ALASKA BY THE NUMBERS – JULY 2019
Ed King, July 29, 2019
[Oil prices] in July 2019, the first month of FY19, averaged $65.82. There was surprisingly little volatility in the daily oil prices in July, even as some events in the Middle East, that would normally cause panic, were merely shrugged off.
The EIA short-term energy outlook for July sees Brent prices averaging $67 in CY20. If the current ANS premium holds, it would imply an ANS price for FY19 of right around $68.
Of course, the market is always adjusting to changing conditions. And right now, there is a lot of uncertainty in the market. Current options trading implies a 95% confidence interval for ANS of $45 and $92.
Exclusive: First big U.S. offshore wind project hits snag due to fishing-industry concerns
Nichola Groom, Reuters, July 28, 2019
Vineyard Wind, a joint venture between Copenhagen Infrastructure Partners and Avangrid Inc (AGR.N), was scheduled to begin construction this year 14 miles (23 km) off the coast of Massachusetts to power more than 400,000 homes by 2021 – making it the first large-scale offshore wind development in the United States.But a federal environmental study crucial to its permitting has been repeatedly delayed since April, according to published government timelines, without any public explanation from Trump administration officials. Vineyard Wind has said the delays could threaten the project’s viability.
Documents seen by Reuters, which have not previously been made public, show the National Oceanic and Atmospheric Administration’s (NOAA) National Marine Fisheries Service (NMFS) triggered the delays by declining to sign off on the project’s design, as proposed by the Bureau of Ocean Energy Management (BOEM), the lead agency on offshore wind projects.
Vineyard Wind said earlier this month that it told federal officials it would be “very challenging” to move forward with the project in its current configuration if the environmental permit is not issued within four to six weeks. The company wants to start construction soon to lock in a federal tax credit that expires next year. The credit is currently worth 12% of the value of the project.
Our take: It must be a bummer when environmentalists stymie themselves when they realize that green infrastructure involves…infrastructure. Here in Alaska, we know this story all too well. The Alliance continues to support responsible development and hopes that projects like this open the eyes of those who seek alternative energy sources to the dangers of overregulating.
Natural Gas Is Stuck in a Vicious Cycle
Lauren Silva Laughlin, The Wall Street Journal, July 30, 2019
U.S. natural-gas demand, which reached nearly 30 trillion cubic feet in 2018, up from 22 trillion in 2005, when prices peaked at about seven times today’s level, is projected to grow by 7% a year in 2019 and 2020, according to EIA projections. That should slow considerably, but the agency doesn’t see prices rising consistently above $4 per million British thermal units before 2035, given ample supply.
From the Daily on Energy:
LOOKING TO HEAD OFF REGULATION, OIL & GAS INDUSTRY TOUTS VOLUNTARY METHANE REDUCTIONS: The oil and gas industry is touting voluntary efforts to cut emissions of methane, a greenhouse gas more potent than carbon, as it tries to make the case against climate change regulations and mandates that have been proposed by Democrats running for president.
The American Petroleum Institute released its first progress report Tuesday on a voluntary program it started with 27 oil and gas companies in 2017 called The Environmental Partnership, which it created to limit leaks of methane and reduce emissions of related pollutants called volatile organic compounds.
Methane, the main component of natural gas, is more potent than carbon dioxide, although its emissions don’t last as long in the atmosphere. Gas emits half the carbon of coal, making it the cleanest fossil fuel.
The stakes for industry: Environmental groups say methane leaks — which can happen purposely or accidentally during the production and transmission of gas — belie the industry’s attempt to sell gas as a “fuel of the future” rather than one that is phased out over coming decades as part of aggressive climate change plans proposed by Democrats.
“What our industry is really focused on is not pledges from politicians but progress from this industry,” Mike Sommers, API’s CEO, told reporters on a press call Tuesday. “The Environmental Partnership has demonstrated the progress that has occurred.”
Report card: Sommers, along with Matthew Todd, program director of the Environmental Partnership, shared the results of the program’s first ever annual report. The report showed how the partnership, which has grown to 66 members representing more than 80% of the top U.S. natural gas producers, has implemented a methane leak detection and repair program.
Companies conducted more than 156,000 leak surveys in 2018 across more than 78,000 production sites, finding a “leak rate” of only 0.16%. In the Permian Basin, the most prolific shale gas producing region, methane emissions relative to production have fell nearly 40% from 2011 to 2017, the report said.
“The very low leak rate we found is great performance,” Todd said.
Missing information, with no emissions reduction target: But the partnership does not require companies to disclose how many of those surveys it was forced to conduct because of federal or state regulations. That means it’s unclear how much of that work happened as a result of voluntary actions.
The partnership, notably, also does not require any overarching emission reduction goal for participating companies that are combating methane leaks, and the report did not measure the amount of emissions cuts that have occurred as a result of the program.
Todd defended the group’s approach by arguing that a reduction goal could “inhibit” the participation of smaller companies that don’t have expertise in limiting methane leaks, but benefit from the information-sharing in the program.
“If we required an emissions percentage reduction, it could prevent smaller operators from joining the program,” Todd said.
Industry will only go so far: Groups such as the Environmental Defense Fund that cooperate with industry to invest in technological research to better detect methane leaks say the current voluntary approach is insufficient.
Some individual companies, such as Shell, have urged the EPA to keep Obama-era regulations targeting methane leaks, instead of weakening them as planned. Sommers, though, argued that the industry is self-motivated to limit methane emissions because leaks remove product that can be sold for profit.
“We know the threat of climate change is real, but the solutions also have to be based in reality,” Sommers said. “We know from even most ambitious projections that oil and gas will be a significant part of the energy mix for years into the future.”