NEWS OF THE DAY:
Biden Administration no longer supports Michigan Governor’s wish to shutdown Line 5 Pipeline
Aliah Keller, WTRF, November 16, 2021
The Oil and Gas pipeline from Michigan to Canada could still go away for good.
The Biden Administration has announced it’s not supporting the closure for now, but the Michigan Governor is still pushing for it.
Enbridge Energy’s Line 5 oil and gas pipeline has carried Canadian oil into Michigan for nearly 70 years, but that might go away for good.
And not everyone is happy with this.
“That is a big concern for the Ohio Oil and Gas association.” Ohio Oil and Gas Association’s Mike Chadsey
The Ohio Oil and Gas Association isn’t the only one defending the pipeline. So is the Biden Administration.
Meanwhile, Michigan Governor Gretchen Whitmer still pushes for the line’s shutdown over environmental concerns. But Ohio Oil and Gas Association’s Mike Chadsey believes there are even bigger concerns on the horizon.
“We are very fearful of the effects it’s gonna have on consumers. The US is the world’s largest producer of oil and natural gas. If you shutdown line 5, you’re talking about pipeline shortages in oil and natural gas.”
He adds that could crank up propane prices.
“Particularly, as the cold weather sets in… many residents use it for home heating, and a few bucks or more increase in propane costs would really hurt those customers.”
Meanwhile, others continue to fight for the pipeline: Enbridge has sued to keep it open. Canada has invoked clauses of the 1977 Treaty that deals with pipelines that cross the US-Canada border.
But the future of the pipeline remains unclear.
“It could be shutdown fairly quickly, which is where our concern is. And so, that’s what our message is ‘do not shut this pipeline down. Do not cause shortages, and do not raise prices to the folks that are out of Wheeling for price increases.”
OIL:
Resurgent Oil Supply Expected to Soothe Tight Market
David Hodari, The Wall Street Journal, November 16, 2021
Rebounding economic activity and natural gas shortages recently pushed the developed world’s oil reserves to their lowest since early 2015, but growing crude supply could soon ease that pressure, the International Energy Agency said Tuesday.
In its closely watched monthly market report, the IEA said that the tight supply and demand balance in the global oil market could be about to ease. It expects output to rise by 1.5 million barrels a day in the remainder of 2021, with the U.S., Saudi Arabia and Russia accounting for around half of that amount.
At the same time, while demand for transportation fuels continue to recover and a supply shortage in the natural gas market has forced some power plants to switch to using oil and refined products, “new Covid waves in Europe, weaker industrial activity and higher oil prices will temper gains,” the Paris-based energy watchdog said.
Oil prices reversed their early gains Tuesday after the IEA became the second forecasting body—after the Energy Information Administration—to predict a looser market in the months to come. Brent crude oil, the global benchmark, was down 0.5% at $81.61 a barrel and U.S. crude futures were down 0.9% at $80.11 a barrel.
The price of crude has risen to its highest since 2014 in recent months, with resurgent economic activity and the gas crisis prompting energy importing nations, such as the U.S., to unsuccessfully urge the Organization of the Petroleum Exporting Countries and its allies to speed up plans to relax curbs set up at the beginning of the pandemic.
Those dynamics have seen wealthy countries in the Organization for Economic Cooperation and Development use the supply gluts they built up during lockdowns and then some—their stocks haven’t been this low in almost seven years. Now, though, “preliminary data and satellite observations of stock changes in October suggest the tide might be turning,” the IEA said.
The watchdog expects oil production to continue increasing after the end of 2021 as well, raising its 2022 forecast by 100,000 barrels a day to 1.9 million barrels a day. A combination of rising output from the Gulf of Mexico, where supply was severely affected by Hurricane Ida earlier in 2021, and fewer overall outages—the pandemic has meant more downtime and affected maintenance schedules—will drive that increase, the IEA’s report said.
The report said rising output, particularly from the U.S.—which the IEA expects to account for 60% of the non-OPEC+ supply increase—will go some way to meet rising demand, with vaccination campaigns allowing travel to continue to rebound, driving exceptional strength in gasoline demand and setting jet-fuel demand on a course to reach around 80% of 2019 levels by the end of next year.
GAS:
Nord Stream 2: Germany halts approval of Russian gas link
BBC, November 16, 2021
Germany’s energy regulator has suspended the approval process for the controversial Nord Stream 2 natural gas pipeline from Russia to Germany.
It said the pipeline’s operating company needed to be compliant with German law before it would certify the €10bn (£8.4bn) project.
The decision sent UK and mainland Europe wholesale gas prices, already under pressure, to three-week highs.
Critics fear the pipeline will increase Europe’s energy dependence on Russia.
Russia’s state-owned Gazprom said the pipeline was ready in September, but it has been beset by delays.
Running under the Baltic Sea, Nord Stream 2 will double Moscow’s gas exports to Germany, but it will also circumvent Ukraine, which relies on existing pipelines for income and would be hard-hit by the loss of transit fees.
German businesses have invested heavily in the 1,225km (760-mile) pipeline and former Chancellor Gerhard Schröder has played a big role in its development.
Political weapon
The German regulator said, “it would only be possible to certify an operator of the Nord Stream 2 pipeline if that operator was organised in a legal form under German law”.
The decision is likely to set the project back several months and even when it receives German approval it will require a green light from the European Commission.
The regulator said its approval procedure would remain suspended until “the main assets and human resources” had been transferred from the Swiss-based Nord Stream 2 parent company to its German subsidiary, which owns and operates the German part of the pipeline.
Ukraine has opposed Nord Stream 2, described by President Volodymyr Zelensky as a “dangerous geopolitical weapon”.
This week, UK Prime Minister Boris Johnson said a choice was coming shortly “between mainlining ever more Russian hydrocarbons in giant new pipelines and sticking up for Ukraine and championing the cause of peace and stability”.
German Chancellor Angela Merkel said recently that further sanctions might be imposed on Russia if it used the pipeline against Ukraine.
The German regulator’s decision to suspend certification has been welcomed by Ukrainian energy firm Naftogaz. And Polish gas company PGNiG responded with a call for energy solidarity in the EU to ensure security of supplies.
The Nord Stream 2 consortium declined to comment on possible delays to gas exports.
Under the EU’s gas directive, gas producers have to be separate from the company that owns the pipeline.
As well as Germany’s Uniper and BASF’s Wintershall unit, other European companies have stakes too, including Anglo-Dutch Shell, OMV of Austria and Engie of France.
Germany’s government estimates that “natural gas will continue to make a significant contribution to energy supply in Germany over the coming decades“, saying it is “more climate-friendly compared to other fossil fuels as it produces less CO2”.
But environmentalist groups in the country such as Deutsche Umwelthilfe oppose Nord Stream 2, arguing that it is incompatible with Germany’s emissions goals in the battle against man-made climate change.
MINING:
China doubles down on slower coal exit after COP26 spat
Mining.Com, November 15, 2021
China extended its defense of coal’s future after diluting demands for action at the COP26 climate summit, insisting a transition away from the dirtiest fossil fuel must be gradual.
“In many developing countries, not everyone has access to electricity and energy supply is not adequate,” Chinese Foreign Ministry spokesman Zhao Lijian told a regular press briefing Monday in Beijing. “Before asking all countries to stop using coal, consideration should be given to the energy shortfall in these countries.”Top of Form
Bottom of Form
Both China and India, the biggest coal-consuming nations, have been ramping up output from mines in recent weeks to ease an autumn energy crisis that caused widespread power shortages and disrupted industrial activity.
India and China’s intervention at the Glasgow talks saw a call to accelerate the “phase-out” of unabated coal power downgraded to a pledge to “phase-down” use of the fuel. COP26 President Alok Sharma, who apologized to the conference over the revisions, told the BBC the two nations will need to justify their actions to countries that are most vulnerable to climate change.
Efforts to “reduce the proportion of coal consumption is an incremental process,” that’ll require the developed world to both end use of the fuel earlier than developing nations and to offer those countries funding and technology to make the transition, Zhao said.
China attaches “high importance” to the energy transition and has recently set out major steps including a target to reduce coal consumption from 2026 and to end the building of overseas power projects that use the fuel, he said.
POLITICS:
From the Washington Examiner, Daily on Energy:
EXPORT CURBS: Congressional Democrats look increasingly interested in supporting a curb on U.S. oil, coal, and natural gas exports as a means of lowering energy prices at home.
Democratic members of the Senate Energy and Natural Resources Committee probed witnesses about the prospect during a hearing on high energy prices this morning, with at least one making the case outright that the Biden administration should take a second look at the market impact of domestic producers shipping product overseas and that American consumers could benefit from added supply.
Chairman Joe Manchin of West Virginia led questioning on the implications of fuel exports, asking whether they “hurt consumers,” and Sen. Angus King, an Independent of Maine who caucuses with the Democrats, posited that the U.S. is “exporting our principal advantage in the world economy” by selling its LNG to China.
“We are literally subsidizing Chinese manufacturing by sending them our natural gas,” he said.
King added that he plans to introduce legislation “not to limit it, not to control it, not to cut it off, but at least have the Department of Energy to do a study when they’re going to approve an export license as to what the effect will be on domestic prices.”
Stephen Nalley, acting administrator of the Energy Information Administration, told the committee that restrictions on exports of LNG would “certainly” give the domestic market a surplus but would benefit neither U.S. consumers nor the international market overall.
“Prices would certainly drop in the U.S. market,” he said. “Internationally, they would skyrocket [and] lower prices in the U.S. would probably discourage more production.”
An export ban is one of two options that Manchin’s and King’s Democratic colleagues recently named among the series of “tools” that President Joe Biden should consider employing in order to counter high prices, especially of gasoline.
The other option they mentioned is a release from the Strategic Petroleum Reserve, the benefits of which Nalley said would be “relatively short-lived,” depending on the amount of crude oil released.
CLIMATE CHANGE:
PR giant vows climate focus and defends work with oil giants
Ben Geman, Axios, November 16, 2021
Edelman, the world’s largest PR firm, is vowing to make climate change a bedrock focus even as it rejects activist pressure to sever ties with Big Oil.
Driving the news: The company on Monday unveiled new principles and plans, along with new hires to guide the efforts.
- Edelman said it’s committed to working with clients focused on “accelerating action” on climate and vowed to “put science and facts first” in its output.
- They’re doing a 60-day review of their portfolio and also plan to “formalize clear criteria for climate communications.” Edelman launched a new practice called Edelman Impact to direct its ESG and sustainability offerings.
- Robert Casamento has joined the firm as its first global head of climate. His prior gigs include founding director of the World Economic Forum’s global climate initiatives and top climate and sustainability roles at Deloitte and EY.
What they’re saying: CEO Richard Edelman, in an interview, said this year’s disasters — including flooding in Bangladesh and Germany and the California wildfires — helped spur the new efforts.
- So did the UN climate science body’s sobering August report. Edelman also said he’s motivated by “disappointment” with the just-concluded UN climate summit, noting that countries’ emissions pledges remain far off Paris agreement goals.
- “I think the private sector is going to have to lead now,” he said. “I’m really excited about the challenge that we have in front of us.” He sees their work at the intersection of clean product development and consumer uptake, giving agriculture as an example.
- “There may be product changes, and formulation changes, and ultimately, the producers will respond to consumer signals. And so, I think we have a very important role to play … it’s on both supply side and demand side that we want to work,” he said.
The intrigue: The climate push comes as PR and ad agencies are under growing pressure over their work with fossil fuel companies, including oil majors like Exxon. The group Clean Creatives launched last year.
- An open letter last week with over 100 signatures from actors, advocates and others called on Edelman to drop those clients because “ending advertising and PR for fossil-fuel companies is a crucial step toward climate justice.” Clean Creatives and the group Slow Factory organized it.
- Advocates bashed Edelman yesterday because their new plan does not call for severing ties with Exxon and others. Dr. Ayana Elizabeth Johnson, a climate expert who corralled signatures, said “the only reason not to drop them is greed — and lack of respect for our shared future on this planet.”
The other side: “I believe in the energy industry. I think that they are making the transition. They are absolutely in a change mentality, in part because of shareholder pressure. And in part I think they see the business opportunity,” Edelman told Axios.
- “We work with oil majors. I’m proud of our work. I think that bigger question over time is, how we can help them express their transitions,” he said.
- However, asked broadly about the 60-day review, Edelman said that if clients are not committed to the new principles they announced, “then I think we’ll withdraw from those relationships.”