Energy News Beat

Note: For quite a while now I have put my Citizens Guide to the Climate Act article as the top post on the website because it summarizes the Climate Leadership & Community Protection Act (Climate Act). This post updates my current thoughts about the Climate Act and will replaces that post at the top of the list of articles on October 2, 2023

There is a new climate reality and it is passing New York by.  New York decision makers are going to have to address the new reality that proves that the Hochul Administration’s Scoping Plan to implement the Climate Act will adversely affect affordability, reliability, and the environment.  This post highlights articles by others that address my concerns.

I have followed the Climate Act since it was first proposed, submitted comments on the Climate Act implementation plan, and have written over 350 articles about New York’s net-zero transition.  I have devoted a lot of time to the Climate Act because I believe the ambitions for a zero-emissions economy embodied in the Climate Act outstrip available renewable technology such that the net-zero transition will do more harm than good by increasing costs unacceptably, threatening electric system reliability, and have major unintended environmental impacts.  The opinions expressed in this post do not reflect the position of any of my previous employers or any other company I have been associated with, these comments are mine alone.

Climate Act Background

The Climate Act established a New York “Net Zero” target (85% reduction and 15% offset of emissions) by 2050.  It includes an interim 2030 reduction target of a 40% reduction by 2030 and a requirement that all electricity generated be “zero-emissions” by 2040. The Climate Action Council is responsible for preparing the Scoping Plan that outlines how to “achieve the State’s bold clean energy and climate agenda.”  In brief, that plan is to electrify everything possible using zero-emissions electricity. The Integration Analysis prepared by the New York State Energy Research and Development Authority (NYSERDA) and its consultants quantifies the impact of the electrification strategies.  That material was used to develop the Draft Scoping Plan.  After a year-long review, the Scoping Plan recommendations were finalized at the end of 2022.  In 2023 the Scoping Plan recommendations are supposed to be implemented through regulation and legislation.

Climate Science

In the past several weeks there have been multiple articles highlighting issues that call into question the rationale for the Climate Act and Climate Act net-zero transition.   The rationale for the Climate Act is that there is an existential threat due to climate change.  However, the Epoch Times reports that is not a universally held position:

There’s no climate emergency. And the alarmist messaging pushed by global elites is purely political. That’s what 1,609 scientists and informed professionals stated when they signed the Global Climate Intelligence Group’s “World Climate Declaration.”

The article gives a good overview of the World Climate Declaration.  The declaration’s signatories include Nobel laureates, theoretical physicists, meteorologists, professors, and environmental scientists worldwide. The article quotes a few signatories who when asked by The Epoch Times why they signed the declaration stating that the “climate emergency” is a farce, they all stated a variation of “because it’s true.”

In my case, I signed the Declaration because I do not think we understand natural climate variability well enough to be able to detect the effect of a relatively small change to the atmosphere’s radiative budget caused by mankind’s greenhouse gas (GHG) emissions.  There are so many poorly understood factors at play and the mathematical challenges of simulating the chaotic, non-linear processes are so immense that I think that claiming that Global Climate Models can simulate the atmosphere well enough to make major changes to the energy system of the world is absurd.

There is another important aspect.  One of the key points made in the Declaration is that climate science is overly politicized:

“Climate science should be less political, while climate policies should be more scientific,” the declaration begins. “Scientists should openly address uncertainties and exaggerations in their predictions of global warming, while politicians should dispassionately count the real costs as well as the imagined benefits of their policy measures.”

It seems to me that every day there is another mass media story attributing any extreme weather event to climate change and insinuating that the “science” has unequivocally shown that there is a link to mankind’s GHG emissions has made the weather more extreme.  The fact is that the latest research and the Intergovernmental Panel on Climate Change are finding that as Roger Pielke, Jr. explains the “projected climate futures have become radically less dire”.  He argues that the consensus has accepted a large change in expected warming due to a doubling of GHG emissions — from 4oC to 2.5oC or less.   Pielke notes that he has documented this trend  for years and has “been talking about the incredible shift in expectations for the future” recently.  Unfortunately he also notes: “Despite the growing recognition that our collective views of the future have changed quickly and dramatically, this change in perspective — a positive and encouraging one at that — has yet to feature in policy, media or scientific discussions of climate.”   He concludes “That silence can’t last, as reality is persistent.”

Affordability

I think this is the one issue that might force political change to the Climate Act net-zero transition.  A coalition of business organizations have called for a “reassessment” of how the Climate Act is being implemented highlighting current policies to determine “what is feasible, what is affordable and what is best for the future of the state.”  In response, Department of Environmental Conservation Commissioner Basil Seggos told Capital Tonight that “the costs of inaction are much higher.”  He goes on: “Listen, we know from two years of very intensive research that the cost of inaction on climate in New York far exceeds the cost of action by the tune of over $100 billion”. I disagree.

The Scoping Plan that documents this claim by Seggos has been described as “a true masterpiece in how to hide what is important under an avalanche of words designed to make people never want to read it”.  No where is this more evident than in the tortuous documentation for this cost claim.  I documented the issues with costs and benefits in my  comments (social cost of carbon benefits, Scoping Plan benefits, and electric system costs).  In brief, the Hochul Administration has never provided concise documentation that includes the costs, expected emission reductions and assumptions used for the control strategies included in the Integration Analysis documentation making it impossible to verify their assumptions and cost estimates.

The claim that the costs of inaction are more than the costs of action compares real costs to New Yorkers relative to societal benefits that can be charitably described as “biased high” or more appropriately “cherry picked” to maximize alleged benefits and, more importantly, do not directly offset consumer costs.  The benefits claimed are also poorly documented, misleading and the largest benefit is dependent upon an incorrect application of the value of carbon.  The plan claims $235 billion societal benefits for avoided greenhouse gas emissions.  I estimate those benefits should only be $60 billion.  The Scoping Plan gets the higher benefit by counting benefits multiple times.  If I lost 10 pounds five years ago, I cannot say I lost 50 pounds but that is what the plan says.  The cost benefit methodology was duplicitous because the cost comparisons were relative only to Climate Act requirements that did not include “already implemented” programs.  For example, this approach excludes the costs to transition to electric vehicles because that was a requirement mandated before the Climate Act.  I maintain that the total costs to transition to net-zero should be provided because that ultimately represents total consumer costs.

It is also frustrating that the State ignores that other jurisdictions are finding costs are an issue.  In a recent article I noted that the Prime Minister of Great Britain, Rishi Sunak, said he would spare the public the “unacceptable costs” of net zero as he scaled back a string of flagship environmental policies. The fact is that every jurisdiction that has tried to transition away from fossil-fueled energy has seen a significant increase in consumer costs.  For example, Net Zero Watch recently published a report that describes six ways renewables increase electricity bills that makes that inevitable.   The article explains:

In order to reduce bills, a new generator generally has to force an old one to leave the electricity market — otherwise there are two sets of costs to cover. But with wind power, you can’t let anything leave the market, because one day there might be no wind.

The article goes on to explain that as well as adding excess capacity to the grid, renewables also have a series of other effects, each of which will push bills up further:

Renewables need subsidies, they cause inefficiency, they require new grid balancing services that need to be paid for; the list of all the different effects is surprisingly long. There is only one way a windfarm will push your power bills, and that’s upwards.

Reliability

Another flawed aspect of the Climate Act narrative is that a transition to a zero-emissions electric system is straight-forward and there are no significant technological challenges.  Terry Etam summed up the issues evident in the German transition that will also occur in New York.  In an article about the ramifications of the energy requirements for implementing artificial intelligence applications, he argued that the fossil-fired energy growth in the developing nations has been discouraged by the G7 nations.  However, those nations are pushing back on anything that is not in their best interests.  He writes:

The second big tectonic shift was on full display at the recent G20 summit. The African Union was admitted as a member, which was kind of a big deal, particularly for Africa, but also for the world in general. The addition acknowledges that other voices need to be on the world stage, a sense of humility the G7 has long lacked. The final communique issued at the end of the G20 summit included doses of common sense lacking from typical utterances of the G7: “We affirm that no country should have to choose between fighting poverty and fighting for the planet…It is also critical to account for the short-, medium-, and long-term impact of both the physical impact of climate change and transition policies, including on growth, inflation, and unemployment.”

Contrast that with the west’s bizarre self-lobotomization when it comes to energy, as best personified by the entity furthest along the rapid-transition path, Germany: the dwindling economic powerhouse is chained to a green freight train it insists is under control, has shut down nuclear power plants with no low-emissions baseload to replace it, and in a final stunning swan dive to the pavement, is orchestrating the installation of 500,000 heat pumps per year to the grid, which will be in most demand in cold weather and will perform worst in cold weather, and will add a potential 10 gigawatts of cold-weather demand at the very instant the grid is least able to afford it, and for which there is no supply available anyway. A German energy economic university think tank says the additional cold-weather demand could only be met by new gas-fired power plants, which are not being built. In sum: Germany has shuttered its cleanest, most reliable energy; it has or is trying to banish hydrocarbons and replace them with intermittent power; and finally, is hastening adoption of devices that will function very well in 80 percent of conditions when it doesn’t matter much but will fail in a spectacularly deadly way at the point in time when they are needed the very most, because heat pumps will be turned up to 11 at the very time the grid will be the most taxed. German engineering isn’t what it used to be.

In the last several years I have concluded that intermittency of wind and solar is the fatal flaw for that technology.  The most important consideration is the need for energy storage.  Francis Menton writing at the Manhattan Contrarian summarizes energy storage problems in a recent post on a new British Royal Society report “Large-scale energy storage.”  This report suffers from the same problems afflicting the Climate Act Scoping Plan.  Menton explains (my emphasis added):

Having now put some time into studying this Report, I would characterize it as semi-competent. That is an enormous improvement over every other effort on this subject that I have seen from green energy advocates. But despite their promising start, the authors come nowhere near a sufficient showing that wind plus solar plus storage can make a viable and cost-effective electricity system. In the end, their quasi-religious commitment to a fossil-fuel-free future leads them to minimize and divert attention away from critical cost and feasibility issues. As a result, the Report, despite containing much valuable information, is actually useless for any public policy purpose.

I believe that the insurmountable problem with energy storage backup for wind and solar is worst-case extremes.  The Royal Society report notes that “it would be prudent to add contingency against prolonged periods of very low supply”.  This contingency is the theoretical dispatchable emissions-free resource that the Integration Analysis, New York State Independent System Operator, New York State Reliability Council, and Public Service Commission in the Order Initiating Process Regarding Zero Emissions Target in Case 15-E-0302 all acknowledge is necessary.  Incredibly, the loudest voices on the Climate Action Council clung to the dogmatic position that no new technology like this resource was necessary and excluded any consideration of a backup plan to address the contingency that a not yet commercialized technology might never become commercially viable and affordable.

If New York State were to embrace nuclear energy, then there might be a chance to significantly reduce GHG emissions without affecting reliability.  Instead, the Scoping Plan placeholder option for this resource is green hydrogen.  Menton describes the hydrogen option proposal in the Royal Society report:

Since hydrogen is the one and only possible solution to the storage problem, the authors proceed to a lengthy consideration of what the future wind/solar/hydrogen electricity system will look like. There will be massive electrolyzers to get hydrogen from the sea. Salt deposits will be chemically dissolved to create vast underground caverns to store the hydrogen. Hydrogen will be transported to these vast caverns and stored there for years and decades, then transported to power plants to burn when needed. A fleet of power plants will burn the hydrogen when called upon to do so, although admittedly they may be idle most of the time, maybe even 90% of the time; but for a pinch, there must be sufficient thermal hydrogen-burning plants to supply the whole of peak demand when needed.

The Scoping Plan proposal is slightly different.  It envisions that the electrolyzers will be powered by wind and solar to create so-called “green” hydrogen.  Menton and I agree that the biggest unknown is the cost.  He raises the following cost issues:

How about the new network of pipelines to transport the hydrogen all over the place?
How about the entire new fleet of thermal power plants, capable of burning 100% hydrogen, and sufficient to meet 100% of peak demand when it’s night and the wind isn’t blowing.
They use a 5% interest rate for capital costs. That’s too low by at least half — should be 10% or more.
And can they really build all the wind turbines and solar panels and electrolyzers they are talking about at the prices they are projecting?

It gets worse in New York.  Ideologues on the Climate Action Council have taken the position that “zero-emissions” means no emissions of any kind.  They propose to use the hydrogen in fuel cells rather than combustion turbines because combustion turbines would emit nitrogen oxides emissions.  This adds another unproven “at the scale necessary” technology making it even less likely to succeed as well as adding another unknown cost.  In addition, it ignores that there are emissions associated with the so-called zero-emissions technologies that they espouse.  All they are advocating is moving the emissions elsewhere.

Environmental Impacts

I addressed the implications that the Scoping Plan only considers environmental impacts of fossil fueled energy in my Draft Scoping Plan Comments.  The life-cycle and upstream emissions and impacts are addressed but no impacts of the proposed “zero-emissions” resources or other energy storage technology are considered.  The fact is that there are significant environmental, economic, and social justice impacts associated with the production of those technologies. Furthermore, the most recent cumulative environmental impact analysis only considered a fraction of the total number of wind turbines and area covered by solar PV installations proposed in the Scoping Plan.  As a result, the ecological impacts on the immense area of impacted land and water have not been adequately addressed.

One of the more frustrating aspects of the Hochul Administration’s Climate Act implementation is the lack of a plan.  For example, consider utility-scale solar development.  There are no responsible solar siting requirements in place so solar developers routinely exceed the Department of Agriculture and Markets guidelines for protection of prime farmlands.  My solar development scorecard found that prime farmland comprises 21% of the project area of 18 approved utility-scale solar project permit applications which is double the Ag and Markets guideline.

I am particularly concerned about environmental impacts associated with Off Shore Wind (OSW).  This will be a major renewable resource in the proposed Climate Act net-zero electric energy system.  The Climate Act mandates 9,000 MW of Off Shore Wind (OSW) generating capacity by 2035.  The Integration Analysis modeling used to develop the Scoping Plan projects OSW capacity at 6,200 MW by 2030, 9,096 MW by 2035 and reaches 14,364 MW in 2040.  I summarized several OSW issues in a recent article that highlighted an article by Craig Rucker titled Offshore Wind Power Isn’t ‘Clean and Green,’ and It Doesn’t Cut CO2 Emissions.  He explains:

A single 12 MW (megawatts) offshore wind turbine is taller than the Washington Monument, weighs around 4,000 tons, and requires mining and processing millions of tons of iron, copper, aluminum, rare earths and other ores, with much of the work done in Africa and China using fossil fuels and near slave labor.

Relying on wind just to provide electricity to power New York state on a hot summer day would require 30,000 megawatts. That means 2,500 Haliade-X 12 MW offshore turbines and all the materials that go into them. Powering the entire U.S. would require a 100 times more than that.

These numbers are huge, but the situation is actually much worse.

This is because offshore turbines generate less than 40% of their “rated capacity.” Why? Because often there’s no wind at all for hours or days at a time. This requires a lot of extra capacity, which means a lot more windmills will have to be erected to charge millions of huge batteries, to ensure stable, reliable electricity supplies.

Once constructed, those turbines would hardly be earth or human friendly, either. They would severely impact aviation, shipping, fishing, submarines, and whales. They are hardly benign power sources.

The environmental impacts on whales of the OSW resources necessary to meet the net-zero transition are especially alarming.  Earlier this year I described the Citizens Campaign for the Environment virtual forum entitled Whale Tales and Whale Facts.  The sponsors wanted the public to hear the story that there was no evidence that site survey work was the cause of recent whale deaths.  I concluded that the ultimate problem with the forum was that they ignored the fact that construction noises will be substantially different than the ongoing site surveys and will probably be much more extensive when the massive planned construction starts.  The virtual forum noted a lack of funding for continued monitoring necessary to address the many concerns with massive offshore wind development to allay the concerns of the public.   Since then, the Save Right Whales Coalition (SRWC) has found issues with the incidental harassment of whales associated with the noise levels associated sonar surveys done in conjunction with OSW development.  I am very disappointed that the Hochul Administration is not investing in an adequate monitoring program that confirms that whales are not being harmed.

Conclusion

This article was intended to summarize my current concerns about the impacts of the Climate Act transition on affordability, reliability, and the environment.  There is a growing realization that the alleged problem of global warming is not as big a threat as commonly assumed. Combined with the fact that New York GHG emissions are less than one half of one percent of global emissions and global emissions have been increasing on average by more than one half of one percent per year since 1990 the rationale for doing anything is weak.  It may not mean that we should not do something, but clearly we have time to address the affordability, reliability and environmental impact issues.

The Scoping Plan has not provided comprehensive and transparent cost estimates so New Yorkers have no idea what this will cost.  I explained why the Hochul Administration claim that the costs of inaction are more than the costs of action is misleading and inaccurate.  I believe that all New Yorkers should let it be known that they need to know the expected costs so they can determine if they support the transition.

When the energy system becomes all-electric the reliability of the electric system will be even more critical than today.  The State plan is to proceed as if there are no implementation issues.  The rational thing to do would be to develop demonstration projects to prove feasibility and cost of the new technology needed before dismantling the current system.  Francis Menton explains why this is necessary and how it could work.  There is no sign that is being considered.

It is particularly galling that organizations who claim to be in favor of a better environment have failed to support comprehensive cumulative environmental impact assessment and on-going impact monitoring assessment to potential impacts from wind, solar, and energy storage development on the scale necessary for the net-zero transition.  Maybe they don’t want to know that the concerns are real.

Mark Twain said: “It is easier to fool someone than it is to tell them they have been fooled.”    The politicians who support the Climate Act net-zero transition have been fooled into thinking it is affordable, will not affect reliability, and benefits the environment.  Unfortunately, it is very difficult to slow down, much less stop the unfolding train wreck of these policies.  I encourage readers to keep asking for a full cost accounting of all the proposed programs as the most obvious concern.

Source: Pragmaticenvironmentalistofnewyork.blog

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A step forward, not the finish line

The first train for the ALNG2 project started producing LNG today at 10:30 local time.

While producing the first LNG drop is a significant achievement for any liquefaction project, it is important to note that this is not the same as loading the first cargo. Several additional steps, including further testing, ramp-up, and ensuring consistent output, must be completed before reaching this crucial project milestone. Technical hiccups are not uncommon at the final stage: one of the LM9000 gas turbines experienced a technical issue during the critical final cooldown phase, causing a slight delay in achieving the first drop.

Limited output and equipment uncertainties

Train 1 currently operates with only four of the required seven LM9000 gas turbines, significantly restricting its production capacity. Additionally, the planned Chinese gas turbines intended for onshore power generation have not been installed yet, casting doubt on the project’s timeline and ultimate output potential.

The concrete gravity-based structure (GBS), with the train installed on top, was pulled out of the Belokamenka yard by 14 tugs under the watchful eye of President Vladimir Putin in July, who attended personally, underscoring the importance of the project and wide-scale support the government extended to Novatek in its maiden project, Yamal LNG, and now Arctic LNG 2.

Once Train 1 is operational, the focus will shift towards resolving the equipment shortfall, potentially installing the planned Chinese gas turbines, and optimizing production for consistent output. Only then can the project progress towards its next major milestone: reaching T1 projected capacity and completing the construction of the second train.

New sanctions

The US has targeted the facility with the explicit goal of shutting down the project. As part of congressional testimony, US officials said their aim is to “systematically reduce Russia’s future energy revenue.” It is unclear if or to what degree existing European and Japanese partners in the project will comply with the new sanctions. Novatek has a 60% stake in Arctic LNG 2, with the remaining shareholders comprising France’s TotalEnergies (10%), China’s CNPC (10%), China’s CNOOC (10%) and a consortium of Japan’s Mitsui and Jogmec – called Japan Arctic LNG – with the final 10% stake.

In September, the US had already imposed sanctions on two vessels intended for use as transshipment terminals for LNG shipments from the project. Industry experts anticipated that this move would lead to shipping congestion for many market participants, particularly Asian companies.

ALNG 2 has yet to sell a large portion of its capacity

Industry insiders, including traders and legal experts, foresaw a scenario in which Arctic LNG 2 might be compelled to place more shipments on the spot market, potentially involving trading intermediaries. This could result in cargoes reaching markets that have been evading oil sanctions. Despite a significant decline in Russian pipeline gas deliveries, shipments of Russian LNG to the European Union have remained strong since the invasion of Ukraine in February 2022.

Source: Linkedin.com

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Energy News Beat

History continues to offer lessons and strategy to Washington if only the Biden Administration had the wisdom to hear it.

Eighty years ago, the allies quickly realized that both Nazi Germany and Imperial Japan fed their war machines on oil. In the Pacific, American submarines sank every enemy tanker on sight, choking off the crucial petroleum desperately needed by Japan. It would be part of a ground, naval and air strategy that ultimately brought surrender. In Europe, our air forces went after the refineries and the rail networks that were fueling the German military. At the end of that conflict, there were probably more disabled Tiger tanks from lack of fuel than from bazookas.

Let us be clear who today’s enemy is in the Middle East.

Hamas may be carrying out the atrocities against Israeli civilians, but they are proxies of Iran.

Missiles fired by Yemen’s Houthi rebels recently struck three commercial ships in the Red Sea and attacked a U.S. warship. Those missiles were supplied by Iran.

Hezbollah has been lobbing rockets into northern Israel. Their masters? The Iranians.

The Iranians are operating with impunity because they believe the United States does not currently have the military will or strategic vision to act against them. They will continue to use their proxies to ratchet up the violence, testing to see where is America’s “red line.” After all, it is not as if anyone believes these various malevolent forces are acting on their own. So, for Iran’s mullahs, how far can they go in sponsoring violence against America’s allies? And more to the point, against America itself?

The Israelis understand exactly the nature of what they are facing. They know that without an overwhelming military response to the Hamas-Iranian massacres they will collectively become hostage to the next Iranian-sponsored attack. And who is to say that the next one will not include a tactical nuclear weapon detonated within a Hamas tunnel that has been dug miles into Israel.

President Ronald Reagan understood the meaning of “red line.” In 1986, he ordered an air raid on Libyan dictator Muammar Gaddafi’s command and control center for overseas terrorist operations. That attack not only sent a stunning message to Libya but to every one of America’s enemies throughout the Middle East.

Much like democracy’s foes of 80 years ago, Iran needs oil to function — exporting it to obtain the hard currency the regime needs to that keep it functioning. Whether it is an American naval quarantine, perhaps an equally concerned unidentified third party mining the waters off Iran’s seaports, or some other appropriate response, Tehran might begin to understand that its days of unilaterally creating mayhem, murder and terror are over.

Source: Gatestoneinstitute.org

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Energy News Beat

Lightsource bp says it has sold five of its Australia solar project to the China-based Beijing Energy International Australia (BJEI Australia) for an equity value of $813 million.

The portfolio, which amounts to a total of 1.04 GW (dc), includes the Wellington, West Wyalong and Woolooga projects which are already in operation, and the Wellington North and Wunghnu solar projects which are due to be be operational in the second half of 2024.

The sold assets represent the entirety of the company’s portfolio of assets that are operating and under construction, and part of the company’s normal “recycling” of assets.

Lightsource bp, which will be wholly owned by bp under a deal announced last month, has a portfolio of around 7.5 GW of solar and battery storage assets in Australia and New Zealand.

“The world is reaching a tipping point on climate change and utility-scale solar will play a vital role in establishing a reliable, cost-effective, and lower carbon energy system,” said Adam Pegg, the head of Lightsource bp in the Asia Pacific.

“The development and sale of these assets validates Lightsource bp’s ability to deliver a meaningfully contribution to the energy transition.

Lightsource bp says it is also exploring opportunities in wind and the integration with green hydrogen production.

Lightsource bp says it was advised on the transaction by KWM, Macquarie Capital and EY. Rothschild & Co acted as financial adviser and King & Wood Mallesons acted as legal adviser to BJEI Australia.

Source: Reneweconomy.com.au

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The Biden administration has cut the number of lease sales in the United States outer continental shelf (OCS) from the previously proposed 47 to just three in the final oil and gas leasing program for 2024–29.

The Department of the Interior (DOI) said the reduction is needed to meet offshore wind area sales required by the Inflation Reduction Act (IRA). An IRA provision prioritizing fossil fuels requires that total acres offered in offshore oil and gas lease sales in the year till the issuance of any lease for offshore wind development must reach 60 million acres.

The final program still needs to be reviewed by Congress within 60 days. A five-year oil and gas auction plan is required by Section 18 of the OCS Lands Act.

“The [final] Program schedules three oil and gas lease sales in the Gulf of Mexico Program Area in 2025, 2027 and 2029”, the DOI said in a recent press release. “These three lease sales are the minimum number that will enable the Interior Department’s offshore wind energy program to continue issuing leases in a way that will ensure continued progress towards the Administration’s goal of 30 gigawatts of offshore wind by 2030”.

The official memorandum on the decision noted the department had the option to hold no lease sale at all in the next five years but that such a course would not meet the country’s energy needs. The DOI did decide to hold no auction next year for offshore oil and gas licenses, the first no-lease year since 1966 according to the American Petroleum Institute (API), which opposed the decision.

The decision “could threaten to increase reliance on foreign energy sources”, the lobby group said in a statement.

“Demand for affordable, reliable energy is only growing, yet the administration is choosing to limit future production in a region that plays a critical role in powering our nation and supplies among the lowest carbon-intensive barrels in the world”, said the statement on the API website.

Production on the US Gulf of Mexico alone accounts for 15 percent of national petroleum output and five percent of US dry gas production, according to the country’s Energy Information Administration (EIA).

“Over 47 percent of total U.S. petroleum refining capacity is located along the Gulf coast, as well as 51 percent of total U.S. natural gas processing plant capacity”, the EIA states on its website.

The API went on to cite an industry report that claimed the carbon intensity of oil production in the Gulf of Mexico was 46 percent lower than the international average outside the US and Canada. The report, released May 16, was prepared by the ICF consulting company for the National Ocean Industries Association.

“Constrained production in this basin could be replaced by higher carbon intensity barrels from elsewhere in the world”, said the statement by the API, which counts a membership of about 600 companies.

“This program is a step in the wrong direction for U.S. energy security and will only make it harder to meet growing energy demand over the long-term”, the API added.

Besides slashing the number of leases, the final program requires prospective licensees to employ measures that mitigate project impact on topographic features and pinnacle trends. “Applying these stipulations at the National OCS Program development stage is consistent with current practice and continues the effective protection of these biologically sensitive areas, should areas including these sensitive bottom habitats be offered in the three potential lease sales scheduled in the 2024-2029 Program”, the DOI said in the memorandum of the decision.

Source: Rigzone.com

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The United States has announced the launch of a multinational force to protect trade in the Red Sea after attacks by Yemen’s Houthi rebels forced at least a dozen shipping lines to suspend operations.

US Defense Secretary Lloyd Austin said on Monday that Bahrain, Canada, France, Italy, the Seychelles and the United Kingdom would be among the countries joining the 10-nation “multinational security initiative”.

“Countries that seek to uphold the foundational principle of freedom of navigation must come together to tackle the challenge posed by this non-state actor,” Austin said in a statement, describing the attacks as an issue that “demands collective action”.

The announcement comes after the US and UK navies said over the weekend that their destroyers had shot down a total of 15 drones in the waterway.

The Iran-aligned Houthis have ramped up drone and missile attacks on vessels in key shipping lanes since the start of the war in Gaza, targeting ships alleged to have links to Israel or Israelis.

The rebel group said on Monday it had attacked the Norwegian-owned Swan Atlantic and the MSC Clara using naval drones to show solidarity with Palestinians in Gaza.

Swan Atlantic’s owner, Norway’s Inventor Chemical Tankers, said in a statement the vessel had no link to Israel and was managed by a Singaporean firm.

There were no injuries reported by either vessel.

Mohammed al-Bukhaiti, a senior Houthi official and spokesperson, told Al Jazeera on Monday that the group would confront any US-led coalition in the Red Sea.

More countries to be included

The coalition might also include Egypt and Jordan as additional Arab nations to Bahrain, as they have a vested interest in ensuring the safe passage of ships, said Al Jazeera’s Sara Khairat, reporting from occupied East Jerusalem.

“It is still not clear whether they will join the fold later. Egypt and Jordan, as well as some of the GCC [Gulf Cooperation Council] countries, including Saudi Arabia, are part of the Combined Maritime Forces, which the coalition will be under the umbrella of,” Khairat reported.

“Reading between the lines, it’s a very difficult situation for some of these Middle Eastern countries. You have Saudi Arabia, which is very close, it seems, to signing a deal with the Houthi rebels in Yemen,” she added.

“You have Egypt, which doesn’t want to be seen as going against the Houthis’ message on Gaza – which is for Israel to stop the war on the enclave.”

US Secretary of State Antony Blinken held a call with Saudi Arabian Foreign Minister Prince Faisal bin Farhan Al Saud on Monday on the issue, discussing the ways to avoid further conflict.

Blinken “condemned continued attacks by the Houthis on commercial vessels operating in international waters in the southern Red Sea and urged cooperation among all partners to uphold maritime security”, the US Department of State said in a statement after the call.

Austin, who was visiting Israel, is scheduled to hold talks in Bahrain and Qatar on Tuesday.

Companies avoid Red Sea

At least 12 shipping companies, including the Italian-Swiss giant Mediterranean Shipping Company, France’s CMA CGM and Denmark’s AP Moller-Maersk, have suspended transit through the Red Sea due to safety concerns.

UK oil giant BP on Monday became the latest firm to announce it would avoid the waters.

“In light of the deteriorating security situation for shipping in the Red Sea, BP has decided to temporarily pause all transits through the Red Sea,” the company said in a statement.

“We will keep this precautionary pause under ongoing review, subject to circumstances as they evolve in the region.”

Houthi attacks have effectively rerouted a significant portion of global trade by forcing freight companies to sail around Africa, imposing higher costs and delays for energy, food and consumer goods deliveries.

About 12 percent of global trade passes through the Red Sea, which connects to the Mediterranean Sea via the Suez Canal, including 30 percent of container traffic.

US Defence Secretary Lloyd Austin says coalition will include Bahrain, Canada, France, Italy, UK and other countries.

​

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Energy News Beat

Croatia’s Krk LNG terminal has received its 80th liquefied natural gas cargo since the launch of operations in January 2021.

The 2010-built 170,000-cbm, Methane Julia Louise, arrived at the 140,000-cbm FSRU on December 18, according to a short statement by state-owned LNG terminal operator LNG Croatia.

Methane Julia Louise’s AIS data provided by VesselsValue shows that the LNG carrier delivered the cargo to the FSRU from Cheniere’s Sabine Pass plant in Louisiana.

GasLog’s LNG carrier serves a charter deal with LNG giant Shell that also has a long-term contract for volumes from the Sabine Pass plant.

Back in 2020, Shell signed a six-year deal with Hungary to supply the country with LNG via the Croatian terminal.

The Croatian FSRU mainly receives shipments from the US, but it also received cargoes from Qatar, Nigeria, Egypt, Trinidad, Indonesia, and reloads from European terminals.

Hungary’s MFGK and a unit of Switzerland-based trading firm MET are some of the users of the facility.

From the start of commercial operations, the LNG terminal has regasified more than 10.8 million cubic meters of LNG and shipped more than 6.52 billion cubic meters of natural gas into the Croatian system, according to LNG Croatia’s website.

Due to high demand, LNG Croatia is currently working to boost the capacity of its FSRU-based Krk LNG terminal.

Earlier this year, Finland’s Wartsila won a contract to supply one regasification module for the FSRU.

Under the contract, Wartsila Gas Solutions, a unit of Wartsila, will build the regas module with a maximum capacity of 250,000 m3/h. The firm recently awarded the module contract to China’s CIMC SOE.

The current three LNG regasification units have a maximum regasification rate of 451,840 m3/h.

Following the upgrade, the Krk LNG facility will have a capacity of about 6.1 bcm per year in 2025.

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Energy News Beat

World Oil

(Bloomberg) — Permian Basin operator Callon Petroleum Co. is considering strategic options amid takeover interest from rival oil and gas players, people familiar with the matter said, as dealmaking accelerates in the U.S. energy industry.

The Houston-based company has been working with an adviser to study possibilities including a potential sale, said the people, who asked to not be identified because the information is private. Callon shares rose 2.9% to $32.59 at 11:15 a.m. in New York, giving the company a market value of about $2.2 billion. They’re down 12% for the year.

No final decision has been made and Callon could opt to remain independent, they said. Representatives for Callon couldn’t immediately be reached for comment.

Oil and gas companies have been increasingly looking to consolidate in order to add scale and cut costs, underscored by ExxonMobil Corp.’s $60 billion deal for Pioneer Natural Resources Co.

Like Pioneer, Callon is active in the Permian of West Texas and New Mexico, the biggest and most productive oil field in the country. The Permian has long been ripe for consolidation because it’s highly fragmented thanks to the scores of shale upstarts that have begun drilling there in the past two decades.

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Energy News Beat

Nasdaq

Goldman Sachs trimmed its price expectation for Brent crude in 2024 by $10 per barrel to between $70 and $90, saying strong production from the United States would moderate any upside in oil prices.

“We still look for range-bound prices and only moderate price volatility in 2024. Elevated spare capacity to handle tightening shocks should limit upside price moves,” its analysts said in a note dated Sunday.

The investment bank now expects Brent to recover to a peak of $85 per barrel in June 2024, and to average at $81/$80 in 2024/2025 compared to $92 previously.

Brent LCoc1 was trading around $77 as of 0526 GMT on Monday, down 20% from multi-month highs hit in September. U.S. West Texas Intermediate crude was around $72 a barrel. O/R

Continued supply from non-Organization of the Petroleum Exporting Countries (OPEC) sources, led by the U.S, shows that several tailwinds to the U.S. production are likely to persist in 2024, Goldman Sachs added.

Analysts said they expect U.S. Lower 48 crude output to reach 11.4 million barrels per day (mb/d) in the fourth quarter of next year, and hiked U.S. total liquids supply 2024 growth forecast to 0.9 mb/d from 0.5 mb/d earlier.

However, OPEC decision to rein in supply, a recovery in China, restocking in the U.S. and modest recession risk should limit downside risk to oil prices, the bank noted.

“Saudi Arabia is unlikely to ‘flush’ the market in 2024”, Goldman analysts said, adding “we expect full extensions of the OPEC+ cuts announced in April 2023 (1.7 mb/d) through 2025, and of the additional 2.2 mb/d package through 2024Q2.”

“We adjust our OPEC range trade to a short $70 put, long $80/90 call spread option on Brent Jun24, and still recommend long summer 2024 gasoline margins,” they added.

(Reporting by Tina Parate and Brijesh Patel in Bengaluru; Editing by Varun H K)

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Energy News Beat

World Oil

(Bloomberg) — Tokyo Gas Co. said its subsidiary Tokyo Gas America Ltd. will purchase Haynesville shale operator Rockcliff Energy II LLC for about $2.7 billion in a move to expand its U.S. shale gas operations.

Tokyo Gas America will acquire all the shares of Rockcliff, a portfolio company of Quantum Energy Partners, through its ownership interest in TG Natural Resources, the Japanese company said in a statement. The deal was signed on Dec. 15 and is scheduled to close on Dec. 29, it said.

The purchase comes amid a wave of multi-billion dollar deals in the global energy industry as oil and gas producers figure out the best way to deploy windfall profits from rising resource prices.

Recent activity includes Occidental Petroleum Corp.’s deal to buy Texas shale driller CrownRock LP, Exxon Mobil Corp.’s $60 billion purchase of Pioneer Natural Resources Co. and Chevron Corp.’s $53 billion agreement to buy Hess Corp. Woodside Energy Group Ltd. is also in preliminary talks with Santos Ltd. on a tie-up that would create a dominant liquefied natural gas exporter.

LNG terminals

The construction of new LNG export terminals in the US is set to boost gas demand, the company said. Tokyo Gas is seeking to expand shale operations and has looked for assets around existing ones in Texas and Louisiana, it said.

After this acquisition, the production volume of gas and natural gas liquid held by TG Natural Resources will increase by about four times to 1,300 million cubic feet per day, the company said. “The outcome from TGNR will become the base of overseas earnings,” it added.

While acknowledging the risks associated with resource prices, Takashi Nakao, senior general manager at Tokyo Gas’s global business development department, said “it is cheap” in an online press conference Saturday.

TG Natural Resources and Rockcliff have mining claims in adjacent areas, and Nakao believes they can survive in changing market conditions because they can improve their competitiveness by lowering production costs.

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