPA, where current staff and their union leaders have complained about low numbers and being overworked with new implementing obligations from the infrastructure law and Inflation Reduction Act.
The Rundown
CNBC China’s energy transition sees ‘staggering’ progress on renewables — and a coal power boom
E&E News Will Daniel-Davis ever get confirmed at Interior?
Washington Post Va. officials weigh letting Loudoun data centers use diesel backup power
Calendar
FRIDAY | MARCH 10
9:00 a.m. 2128 Rayburn. The House Financial Services Subcommittee on Housing and Insurance will hold a hearing examining ways to encourage greater flood insurance coverage in the U.S. Learn more here.
WEDNESDAY | MARCH 15
10:00 a.m. 406 Dirksen. The Senate Environment and Public Works Committee will hold a hearing to examine implementation of the Infrastructure Investment and Jobs Act, focusing on perspectives on the Drinking Water and Wastewater Infrastructure Act.
