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!
THE SHALE SCALE-UP: Domestic producers are responding in kind to $90-plus per barrel oil and are expected to grow daily shale oil production by some 109,000 barrels in March.
New data from the Energy Information Administration project total shale oil production to reach nearly 8.6 million barrels per day for the month of February, up from 8.4 million estimated for January, and then rise to over 8.7 million barrels per day next month, with production in all but one of the seven major shale regions projected to rise (those projections exclude offshore production and output from Alaska, which account for the 3 million or so other barrels produced each day at current rates).
The shale plays, especially the Permian Basin in Texas and New Mexico, are integral to major producers’ plans to drill more crude during this bullish market period. ExxonMobil and Chevron each intend to grow output in the region, by 25% and 10% respectively this year.
The production boosts are a virtual no-brainer, said Ben Cahill, senior fellow for the Center for Strategic and International Studies’ Energy Program.
“With prices at this level, if you don’t crank up production, you’re potentially leaving money on the table,” he told Jeremy.
Cahill noted, as he has before, that major firms are “still beating the drum” on capital discipline after losing out big due to the pandemic-wrought destruction on demand.
Industry executives have been warning about underinvestment in oil and gas production and rebutting notions that fossil fuels are swiftly on their way out. Proving to shareholders they can get a solid return in that kind of investment environment is by all accounts front of mind.
But near-$100 per barrel oil also enables them to go ahead and spend more on production, Cahill said.
“Companies can de-lever, increase shareholder payouts, and still crank up production,” he said. “The market is sending a pretty strong signal that more supply is needed.”
What about natural gas?: Global gas markets are similarly hot, with demand for U.S. LNG as strong as it’s ever been, and shale gas is also on the up, too. EIA projects shale gas production to grow from 91.2 billion to nearly 91.7 billion cubic feet per day from February to March.
Welcome to Daily on Energy, written by Washington Examiner Energy and Environment Writer 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.
ENERGY GETS GREEN HYDROGEN PROGRAMS MOVING: The Energy Department announced today it is requesting stakeholder input on three green hydrogen project items funded by the new infrastructure law: the $8 billion for Regional Clean Hydrogen Hubs, $1 billion Clean Hydrogen Electrolysis Program, and $500 million for other clean hydrogen manufacturing and recycling, all designed to enable industrial-scale production of hydrogen without greenhouse gas emissions.
Once it gets to that stage, the administration will prioritize any proposed hub able to “provide significant training and long-term job opportunities for residents of each region and drive greenhouse gas emissions down in the sector,” a senior administration official told reporters on a call yesterday previewing the announcement.
What else is being announced today: The White House also said it is has created a “Buy Clean Task Force,” which will include as members the Departments of Energy, Defense, and Transportation and the General Services Administration, to develop recommendations on how agencies and interested companies can procure low-emissions products and building materials. The task force was created in conjunction with President Joe Biden’s December executive order directing federal agencies to work to enable a 65% reduction in emissions for all federal government operations by 2030 and aim to achieve net-zero by 2050.
The White House’s Council on Environmental Quality is also issuing guidance today on how carbon capture, utilization, and storage projects developers should analyze life cycle emissions associated with their projects and what considerations such projects should have to generate the most jobs.
DOD: US MANUFACTURING CAN’T MEET MILITARY’S BATTERY NEEDS: The U.S. defense industrial base’s battery manufacturing capacity “is limited and requires major capital expenditures and time to compete” with Chinese dominance of the sector, according to a new Defense Department report out today reviewing the state of competition within the military’s industrial base.
The report established that the U.S. cannot produce battery products at a scale needed to supply military operations and warned that reliance on China for those products reduces competition and makes the U.S. more vulnerable to supply chain disruptions.
That assessment is part of a much larger conversation lawmakers and other government officials are having about the need to enable more domestic production of critical minerals, such as lithium, cobalt, and other inputs needed for energy technologies.
But the rub has been disagreement between industry and friendly Republican lawmakers and the Democrats and green groups over how to best source those minerals (Minnesota’s Twin Metals mine project is a case in point).
NEW CLC TRADE CENTER WILL LOOK AT CARBON ADJUSTMENT: The Climate Leadership Council, a group that has sought to win GOP support for a carbon tax, announced the launch of its Center for Climate and Trade–– a new research center aimed at advancing policies that reward more carbon efficient manufacturing and leverage trade relationships to lower emissions, including border carbon adjustments.
The center will be co-chaired by a bipartisan group of former climate and trade representatives, including Charlene Barshefsky, former U.S. trade representative under former President Bill Clinton; Jim Connaughton, who led the White House Council on Environmental Quality under former President George W. Bush; and Jennifer Hillman, former commissioner of the U.S. International Trade Commission and member of the World Trade Organization Appellate Body.
INDIAN AFFAIRS PLEDGES REFORMS AFTER DEATHS IN TRIBAL JAILS: The Interior Department’s Bureau of Indian Affairs said it will begin implementing reforms to its tribal jails. The announcement comes after the agency ordered an internal review of conditions within the detention centers, which saw the deaths of 16 inmates over a four-year period.
The reform program, first announced yesterday, identified 28 areas for improvement within the facilities–– including improvements to conducting cell checks and responding to medical emergencies, among other things. It also includes guidance for improving employee recruitment and retention of current staff.
The reforms “represent a new chapter for the Bureau of Indian Affairs as we move toward organizational culture change,” Assistant Secretary for Indian Affairs Bryan Newland told reporters.
“We will not shy away from acknowledging the past and taking ownership of the path to improve conditions in our facilities,” he added.
SENATORS TO ADDRESS HOUSTON ENERGY CONFERENCE: Sens. Lisa Murkowski, Joe Manchin, and Dan Sullivan will address IHS Markit’s CERAWeek energy conference next month, the global analytics firm announced today.
The conference will take place March 7-11 and feature a number of big-name guests to discuss “challenges and opportunities of reducing emissions while supplying the needs of a growing global economy.” U.S. climate envoy John Kerry, Energy Secretary Jennifer Granholm, and Saudi Aramco CEO Amin Nasser will also be present.
NUCLEAR ENGINEER PLEADS GUILTY TO CONSPIRACY: An engineer for the Naval Nuclear Propulsion Program faces up to 17 years in prison after he pleaded guilty to conspiracy for attempting to sell nuclear submarine secrets for $5 million in cryptocurrency, the Washington Examiner’s Jerry Dunleavy reports.
The FBI intervened when defendant Jonathan Toebbe and his wife allegedly passed SD cards hidden in a peanut butter sandwich, a Band-Aid wrapper, and a gum package to undercover agents.
The Rundown
AP West megadrought worsens to driest in at least 1,200 years
E&E News Joe Manchin-connected power plant hasn’t paid rent in a decade
Reuters EV startups hunt for an edge as big automakers roll out vans and trucks
AP Michigan coastal management projects, programs get $1.1M
CNN DOE will build nation’s first large-scale facility to turn fossil fuel waste into rare materials for tech
Calendar
TUESDAY | FEB. 15
2:30 p.m. The House Select Committee on the Climate Crisis will hold a remote hearing entitled “Keeping the Lights On: Strategies for Grid Resilience and Reliability.”
WEDNESDAY | FEB. 16
10:00 a.m. The Senate Committee on Environment and Public Works will meet to discuss the EPA’s renewable fuel standards program. Members are also slated to vote on two EPA nominations: David Uhlmann to be Assistant Administrator of Enforcement and Compliance Assurance, and Carlton Waterhouse to be Assistant Administrator for the Office of Solid Waste.
THURSDAY | FEB. 17
1:00 p.m. The House Subcommittee on Energy and Mineral Resources will host a remote hearing on climate adaptation science at the U.S. Geological Survey.
