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ABOUT THAT ENERGY INDEPENDENCE: President Trump often likes to boast his policies have made the U.S. energy independent, but for two months this year, at the height of the pandemic this spring and summer, the U.S. was importing more oil than it was exporting.
In May and June, the U.S. was a net oil importer, briefly reversing the country’s 15-year-long path toward becoming a net oil exporter, the Energy Information Administration said in a note this morning. For seven months in a row, from October 2019 to this April, the U.S. had been exporting more oil than it imported.
The pandemic effect: Over the spring, U.S. oil exports fell as production declined and global demand for oil dropped dramatically amid the first round of coronavirus lockdowns. The EIA said U.S. oil consumption was at its lowest level in decades in April.
Overall, U.S. exports of petroleum products declined for three months in a row — from 6.3 million barrels per day in February (a record high) to 3.9 million b/d in May. That sharp drop was the main factor driving the U.S. brief return to being a net oil importer in May and June, the EIA said.
Oil exports are on the rise again: Since June, U.S. exports of petroleum products and crude oil have recovered — to 5.1 million b/d and 3.2 million b/d in September, respectively. U.S. imports of crude oil, meanwhile, have begun to decline again, reaching their lowest monthly value in September since March of 1992 at 5.4 million b/d, according to the EIA’s latest data.
Despite recent increases in oil exports, the brief reversal shows how precarious the U.S. status as a net oil exporter is. The U.S. is still dependent on the global market, and it is far from immune to shocks to that system, such as the pandemic and oil price volatility.
Welcome to Daily on Energy, written by Washington Examiner Energy and Environment Writers Josh Siegel (@SiegelScribe) and Abby Smith (@AbbySmithDC). 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.
EXXON’S MASSIVE WRITEDOWN: U.S. oil and gas giant Exxon Mobil is planning to slash, or write down, the value of its assets by up to $20 billion and cut billions in capital spending as oil and gas prices remain low.
Exxon is retreating from its plan to boost oil and gas production and increase spending by 2025, and is struggling to position itself for the future as European competitors adapt by investing more in renewables.
The writedown, which is focused on Exxon’s dry gas assets, is the largest in modern history, according to Bloomberg. Exxon had resisted writing down assets after peers such as Shell, BP, and Chevron have already done so.
Exxon is also reducing capital spending to $20-$25 billion annually through 2025, compared to $30-$35 billion it planned before the pandemic. The company said its focusing on areas with the “highest potential future value,” including in the Permian Basin, Guyana, Brazil, and its chemicals division.
The new developments finish a tough year for Exxon, which was removed from the Dow Jones industrial average in August, suffered three straight quarterly losses, and cut 15% of its global workforce.
WAITING ON OPEC+: OPEC and its allies delayed negotiations for two days after a meeting yesterday did not settle whether the group will postpone its planned oil production increase beginning in January.
OPEC is now scheduled to huddle with Russia and other partners outside the cartel on Thursday, instead of today. Oil market traders had seemed to expect an OPEC+ extension of the oil output cuts to be a done deal, as prices rose in the days leading up to the talks even as demand has stalled due to a resurgence of the coronavirus.
What’s the rub? But prices are slightly down this morning as members appear more divided than expected. The United Arab Emirates, in particular, is reluctant to go along with an extension of the historic production cut agreement unless laggard countries who did not cut according to their assigned quotas fully comply. Saudi Arabia, the de facto leader of OPEC, and Russia are aligned in wanting to extend the cuts.
“Reaching a consensus within OPEC is definitely harder than expected, as the UAE is putting forth conditions to an extension which was difficult for certain members to accept,” said Bjornar Tonhaugen, head of oil markets at Rystad Energy. “An OPEC+ cut extension is no longer a certainty, but still the most likely outcome, albeit with a less unified OPEC.”
FERC COMMISSIONERS CONFIRMED AFTER DARK: The Senate last night quietly approved by voice vote the nominations of Republican Mark Christie and Democrat Allison Clements to FERC, giving the chronically shorthanded commission a full slate.
The abrupt vote came after a coalition of energy, labor, and business groups urged Senate leaders to advance the pending FERC nominees in the lame duck given the inability of the commission to approve new infrastructure, review rate or service proposals, or perform other key functions without a quorum.
Their confirmation gives Republicans a 3-2 majority, but President-elect Joe Biden is likely to choose between Clements and sitting Democratic commissioner Richard Glick to be the new chairman next year, who would set the agenda.
No controversy here: Christie is chairman of the Virginia State Corporation Commission, the state’s electric utility regulator, while Clements is a clean energy lawyer and consultant who has represented environmental groups, utilities, and independent power producers, and more. Christie becomes the only state regulator at FERC. Both nominees were uncontroversial and praised across the spectrum.
“With fresh voices from clean energy and state regulatory backgrounds, we hope this reinvigorated, independent FERC will look anew at how to achieve the long overdue regulatory reforms needed to accelerate our energy transition,” said Gregory Wetstone, president and CEO of the American Council on Renewable Energy.
BANK OF AMERICA WON’T FUND ARCTIC DRILLING: Environmentalists had singled out Bank of America as the only remaining big U.S. bank to leave open the possibility of funding new oil and gas drilling in the Arctic. Now, the bank is clarifying its position.
“There’s been misunderstanding around our position, but we have not historically participated in project finance for oil and gas exploration in the Arctic,” Larry Di Rita, who leads the bank’s public policy and strategy, told Bloomberg in an interview yesterday. “But given that misinterpretation, we’ve determined that it’s time to codify our existing practice into policy.”
Interesting timing: Bank of America’s policy comes as the Trump administration is rushing to hold a lease sale next month, before Biden takes office, for companies to drill for oil in the Arctic National Wildlife Refuge. Biden has vowed to permanently ban drilling there.
It also comes as the Trump administration is taking steps to retaliate against big banks that have said they will stop financing fossil fuel activities such as drilling in the Arctic or coal mining. The Office of the Comptroller of the Currency issued a proposal barring large U.S. banks from restricting specific industries from access to lending and other financial services, a direct response to outcry from Republican lawmakers that banks were declining to support fossil fuel companies.
MORE CARBON CAPTURE IN THE PIPELINE: The number of carbon capture projects in operation and under development worldwide continued to grow in 2020 for the third year in a row, according to a status report released this morning by the Global CCS Institute.
This year, 26 operating commercial carbon capture projects — ranging from natural gas processing facilities to ethanol production to coal-fired power plants — captured nearly 40 million tons of carbon dioxide, the report finds.
The U.S. remains the leader in operating carbon capture projects, and 12 of the 17 new commercial projects added to the development pipeline this year are located in the U.S., the Institute said. However, countries in Europe are ramping up carbon capture, including significant investment from the Norwegian government in a carbon capture project, increased funding for carbon capture in the United Kingdom, and the inclusion of carbon capture to qualify for the European Union’s 10 billion Euro innovation fund.
Despite the growth this year, the Global CCS Institute notes it is not enough to achieve global climate goals. To keep warming to 1.5 degrees Celsius, the more ambitious goal under the Paris Agreement, the world should have more than 2,000 carbon capture facilities in operation by 2050, a more than hundredfold scale-up over the next few decades, the report said.
DEMOCRATS OPPOSE 11TH HOUR ACTION: Democrats on the special House climate committee urged Trump administration officials today to “immediately end the dismantlement of bedrock clean air and water protections and public health safeguards as President Trump prepares to leave office.”
Democrats sent a letter to EPA Administrator Andrew Wheeler, Interior Secretary David Bernhardt, Agriculture Secretary Sonny Perdue, and Acting Comptroller of the Currency Brian Brooks, as well as Trump.
They cite a number of environmental rules and regulatory changes agencies are intending to finalize in coming weeks, including EPA’s “secret science” plan and changes to cost-benefit analysis, along with a rule on industrial soot pollution, and Interior’s move to require state and local approval of Land and Water Conservation Fund spending.
WHAT GENDER DIVERSITY MEANS FOR CLIMATE GOVERNANCE: Companies with a critical mass of women (more than 30%) serving on their boards had better climate governance, including disclosure of emissions and greater investment in clean energy, over the last four years, according to a new report today from BloombergNEF.
BNEF studied 11,700 companies across the utility, oil and gas, and mining sectors. Even though the number of women on the boards of those companies has increased dramatically over the last 10 years, BNEF still found that just 16% of those companies have boards with at least one-third female representation.
Gender diversity on company boards doesn’t directly prompt emissions reductions, but more diverse companies are more likely to disclose their emissions, have strategies in place to decarbonize, and spend more money on renewable energy, BNEF said.
“Companies should consider setting longer-term diversity goals in the same fashion that they set goals for financial performance and climate governance,” said Miho Kurosaki, BNEF’s head of Japan and Korea research.
FOR BIDEN, CLIMATE IS NATIONAL SECURITY: A week after finalizing his foreign policy team, Biden and Vice President-elect Kamala Harris met virtually with national security and climate policy staff yesterday.
They discussed ways to meet Biden’s international climate commitments, including rejoining the Paris Agreement on his first day in office, according to a readout from the office of the president-elect.
Biden “reiterated his intention to ensure climate change is a core national security priority and expressed a clear sense of urgency in advancing his climate goals.”
MOVERS AND SHAKERS: Alex Fitzsimmons, a former Trump administration Energy Department official, joined the conservative group ClearPath yesterday, Josh has learned.
Fitzsimmons was deputy assistant secretary for energy efficiency at DOE, where he helped launch the Energy Storage Grand Challenge, a strategy to help the U.S. develop advanced energy storage technologies.
He will have a similar portfolio at ClearPath as a senior program director focusing on storage, renewable energy technologies, advanced manufacturing, and critical minerals policies.
The Rundown
Politico How climate change could spark the next home mortgage disaster
Reuters Ford says automakers should consider backing California emissions deal
Financial Times Biden’s renewable energy deadline too ambitious says power boss
Reuters Biden shortlist for White House key environmental post shows focus on environmental justice
Bloomberg BlackRock, Vanguard show little favor for shareholder ESG votes
Calendar
WEDNESDAY | DEC. 2
9:45 a.m. The Senate Environment and Public Works Committee holds a business meeting to consider the American Nuclear Infrastructure Act of 2020 and GSA resolutions.
