Today’s Key Takeaways: Talks on permitting reform are percolating. Time to buy the dip? 9 EU extends gas consumption cuts for another year. Chinese nationals killed at gold mine in Central African Republic. Coal vs. gas in grid reliability battle.
NEWS OF THE DAY:
Senate hope for permit deal alive after DOA House energy bill
Jeremy Dillon, E & E Daily, March 16, 2023
A House Republican energy package that includes permitting reform will be dead on arrival in the Senate, but informal talks on a deal are percolating.
Senate Democrats are still holding out hope for a deal on permitting reform, but a House Republican energy bill is not going to do the trick.
On Wednesday, Democrats in the upper chamber said they found some promise in the GOP package, H.R. 1, even if they dismissed it as a nonstarter.
“I think there’s a realistic chance for compromise, but we’re not going to enact that,” said Sen. Brian Schatz (D-Hawaii).
Senate Environment and Public Works ranking member Shelley Moore Capito (R-W.Va.) said informal talks had already begun.
“What we’ll do is we’ll take what the House has, consider parts of it and then expect [Democrats] to do the same thing, and pick apart what you like and don’t like and start a negotiation,” Capito told reporters. “I mean, that’s how you do it.”
The House bill, the “Lower Energy Costs Act,” introduced Tuesday, combines legislation advanced by the House Energy and Commerce, Natural Resources and Transportation and Infrastructure committees over the past few weeks. A vote is expected by month’s end.
A central component is the “BUILDER Act” from Rep. Garret Graves (R-La.). That bill would codify Trump-era rules to speed up environmental reviews under the National Environmental Policy Act.
Such provisions were among many trashed by Senate Majority Leader Chuck Schumer (D-N.Y.), who vowed to block the bill from reaching the Senate floor (Greenwire, March 15).
Still, Schumer saw the bill as a chance to reiterate his belief that bipartisan progress on permitting is still in the realm of possibility this Congress.
“Permitting reform is an essential step towards laying the foundation for a clean energy future, and Republicans must work with Democrats on a package that meets this challenge if we’re going to get anything done,” he said Wednesday.
“What House Republicans have come up with in the meantime,” said Schumer, “is something that falls pathetically short.”
Many Democrats, including the White House, have embraced permitting overhaul, despite a divided Congress.
The issue has only become more pertinent as Democrats look to build upon incentives passed in the Inflation Reduction Act. To achieve the goals of that bill’s climate provisions, many argue, the U.S. will need to build more transmission infrastructure to connect renewable energy technology to the grid.
“I’ve made it clear that it is extraordinarily important to improve permitting for renewables — solar and wind and geothermal,” said Senate Finance Chair Ron Wyden (D-Ore.). “I believe you can do that without kicking environmental laws in the trash can, so my views haven’t changed.”
OIL:
Oil prices fall despite central bank action: Time to buy the dip?
Angela Barnes, Yahoo!Finance, March 20, 2023
Oil prices fell again on Monday as traders weighed up global banking sector risks and another US interest rate hike, which could subsequently prompt a recession and reduce demand.
Brent crude (BZ=F) was down 0.55% to $72.57 (£59.26) a barrel, while US West Texas Intermediate crude (CL=F) fell 0.21% to $66.60.
“Last week, oil prices fell 10%, marking the worst weekly decline since April 2020,” independent macro analyst Piero Cingari said.
“Concerns about demand and mounting recessionary risk in the US and Europe are pressuring crude oil prices, which are now trading at their lowest levels since the end of 2021.”
GAS:
EU Looks To Extend Natural Gas Consumption Cuts For Another Year
Michael Kern, OilPrice.Com, March 20, 2023
- On Monday, the European Commission proposed an extension of the emergency measure to reduce the European Union’s gas consumption by 15%.
- The existing regulation expires at the end of this month, but the new proposal would extend it for another 12 months.
- Despite historically high levels of gas in storage across Europe, natural gas markets are expected to remain tight in the months ahead.
The European Commission on Monday proposed extending the emergency measure which targets a 15% reduction in the bloc’s natural gas consumption by another 12 months to the end of the 2023/2024 winter heating season.
The existing regulation to have natural gas demand cut by 15% expires at the end of this month.
Today’s proposal from the European Commission for another year of gas savings will be discussed by energy ministers at the Transport, Telecommunications and Energy Council (TTE) Council on March 28. EU Commissioner for Energy Kadri Simson already signaled to Ministers in February that a proposal along these lines was to be expected.
Despite the coming end to this winter’s heating season and the historically high levels of gas in storage across Europe, global natural gas markets are expected to remain tight in the months ahead, with a number of possible risks and challenges, including weather, global LNG demand, and macroeconomic conditions, the European Commission said today.
MINING:
China warns its nationals after killings in Central African Republic
Reuters, Mining.Com, March 20, 2023
China’s embassy in the Central African Republic has urged its citizens to avoid travelling outside the capital Bangui after nine Chinese nationals were killed in an attack by militants at a gold mine outside the city.
The embassy said in a statement on Sunday there had been many “vicious” security incidents against workers of foreign mining enterprises in the area, and Chinese citizens still outside Bangui were requested to evacuate immediately.
Armed men killed nine Chinese nationals and wounded two more in an attack on a mine run by the Gold Coast Group, 25 km (15 miles) from the town of Bambari, its mayor told Reuters.
“It was yesterday morning around 5:00 a.m. (0300 GMT) that we heard weapons being fired. A little later we learned it was the Chinese mining site that was attacked,” Abel Matchipata said on Monday.
He said the attackers were thought to be from the Coalition of Patriots for Change (CPC), an alliance of rebel groups formed ahead of the 2020 presidential election to oppose President Faustin-Archange Touadera.
The CPC in a statement denied responsibility and condemned the attack.
A patchwork of armed groups control swathes of territory and regularly commit abuses against the civilian population in Central African Republic, a country that has rarely known stability since independence in 1960.
Chinese President Xi Jinping has called for “severe punishment” of the perpetrators in accordance to the law, and said the safety of Chinese citizens must be ensured, the Chinese foreign ministry said in a statement on Monday.
In view of the security risks, the Chinese embassy warned Chinese institutions and citizens not to travel outside Bangui and in case of emergency, to contact the embassy to seek consular protection.
The security risk level in the Central African Republic, apart from the capital, was “red”, or very high, the Chinese foreign ministry added.
The ministry said it would work with governments and guide Chinese embassies and consulates to take further effective measures to fully safeguard Chinese citizens and enterprises in Africa.
There have been several attacks on Chinese nationals abroad in recent months, prompting embassies to issue warnings and safety alerts and conduct evacuations.
POLITICS:
CAGE MATCH BETWEEN COAL AND GAS: Coal and natural gas interests are locked in an existential cage match over which fuel source is best positioned to stop the bleeding as regulators at FERC and NERC warn about diminishing grid reliability.
A bit of stage-setting: Before getting to the arguments, we note that gas is a primary driver of coal’s demise. Pennsylvania offers a case study: Natural gas-fired electricity generation there catapulted to 52% in 2021 from just 2% in 2001. Coal generation fell from 57% to 12% over the same period.
EIA’s newest Advanced Energy Outlook predicts the trend will continue, estimating a decrease in coal-fired generation nationally from 20% in 2022 to between about 4% and 8% of total generation by 2050: “Continued low natural gas prices increase retirements of more expensive coal-fired generation assets in the near term,” the AEO said.
Coal case: NERC issued multiple warnings last year warning that a mismatch between traditional generator retirements (mostly coal) and the addition of new resources to replace them is driving reserve capacity down and making the grid more vulnerable to outages, which utilities in the Southeast were forced to perform during December’s spell of extreme cold.
Coal interests hope utilities, lawmakers, and regulators will rectify reliability shortcomings by holding on to coal plants a little longer, and they’re also making the case that coal has the cost advantage because it’s less subject to the kind of extreme price spikes that gas markets suffered last year.
“Europe made a grave mistake sacrificing its own dispatchable fuel diversity and energy security in largely pushing coal off its grid and embracing a notoriously volatile gas market dominated by Russia,” the National Mining Association said in a recent blog post.
Uri and Elliot: Gas generators struggled immensely in Texas during Winter Storm Uri due to equipment and fuel supply issues, accounting for 58% of unplanned outages, derates, and failures (vs. wind and coal at 27% and 6% respectively, according to the joint FERC-NERC review).
Gas outages were a problem during Elliot, too. Duke Energy, which ordered controlled outages for the first time ever, said it faced frozen instrumentation at gas-fired units, leading to their derating (Reviews of the storm from TVA, which also implemented outages, and from NERC are pending.)
Between Uri and Elliot, gas is “0-2,” said Michelle Bloodworth, president, and CEO of America’s Power. The coal-fired power interest group released a review last month detailing resource performance during the winter storm, which stressed the advantages of on-site fuel.
Gas’s value proposition: Natural gas interests, meanwhile, see a big opportunity in the rebound of coal in Europe and its consequences to global emissions, which reached a new high last year.
Major banks and other financial institutions are generally locking down financing of coal more aggressively than oil and gas ventures, and coal-to-gas switching has driven the massive drop in power sector emissions in the U.S. over the past two decades.
Gas executives campaigned hard on this latter fact during CERAWeek to promote more policy support for the sector, including faster approvals of pipeline infrastructure to help displace more coal.
“The energy transition is going to have to be built,” Will Jordan, executive vice president of top U.S. gas producer EQT, said during a panel on LNG. “In the natural gas sector, that is building pipelines and infrastructure to allow the Marcellus Shale to be the behemoth that it can and should be.”
Jordan noted that opposition to the Mountain Valley Pipeline goes beyond environmental NGOs to gas’s direct competitor.
“Guess who’s on the side of the Sierra Club in supporting blocking Mountain Valley Pipeline? It’s the West Virginia Coal Association … because they don’t want to have the coal-fired power plants in North Carolina shut down,” he said. “Is that progress? I don’t think so.”
WVCA President Chris Hamilton came out against MVP in January, and the coal trade group has opposed other initiatives by the industry to increase gas infrastructure and exports.