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BIROL WARNS OPEC+: The head of the International Energy Agency asked OPEC+ to take into account the “very fragile” state of the global economy, especially in developing countries, before ordering additional production cuts in December, urging the group of oil producers to tread carefully as they prepare to gather Sunday in Vienna.
“It will be very important that the OPEC+ countries consider the very fragile global economic situation,” IEA chief Fatih Birol said in an interview with Bloomberg. “Some of their main clients are about to slide into recession.”
Analysts fear that a resurgence of COVID-19 cases in China could blunt demand from the world’s largest crude importer heading into 2023 and prompt OPEC+ to deepen its supply cuts on top of the 2 million barrel per day target reduction the cartel ordered last month.
The global head of commodities at Goldman Sachs, Jeff Currie, said today that he believes there is a high likelihood OPEC+ will order additional oil production cuts in December, backing the bank’s projection that oil prices will hit $110 per barrel in 2023 – thanks to demand reduction in China, looming recession fears, and uncertainty over the G-7 Russian oil price cap plan.
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INTERIOR INTRODUCES METHANE WASTE RULE FOR FEDERAL LESSEES: The Interior Department announced a new draft methane waste prevention rule yesterday for federal oil and gas lessees, expanding the administration’s regulatory campaign against methane emissions.
Interior’s rule would require operators to submit “waste minimization plans” to be submitted alongside their drilling applications and require royalties on flared and vented gas. It would also put specific restrictions on the equipment some operators can use, including pneumatic devices.
The Bureau of Land Management estimates that 13 billion cubic feet of natural gas, a volume equivalent to more than a day’s worth of LNG exports, was lost from pneumatic devices on federal and Indian lands in 2019.
Proponents of more aggressive rules designed to incentivize the capture and sale or use of excess gas have argued that regulations would benefit producers, who are letting go of a valuable product, and consumers, who would in theory have access to more gas in the marketplace.
Adding up the methane actions: The administration is now working on new methane rules via Interior and EPA. The EPA’s beefed-up rulemaking also would create new requirements for owners or operators to route associated gas (gas produced alongside oil) to a sales line, or otherwise make use of the fuel, before they’re permitted to flare it.
The Inflation Reduction Act also creates a new statutory fee schedule to levy charges on methane emissions.
WHITE HOUSE EXPECTING LITTLE PRODUCT FROM CHEVRON IN VENEZUELA: The White House insisted the administration’s easing up on sanctions against Venezuela, which have restricted petroleum production there since 2019, was not a preferencing of foreign production over domestic.
National Security Council coordinator John Kirby again pointed to the several thousand approved applications for permits to drill currently on the balance sheets of federal lessees and said there “are plenty of opportunities for oil and gas companies to drill here in the United States.”
The operating license Treasury extended to Chevron also requires that petroleum it produces must be sent to the United States, although the expectation is that “it won’t be a lot of oil coming out of there,” Kirby said.
Chevron has five joint ventures in Venezuela, and before sanctions were introduced, the company was producing around 40,000 barrels per day. In October, Venezuela overall produced around 700,000 bpd, according to OPEC data.
CORPORATE SOLAR INSTALLATIONS DOUBLED SINCE 2019: On- and off-site corporate solar installations are growing, with some of the largest U.S. companies also topping the list of top solar users, according to a new report from the Solar Energy Industries Association.
U.S. businesses had installed nearly 19 gigawatts total of on-site and off-site solar capacity through June of this year. The number has doubled since 2019, when total capacity was 9.4 GW, according to SEIA’s Solar Means Business 2022 report.
Facebook parent Meta is far and away the largest solar user. Amazon and Walmart are also among the leading corporate users.
“From data centers to industrial freezers, the most energy-intensive business operations are turning to solar as the most reliable and affordable way to power their infrastructure,” said Abigail Ross Hopper, SEIA’s president and CEO.
EPW DEADLOCKS ON EPA AIR NOMINEE: The Senate Environment and Public Works Committee tied 10-10 in a party-line vote this morning on the nomination of Joe Goffman to head up the EPA’s Office of Air and Radiation.
Goffman, whose nomination hearing was held back in May, previously served as chief counsel for the Democrats on EPW and also worked in the Obama EPA, where he helped craft the Clean Power Plan and other rulemakings that cracked down on pollution from coal plants.
Ranking Member Shelley Moore Capito, who with the committee’s Republicans voted against Goffman today, said he helped develop regulations that “harm our energy sector.”
All Democrats on the committee supported Goffman’s nomination, although Sen. Bernie Sanders said he would not vote in favor of a discharge petition (the mechanism required when a nomination vote ties in committee) to bring the nomination to the Senate floor unless he gets answers from EPA about the implementation of a $7 billion program funded in the Inflation Reduction Act designed to subsidize solar installations in low- and middle-income households.
Sanders was a co-author of the program.
NETHERLANDS TO PURCHASE AND CLOSE UP TO 3,000 FARMS: The Dutch government is planning to buy out and close as many as 3,000 farms in the country, exacerbating an already-bitter dispute with growers in the country as leaders attempt to meet their strict emissions reduction targets.
Leaders have allocated some $25 billion to the buyout plan, and will use the funds to purchase between 2,000 and 3,000 high-emitting Dutch farms located near nature reserves. If farmers do not agree to sell their property, the buyouts could become compulsory.
“There is no better offer coming,” Dutch Nitrogen Minister Christianne van der Wal told members of parliament last week. Offers will be made “well over” property value.
The plan comes as the Dutch government moves to halve its nitrogen emissions by 2030 in accordance with EU conservation rules. But to meet that target, the government estimates that 11,200 farms will have to close, and 17,600 others will have to significantly reduce their livestock numbers.
The targets have been met with bitter response in the Netherlands. Earlier this year, thousands of farmers massed in major cities to protest the targets—blocking roadways, bridges, and key waterways across the country.
The Rundown
Wall Street Journal Energy companies expect more friends in Washington as Republicans take over House
E&E News DOE watchdog begs for cash to combat ‘large-scale frauds’
Calendar
THURSDAY | DECEMBER 1
10:00 a.m. 366 Dirksen The Senate Energy and Natural Resources Committee will hold a hearing to consider pending legislation.
