Today’s Key Takeaways: IEA talks global energy crisis. Biden throws a bone to the oil industry. U.S. and Japanese officials discuss AKLNG’s ability to provide sustainable, affordable energy to Japan. New study – charging EV’s at home. Kerry lays out COP27 agenda.
NEWS OF THE DAY:
FIRST ‘TRULY GLOBAL’ ENERGY CRISIS, IEA CHIEF DECLARES: Tightening LNG markets and cuts from the world’s largest oil producers have put the world in the middle of the world’s “first truly global energy crisis,” the director of the International Energy Agency, Fatih Birol, said today.
Birol said at Singapore’s International Energy Week that global markets are already tighter than usual due to rising LNG demand from the EU as it races to offset Russian fossil fuels, a situation he warned could worsen if China’s economy begins to reopen and drives demand even higher.
Together, he said these things could lead to a sharp supply-demand imbalance, since just 20 million cubic meters of new LNG capacity will hit the markets next year.
Birol also criticized the OPEC+ to slash oil production by 2 million barrels per day. He described the cuts as “risky,” noting that the IEA predicts global demand growth will sit around exactly that amount for the remainder of the year.
“[The cuts are] especially risky as several economies around the world are on the brink of a recession, if that we are talking about the global recession… I found this decision really unfortunate,” he said.
Birol also weighed in on the G-7’s proposed Russian oil price cap, saying details must be ironed out before it takes effect in six weeks. Leaders must also secure buy-in from the world’s major oil importers, he said.
From the Washington Examiner Daily on Energy
OIL:
Shale firms discount ‘U.S. put’ as inadequate to lift oil output
Arathy Somasekhar, Stephanie Kelly, Reuters, October 24, 2022
U.S. shale oil executive Matt Gallagher this week took a poll on Twitter to gauge sentiment toward President Joe Biden’s offer to stock the U.S. emergency oil reserve at prices around $72 a barrel, to give producers an incentive to drill more.
The result: nearly 80% of respondents said they did not expect oil futures next year will fall to a level that would trigger any U.S. purchases – negating any boost from what analysts called the “U.S. put,” or using proposed Strategic Petroleum Reserve buys to set a minimum price for new oil production.
“That announcement was making it appear like he was throwing a bone to the oil industry,” said Trisha Curtis, CEO of consultancy PetroNerds, who dismissed the offer.
“What if oil does not fall to that price: Do we just keep our reserves low?” she asked.
The release of the last of a 180-million-barrel sale coupled with a repurchase price was Biden “trying to walk a fine line between supporting his green base and trying to lower fuel prices. And he did neither,” said Curtis.
GAS:
Biden admin backs contested Alaska LNG project
Carlos Anchondo, Energywire, October 25, 2022
The Biden administration signaled support Monday for a massive liquefied natural gas project in Alaska, touting the energy benefits of a proposal critics have called a terrible idea.
U.S. Ambassador to Japan Rahm Emanuel held a summit in Japan focused on the proposed Alaska LNG project, which would include about 800 miles of pipeline as well as a gas export facility in Nikiski, Alaska.
U.S. and Japanese officials discussed how “Alaska LNG can provide stable, sustainable, and affordable energy sources to Japan,” according to a statement Monday from Emanuel. He indirectly referenced Russia’s war in Ukraine, a conflict that has pushed numerous countries to seek new supplies of energy.
“No need for Russian gas when #America stands ready to supply it,” Emanuel said on Twitter.
The talks in Tokyo come as the Biden administration has pushed to boost U.S. LNG exports to Europe following Russia’s invasion of Ukraine in late February. U.S. LNG exports are forecast to average 11.7 billion cubic feet per day in the fourth quarter of 2022, according to a report last month from the U.S. Energy Information Administration, up 1.7 bcf per day from the third quarter of this year.
The Alaska LNG project is being developed by the Alaska Gasline Development Corp. (AGDC), a state corporation. It is looking to ship LNG primarily to Asian markets. The Federal Energy Regulatory Commission approved the project in 2020 (Greenwire, May 21, 2020).
The $39 billion project has garnered the support of policymakers such as Alaska Gov. Mike Dunleavy (R) and Sens. Dan Sullivan and Lisa Murkowski, both Republicans who represent Alaska. The $39 billion is for the proposed pipeline, a gas treatment facility on the North Slope and an LNG plant, according to Tim Fitzpatrick, a spokesperson for AGDC.
“Our ongoing conversations with investors and developers, like the one early this morning, are to address funding and other aspects of completing the project,” Fitzpatrick said in an email Monday.
But environmental groups have criticized the fossil fuel project, with groups opposing it because they do not want to see more oil and gas infrastructure built (Energywire, June 30). Concerns have ranged from climate change to the ecosystem in Alaska.
Fitzpatrick said the Alaska LNG project is the only one under development by the company. The development corporation has signed multiple letters of intent with potential LNG purchasers, he said.
The project’s benefits include proximity to Asian markets, a “strong safety culture” and a “cold climate that ensures more efficient production,” according to a video on Alaska LNG’s website.
The facility, which could export up to 20 million metric tons of LNG annually, has faced legal challenges over a FERC analysis of the project’s climate risks (Energywire, Sept. 15).
One environmental group said the Alaska LNG summit appeared to be an example of the U.S. government trying to facilitate deals between project developers and Japanese companies.
“This is part of a broader pattern,” said Talia Calnek-Sugin, the associate director of legislative and administrative advocacy for the Sierra Club’s Beyond Dirty Fuels campaign, in an email.
“This is helping proposed US export facilities reach a final investment decision (FID) that might otherwise not get enough contracts to attract financing, contradicting the Biden Administration’s climate goals and international fossil fuel finance policy,” Calnek-Sugin said.
Neither the Department of State nor the White House provided a comment to E&E News in time for publication.
The Department of Energy released an environmental review of the project earlier this year that said the Alaska LNG project wouldn’t raise greenhouse gas emissions, assuming LNG exports elsewhere would continue to meet demand even if the pipeline and terminal do not get built (Energywire, June 30).
A spokesperson for DOE’s Office of Fossil Energy and Carbon Management said Monday that the agency did not participate in the summit because of the ongoing environmental review. A final supplemental environmental impact statement is slated to be finalized next month, the spokesperson said.
In his Monday tweet, Emanuel said he was proud to convene a group that included Sullivan, Dunleavy, State Department energy adviser Amos Hochstein and representatives from the Japanese government to “discuss how @AlaskaLNG can be part of [Japan]’s energy future.”
Sullivan, a member of the Senate Environment and Public Works Committee, described the summit as a “significant gathering of stakeholders seeking to advance the Alaska LNG Project” in a statement Monday.
“This action-oriented Alaska LNG Summit is an outgrowth of these meetings that we believe will advance the prospects of the Alaska LNG project,” said Sullivan, who thanked Emanuel for hosting the gathering.
Sullivan’s statement said in-person attendees included AGDC President Frank Richards.
Fitzpatrick with AGDC said no offtake agreements for purchasing LNG from Alaska were announced following the summit.
MINING:
5 charts that shed new light on how people charge EVs at home
Jeff St. John, Canary Media, October 25, 2022
A new report draws on 10 years of detailed data to chart charger use patterns, as well as how they can work as home backup and grid-balancing tools.
According to the U.S. Department of Energy, 80 percent of EV charging happens at home, so figuring out how all of these cars will affect their owners’ electric bills — and the utility grids they’re connected to — will become a far more pressing matter.
One place to look for insights on these questions is Austin, Texas. Over the past decade, hundreds of households have volunteered to provide nonprofit research organization Pecan Street access to second-by-second data on how much electricity their air conditioners and appliances are using, how much their rooftop solar systems are generating — and the charging patterns of their electric vehicles.
Since the federally funded data-collection project started in 2011, the more than 100 EVs in the program have shifted from early power-sippers like the Chevy Volt and Nissan Leaf to newer models with much bigger batteries from automakers like Tesla, Ford and BMW. All have remained under the owners’ direct control, providing a uniquely long-running and granular view of how EV owners’ charging behaviors have changed over time and under circumstances such as the coronavirus pandemic and last year’s winter grid emergency in Texas.
This extensive trove of data allows Pecan Street to game out a number of propositions for the future of home EV charging.
POLITICS:
Kerry speech lays out COP27 agenda, talks “loss and damage”
Andrew Freedman, Axios, October 25, 2022
Special climate envoy John Kerry laid out the U.S. point of view this morning on a host of issues at the upcoming COP27 climate negotiations in Egypt.
Driving the news: Here are three big things to know about his wide-ranging remarks at the Council on Foreign Relations…
He fears Wall Street backsliding: Kerry emphasized the need to mobilize private capital to fund the clean energy transition and criticized “slowing” momentum among banks and financiers this past year given the Ukraine war and ensuing European energy crisis.
- “For every $1 invested in low carbon energy supply, $1.10 is invested in fossil fuels,” he stated in prepared remarks. “The math and the science unequivocally make clear, we cannot hit our targets unless we dramatically change that ratio.”
He strongly calls for reforming the World Bank: Multilateral development banks are a key target for criticism, as Kerry and others want these institutions to funnel far more money toward low-carbon solutions abroad.
Kerry sees escalating climate disasters as motivation to act with urgency: Kerry cited the megadrought in the Southwest, heat waves and drought in China: “This past perilous year may well prove better than all those still ahead” without swift action, he said.
The intrigue: Kerry’s appearance on Tuesday addressed the U.S. position on “loss and damage” at COP27.
- “Loss and damage” refers to industrialized countries agreeing to pay developing nations for the impacts of climate change that go beyond adaptation limits.
- The U.S. and EU have signaled a willingness to discuss the topic at COP27 but resistance to a specific fund.
- Kerry was careful not to commit to a specific funding mechanism at COP27, but rather to a continuing dialogue through 2023 and possibly 2024.
What they’re saying: “We’re very concerned about the impacts of climate on all of these countries,” Kerry said of the developing nations, such as flood-ravaged Pakistan, seeking financial support in response to major climate disasters.
- “We’re all determined to come up with progress, but something real that we can begin to define for everybody,” he said. “You’ve got to make things happen that can work, that can be functional in your own political system,” he said.
- The possibility of a Republican-led House next year could make it far more difficult to mobilize Congress to fund international climate assistance for adaptation and loss and damage, which is something U.S. negotiators will be cognizant of in Egypt.
- The midterm elections will take place during the first week of the summit.