Hazy oil market outlook for OPEC. Two views of Alaska’s Senate Race.

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Exclusive: White House signals “clean” standard push in budget reconciliation
Ben Geman, Axios, June 30, 2021

The White House hopes to use the filibuster-proof budget reconciliation process to mandate that power companies supply escalating amounts of zero-carbon electricity, according to a memo from two top aides obtained by Axios.

Why it matters: The policy, called a “clean energy standard,” is a priority for environmentalists, and the memo comes as activists fear infrastructure talks will leave major climate measures on the cutting room floor.

  • President Biden has set a target of achieving 100% carbon-free U.S. power by 2035.
  • A CES would help meet that goal by requiring that growing percentages of power sales over time come from sources like renewables and nuclear power.

Driving the news: The memo promotes environmental pieces already in the bipartisan infrastructure outline, touting climate measures “embedded throughout” the framework.

But it also lists other steps President Biden supports through the budget process.

  • That includes, per the memo from domestic climate chief Gina McCarthy and senior adviser Anita Dunn, “sending a market signal that brings additional private investment off the sidelines and into modernizing our electric grid through an Energy Efficiency and Clean Electricity Standard.”
  • The memo also lists $10 billion for “mobilizing the next generation of conservation and resilience workers” and touts the idea of a “Civilian Climate Corps” to achieve it.
  • Another goal is expanded clean energy tax credits, which Biden has cited repeatedly as a priority for the reconciliation bill Democrats plan to craft.

Our thought bubble: The memo is the latest step in the delicate and uncertain push to build support for the bipartisan plan, while also appealing to climate-focused lawmakers and activists who want much more.

  • The sections touting grid, clean water and transit investments in the bipartisan outline mirror other sales pitches earlier this week.
  • Meanwhile, the pledges around the CES and other provisions could help reassure Biden’s left flank.
  • The “Civilian Climate Corps” is a priority for the Sunrise Movement, but they’re seeking much more funding than Biden has floated.
  • The memo also argues provisions in the bipartisan outline — like cleaning abandoned mines — and reconciliation ideas will boost union jobs.

Catch up fast: Biden recently abandoned threats to veto the bipartisan plan unless a much larger, Democrats-only reconciliation package moves too.

But both packages — which have yet to even be unveiled in legislative form — face extremely high political hurdles.

What we’re watching: How a CES could fit within reconciliation, which is meant for spending- and revenue-related measures but not general policy ideas.

The groups Evergreen Action and Data for Progress released a proposal in February about CES designs consistent with that process.

The intrigue: The memo, while citing Biden’s reconciliation goals, leaves wiggle room.

  • It offers a commitment to pushing priorities outside the bipartisan plan “through additional congressional action, including budget reconciliation, to ensure we build back our economy and country better.”
  • However McCarthy, when asked by Punchbowl News this morning about non-negotiable items in the reconciliation package, pointed to the CES. “We need that second package. We need tax credits. We need a clean energy standard. [We’d] love to see a Civilian Climate Corps,” she said.


Still hazy on the oil market’s outlook, OPEC+ prepares to negotiate August output quotas
Herman Wang, Alisdair Bowles, S & P Global Platts, June 30, 2021


Uncertain forecasts open to interpretation, delegates say

OPEC and allies to hold flurry of meetings on July 1

Iran deal, end of summer could be downers for oil prices

OPEC and its partners are poring over oil market forecasts and scenarios, buoyed by what Secretary General Mohammed Barkindo called an “overall brighter picture” in the world’s battle against COVID-19 but without a consensus so far on how to set August production levels.

The 23-country OPEC+ alliance is scheduled to convene July 1 for what could be a long day of talks.

That the oil market will be in deficit in the second half of the year is not a matter of debate.

But stubbornly persistent infection rates in many parts of the world and OPEC kingpin Saudi Arabia’s customary conservatism on production policy has somewhat tempered expectations for how much the alliance will raise output quotas.

Analyst predictions have largely coalesced around a production increase of 500,000 b/d or so, far short of the volume many say is needed to satisfy rebounding global oil demand, prompting fears of a price squeeze.

But some delegates have told S&P Global Platts that they remain wary of a jump in Iranian crude exports if Washington relieves oil sanctions on Tehran with a revived nuclear deal later this year. The coming end of the summer driving season and the onset of autumn refinery maintenance schedules may also give members pause.

“Saudi Arabia remains cautious on demand and Iran nuclear talks, while Russia is more focused on regaining market share,” Platts Analytics said in a note. “However, with Brent already in the mid-$70s, both will likely be committed to not overheating the market.”

An advisory technical committee met June 29 to review the latest forecasts devised by the OPEC secretariat, the base case of which sees oil demand rising 6 million b/d in 2021, with world economic growth at 5.5%. OECD oil inventories have dipped below the 2015-2019 average that OPEC+ members are targeting.

How that translates into production policy is still undetermined, delegates said.

“We just left open the deficit in the market for the second half of 2021 for interpretation and for the ministers to make decisions,” one said on condition of anonymity to discuss the private deliberations. “Of course, we highlighted the uncertainties, for example the new Delta variant and the potential return of Iranian production.”

Another delegate said the technical committee examined market outlooks through 2022, which contained many uncertainties.

“I hope the ministers will not be confused,” the delegate said.

Quota discipline

For now, the near-term prospects for the market appear to favor the bulls.

Platts assessed Dated Brent on June 29 at $75.95/b, a more than 50% rise since the start of the year and a far cry from when the price bottomed out at $13.24/b on April 21, 2020.

“The overall brighter picture in relation to the pandemic recovery efforts has led to significantly improved oil market conditions and prospects for future growth,” Barkindo said in his opening remarks to the technical committee meeting.

A 500,000 b/d increase in quotas for August would bring the OPEC+ alliance’s collective production cuts down to about 5.3 million b/d, continuing the unwinding of the historic 9.7 million b/d cut that was implemented in May-July 2020.

The group’s compliance with its quotas has largely been solid, though overcompliance by some members, such as Saudi Arabia and Angola, has papered over lax discipline by others, notably Russia, Iraq, and Kazakhstan.

Inconsistent conformity has been a source of tension at previous OPEC+ meetings and could be another flashpoint as the alliance seeks to apportion a production increase. Under the deal, Iran, Libya, Venezuela, and Mexico are exempt from quotas.

The formal negotiations will kick off July 1 with OPEC’s 13 members meeting at 1 pm Vienna time (1100 GMT).

The nine-country OPEC+ Joint Ministerial Monitoring Committee co-chaired by Saudi Arabia and Russia, which had been scheduled to meet June 30, will instead convene after the OPEC meeting, delegates said.

Then Russia and nine other allies will join with OPEC for a full OPEC+ meeting beginning at 5 pm Vienna time (1500 GMT).

Related:               The worst of COVID-19 may be over, but it’s still a factor in the price of oil


U.S. Supreme Court backs pipeline companies in New Jersey land dispute
Reuters, June 29, 2021

The U.S. Supreme Court on Tuesday ruled in favor of a consortium of energy companies including Enbridge Inc seeking to seize land owned by New Jersey to build a $1 billion natural gas pipeline despite the state’s objections.

The 5-4 ruling, authored by conservative Chief Justice John Roberts, handed a victory to PennEast Pipeline Company LLC, a joint venture seeking to build the 116-mile (187-km) pipeline from Pennsylvania to New Jersey. The justices overturned a lower court ruling in favor of New Jersey’s government.

Other companies joining Enbridge in the consortium include South Jersey Industries Inc, New Jersey Resources Corp (NJR), Southern Co and UGI Corp.

The court ruled that a 1938 U.S. law called the Natural Gas Act that lets private energy companies seize “necessary” parcels of land for a project if they have obtained a certificate from the Federal Energy Regulatory Commission (FERC) can be applied to state-owned land.

The law effectively gives private companies the power of eminent domain in which government entities can take property in return for compensation.

“Specifically, we are asked to decide whether the federal government can constitutionally confer on pipeline companies the authority to condemn necessary rights-of-way in which a state has an interest. We hold that it can,” Roberts wrote for the court.

The court, which has a 6-3 conservative majority, was divided on non-ideological lines. Roberts was joined in the majority by two conservative justices, Samuel Alito, and Brett Kavanaugh, and two liberals, Stephen Breyer, and Sonia Sotomayor.

Roberts wrote that the U.S. Constitution’s 11th Amendment, which prevents courts from hearing certain lawsuits against states, does not bar the lawsuit, as the state had argued.

FERC in 2018 approved PennEast’s request to build the pipeline. The company then sued to gain access to properties along the route.

New Jersey did not consent to PennEast’s seizure of properties that the state owns or in which it has an interest.

PennEast wants the land to build a pipeline designed to deliver 1.1 billion cubic feet per day of gas – enough to supply about 5 million homes – from the Marcellus shale formation in Pennsylvania to customers in Pennsylvania and New Jersey.

After a federal judge approved the property seizure, the Philadelphia-based 3rd U.S. Circuit Court of Appeals ruled in 2019 that PennEast could not use federal eminent domain to condemn land controlled by the state, prompting the appeal to the Supreme Court.


Copper price set for smallest quarterly gain since March 2020
Mining.Com, June 30, 2021

Copper prices rose on Wednesday but were set for their smallest quarterly gain since March 2020 on pressure from a firm dollar and China’s efforts to tame a red-hot metals rally.

Copper for delivery in September rose 1.6% from Tuesday’s settlement price, touching $4.335 per pound ($9,537 per tonne) midday Wednesday on the Comex market in New York.

Click her for an interactive chart of copper prices.


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How energy will steer the Alaska Senate race


Enbridge Raises Funds from Sustainability Bonds in Climate-Goal Push
Pipeline & Gas Journal, June 30, 2021

Enbridge Inc said on Monday it has closed its inaugural sustainability-linked bond (SLB), the first company in the midstream sector to raise sustainable bonds in North America, as it moves a step closer to its environment goals.

Enbridge said in a statement that as part of a larger $1.5 billion financing, it issued a $1 billion 12-year term senior note, integrating emissions and inclusion goals into the financing terms.

The energy infrastructure firm said it also closed a 30-year $500 million term senior note issuance with a coupon of 3.4%.

The SLB carries a coupon of 2.5%, Enbridge said, adding that the proceeds from the issuance will be used mainly to repay existing indebtedness, partially fund capital projects.

The Calgary, Alberta-based company had published a framework of the SLB a few weeks ago that laid out the principles for bond issuance and performance indicators that impact its borrowing costs.

Enbridge has been under the scanner of environmental campaigners as they have argued for years that there is a risk its Line 5 oil pipeline in Michigan, built in 1953, could rupture in the Straits of Mackinac.