Today’s Key Takeaways: 20-year supply deal for U.S. LNG. U.S. college students staying away from oil-industry degrees. Battle over green gas. Disrupting America’s favorite pastime over climate change.
NEWS OF THE DAY:
Major LNG project advances with 20-year supply deal
Carlos Anchondo, Energywire, July 6, 2022
The agreement with China Gas is the latest contract for the Rio Grande project, which is one of the largest proposed export terminals for liquefied natural gas in the United States.
A Chinese company has agreed to buy 1 million metric tons of liquefied natural gas per year from one of the largest proposed U.S. export terminals, bringing the project one step closer to a final investment decision.
The Rio Grande export project is planned for Brownsville, Texas, and at full scale, would send 3.6 billion cubic feet per day of LNG oversees. The project’s developer, NextDecade Corp., announced yesterday that it signed a 20-year agreement to provide LNG to a subsidiary of China Gas Holdings Ltd.
It is the third sales and purchase agreement NextDecade has announced since early April. In May, French company Engie SA signed a 15-year agreement with NextDecade for 1.75 million metric tons of LNG a year — reversing a 2020 decision not to buy LNG from the same project (Energywire, May 3).
The gas for the China Gas agreement will come from Rio Grande LNG’s second liquefaction train, which could start commercial operation as soon as 2027, according to NextDecade’s announcement.
“We are pleased to announce the signing of this long-term [sales and purchase agreement] with China Gas, one of China’s largest natural gas distribution companies supplying approximately 43 million households across China,” said Matt Schatzman, NextDecade’s chair and CEO, in a statement.
Chinese buyers have signed 14 deals with U.S. LNG exporters in 2022, said Hinson Peters, a spokesperson for the Center for Liquefied Natural Gas, in an email. Peters said NextDecade’s agreement with China Gas means the company is closer to reaching a final investment decision on the Rio Grande project, which is among the largest approved by federal regulators.
However, NextDecade’s announcement comes roughly three months after the company asked the Federal Energy Regulatory Commission for two more years to complete the project, saying it was hit by “unforeseeable developments in the global LNG market” due to the Covid-19 pandemic (Energywire, April 8).
NextDecade currently has until November 2026 to finish project construction, and FERC has not yet made a decision on whether to give the company more time.
Last month, Texas Republican Sens. John Cornyn and Ted Cruz — along with four House members also from Texas — wrote a letter to FERC in support of NextDecade’s request for an extension on its permit to complete construction.
“This project is critical as it will provide LNG to our European allies, helping them reduce their dependence on Russian natural gas,” the lawmakers wrote.
But Rebekah Hinojosa, the senior Gulf Coast campaign representative for Sierra Club’s Beyond Dirty Fuels campaign, argued that the Rio Grande project is far from a done deal.
“For years, Rio Grande LNG has failed to line up customers because of its potential environmental and climate change impacts,” Hinojosa said in a statement yesterday, asserting that the terminal poses a “major threat” to air quality and wildlife habitat. NextDecade’s agreement with China Gas is “terrible news,” she said.
Separately, energy company Williams Cos. announced late last month that it’s reached a final investment decision on the Louisiana Energy Gateway project, which plans to gather 1.8 billion cubic feet per day of natural gas from the Haynesville shale basin, which includes parts of Texas and Louisiana, “for delivery to premium markets,” according to a news release.
The project, which aims to go into service in 2024, could feed “growing LNG export demand” along the Gulf Coast, according to Williams, as well as feed the Transco gas pipeline system.
US College Students Are Shunning Oil-Industry Degrees for ESG Future
Dianna Li, Bloomberg BNN, July 6, 2022
Scott Lindberg’s dream of becoming a petroleum engineer was fueled by childhood drives through Texas oil country with his energy-consultant father, passing pumpjacks and pipeline hubs that kept the world’s biggest economy humming.
But after recently graduating with honors from the University of Texas at Austin with a petroleum-engineering degree, Lindberg is turning his back on the oil industry and plans to attend law school instead. His disenchantment is rooted in concern that fossil fuels may not have much of a future given increasing pressure from politicians, activists, and investors to pivot toward more climate-friendly energy sources.
The 22-year-old Houston-area native illustrates an alarming trend for the top US petroleum-engineering programs, where enrollments are dwindling despite the surge in crude prices that historically prompted more aspirants to join the industry.
This year, the number of new petroleum-engineering graduates in the US is expected to total about 400 — an 83% decline from 2017, when they peaked at more than 2,300, according to Lloyd Heinze, a Texas Tech University professor who tracks annual enrollments at more than three dozen petroleum schools around the world.
“I was kind of concerned that if we eventually get to a point where fossil fuels are so disfavored that the jobs simply don’t exist before I plan to retire,” Lindberg said. “I could lose my career if I stayed.”
At Lindberg’s alma mater — which he attended on a full scholarship — undergraduate enrollment in petroleum engineering dropped 11% between 2018 and 2021. Although benchmark American crude prices climbed 25% during that period, it was perhaps the most-volatile era in the modern oil industry: in early 2020, the price temporarily went negative for the first time in history as energy demand collapsed in the wake of a worsening global pandemic.
Historically, however, petroleum schools have seen influxes of new students when oil booms and the sector go on hiring sprees. But with US crude up more than 30% so far this year, the link appears to be broken.
“Personally, I think we are heading to a bit of a crisis,” said Jennifer Miskimins, who leads the petroleum-engineering department at the Colorado School of Mines, one of the world’s premier oil universities. “As petroleum engineers age, the industry will need to replace a retiring cohort of Baby Boomers. But we are not seeing enough petroleum engineers to fill the demand.”
During the shale revolution that unfolded during the first decade-and-a-half of this century, enrollments soared, and bachelor’s degrees reached a record 2,326 in 2017, Texas Tech’s Heinze said. That will tumble to about 400 this year and remain in the 200-to-400 range annually for the next 10 years or so, he estimated.
The reason why enrollment numbers no longer correlate with oil prices, according to Colorado School of Mines’s Miskimins, is partly due to the energy transition. More students and parents are turned off by the sector not necessarily because they are environmental advocates, but because they have concluded the switch will make oil and natural gas obsolete in five or 10 years, she said.
To cope with falling petroleum-engineering enrollments, universities across the country are trying to adapt. For example, the University of Texas is offering a new minor in sustainable energy where students can take a wide array of environmentally minded classes.
And many students that matriculate with petroleum-engineering degrees are putting those skills to work in non-oil fields, said Jon E. Olson, the department chair of petroleum and geosystems engineering at UT. Roughly 25 of the 75 companies that hired graduates of the department’s class of 2020 were involved in the tech, financial, environmental, and consulting sectors, he said.
“We always tell students in their first lesson, you are entering a super cyclical industry, and you need to be prepared for that,” Miskimins said.
Europe’s battle over “green” natural gas
Andrew Freedman, Axios, July 7, 2022
European lawmakers’ decision to bless some natural gas plants and nuclear power as climate-friendly energy sources signals the high priority countries are placing on securing energy supplies to replace Russian fossil fuels.
Catch up fast: The European Parliament on Wednesday voted to classify certain uses of natural gas and nuclear power as green, or climate-friendly energy sources, in its taxonomy of sustainable activities.
- The moves, which are highly controversial, encourage the private sector to continue to invest in such energy sources.
- Many lawmakers and environmental groups argue that labeling natural gas, which is a fossil fuel, as a sustainable form of energy is misleading at best.
Why it matters: Russia’s unprovoked invasion of Ukraine has set off a scramble in Europe to secure natural gas supplies ahead of next winter and for many years to come, with planning underway to build more than a dozen new liquefied natural gas (LNG) terminals.
- Countries are cutting deals with U.S., Middle Eastern and African suppliers to try to make up for the loss of Russian gas.
- While natural gas, sometimes referred to as fossil gas, is a cleaner burning fuel compared to coal, it still emits planet-warming greenhouse gasses during drilling, transport, and when it’s burned for energy.
- A commentary published in the journal Nature Energy this week, in fact, argues that natural gas-related emissions have consistently been underestimated.
Context: Even with the Parliamentary vote, lawmakers maintained their rapid timetable for an energy transition away from fossil fuels and put some guardrails around natural gas projects as well.
- Gas-fueled power plants will need to meet certain emissions criteria in order to be referred to as sustainable investments and need to switch to low-carbon gases by 2035.
- The EU still aims to cut its greenhouse gas emissions by “at least 55%” by 2030, and be carbon neutral by 2050.
Zoom in: Since the first of the year, European natural gas prices have skyrocketed by about 700%, according to Kevin Book, managing director of ClearView Energy Partners.
- To bring prices down, many European countries are seeking long-term deals for fuels, including LNG shipments from the U.S., Qatar, and other nations.
- However, such lengthy contracts run counter to Europe’s goals of curtailing global warming by cutting greenhouse gas emissions as quickly and sharply as possible.
- “What I think we’re seeing is a divergence between rhetoric and realpolitik,” Book told Axios. “Some of the governments that have espoused very green values are also signing 20-year contracts for LNG.”
- “High prices tend to usher out incumbent politicians faster than they usher in new technologies,” he said.
A Lithium Battery That Goes to Extremes
Prachi Patel, IEEE Spectrum, July 7, 2022
A new lithium-ion battery works at frigid temperatures of -40 °C all the way to a scorching high of 50 °C. With a cathode made of sulfur, the new lithium-sulfur battery could also pack more energy than is possible with today’s chemistries.
The batteries could increase the driving range of EVs in cold climates. They could also be used in satellites, spacecraft, high-altitude drones, and submarines. “By largely expanding the operation window for lithium batteries, we can provide more robust and resilient battery chemistry for applications beyond EVs,” says Zheng Chen, a professor of nanoengineering at the University of California, San Diego.
Today’s batteries, with their graphite anodes and lithium metal oxide cathodes, don’t handle extreme temperatures very well. High temperatures exacerbate the already highly chemically active environment inside a battery cell, causing side reactions that decompose the electrolyte and other battery materials, resulting in irreversible damage. Low temperatures, meanwhile, thicken the liquid electrolyte, so lithium ions move through it sluggishly, leading to power loss and slow charging.
Insulating the battery or novel ways to heat it up from the inside help address the cold temperature issues. Researchers have also previously engineered the electrolyte to expand battery temperature range, but that improves performance either at low or high temperatures, not both at once.
The heart of the new extreme-temperature battery that Chen and his colleagues have reported in the Proceedings of the National Academy of Sciences is a new electrolyte formulation. They make it by dissolving a lithium salt in dibutyl ether (DBW) solvent. Unlike the ethylene carbonate solvent used today in batteries, DBE does not freeze at temperatures down to -100 °C, says Chen. It also does not evaporate easily. Plus, DBE molecules bind weakly to lithium ions, so lithium ions move through it more freely, even in freezing temperatures.
From the Washington Examiner, Daily on Energy:
CLIMATE ACTIVISTS PLAN TO DISRUPT CONGRESSIONAL BASEBALL GAME: Several climate activist groups are planning to “disrupt” this year’s Congressional Baseball Game, taking aim at one of Washington’s longtime traditions — and rare displays of bipartisanship— as they pressure lawmakers to pass a climate bill through budget reconciliation.
Details of the planned disruption remain largely under wraps, though organizers told the Washington Post there “will be a component of direct action for activists who are willing to risk arrest” at the game, currently scheduled for July 28.
“We refuse to watch a member of Congress play baseball while the world burns,” Jamie DeMarco, a federal policy director for Chesapeake Climate Action Network, told the Post.
DeMarco added that two of the game’s sponsors are BP and Chevron. “Either you deliver on your promise on climate or voters will hold you accountable,” he said.
CONSERVATIVE GROUP POLL FINDS GOP SUPPORT FOR CLIMATE MEASURES: A new survey found strong Republican and bipartisan support for fiscally responsible climate measures in three battleground states.
The poll was conducted by conservative climate group C3 Action, and surveyed voters in Arizona, Georgia, and Michigan. Among their findings:
Just 14% of Republican voters believe climate change is not happening, and most Republicans said they prefer candidates who propose climate solutions.
The poll also found majority-Democrat support for center-right climate preferences: Roughly 71% of Democrats said they support the “all of the above” strategy to adopting clean energy alternatives, while 68% said they support nuclear energy.
Two-thirds of all voters said they support streamlining regulations to speed up deployment of new clean energy technology. Meanwhile, votes from both parties prefer to finance clean energy research through spending offsets—49%— over borrowing—13%— or tax increases (9%).
Another biggie: Republican voters also said it is more important for a candidate “to have plans to reduce gas prices, promote energy independence and defend America from foreign threats” than to have Trump’s endorsement.
“Our poll indicates a strong bipartisan consensus exists around an ‘all of the above’ fiscally responsible energy diversification agenda,” said C3 Action executive director John Hart.
“The party that embraces and implements this agenda will set itself up for success for a generation.”