Energy News Beat

Get ready for more energy shortages. The Environmental Protection Agency’s (EPA) power plant rule was finalized last week, and it is bad news for America’s energy supply.

Under the new rule, all coal plants that plan to stay open beyond 2039 and any new natural gas plant would have to cut or capture 90% of their carbon dioxide emissions by 2032.

Plants that expect to retire by 2039 face less stringent standards but still would have to capture some emissions. And while current natural gas plants are safe for the time being, any new plant will have to adhere to these regulations.

Carbon capture and sequestration (CCS) is the idea that CO2 can be captured, transported and then stored in underground wells. But despite decades of research and development, CCS remains extremely expensive and largely unsuccessful. Only a handful of functioning CCS facilities operate worldwide, and they only capture a small fraction of what experts had projected.

Bottom line: These projects are nowhere near ready for wide-scale adoption and implementation.

But the lack of progress is not the only impediment.

Less than a month ago, the House Climate Solutions Caucus sent a letter to the head of the EPA expressing deep concerns about the underground CO2 storage permitting delays which “are actively crippling U.S. efforts to deploy vital clean energy and carbon capture infrastructure alike.”

It is vital that the infrastructure is made available in time frames that align with decarbonization goals. Now that the power plant rule is finalized, the permit backlog is only sure to worsen if no action is taken.

The EPA is setting power plants up for failure. But perhaps this is the plan all along?

Fossil fuels have been under attack since Biden’s first day in office. This regulation will force many power plants to shut down, precisely what this administration hopes to achieve. Their end goal is a transition to renewables.

A study published last year concluded that switching to a mostly renewable electric grid would cause electricity prices to soar more than threefold. The demand for hydrocarbons is not falling. Restricting supply would only lead to sustained increases in oil and gas prices, delivering “body blows to the economies of the West.”

The truth is fossil fuels can and do dispatch uninterrupted, cost-effective and resilient energy, which in turn fosters and supports strong economic activity. Renewables are not a technological or sound replacement, and nowhere near capable of being a major energy source. Their intermittence and unreliability have already caused some unfortunate events.

Several years ago, Winter Storm Uri left millions without power and several hundred dead. Weather-dependent sources failed, and without readily available coal, the Texas power grid was minutes away from total collapse.

Storm Elliot in December 2022 ripped through the Southeast, where several major utilities had to implement rolling outages to preserve supply. To prevent system collapse, coal provided nearly 40% of the critically needed energy.

California has experienced its share of rolling blackouts and has even asked its residents to conserve energy for fear of further electricity deficits. Roughly a quarter of the Golden State’s energy comes from wind and solar, having the most ambitious green agenda on the books.

According to the North American Electric Reliability Corporation (NERC), risks of blackouts are increasing across America due to state and federal mandates for carbon-free electricity. Potential energy deficiencies are “projected in areas where the future resource mix could fail to deliver the necessary supply of electricity under energy-constrained conditions.” Coal-heavy regions like the Midcontinent Independent Systems Operator (MISO) are at very high risk.

During a Senate Energy and Natural Resources Committee hearing a year ago, NERC’s CEO was asked whether energy sources forced to retire early under EPA’s regulations could be replaced by suitable renewables. “No. Not in the timeframe we’re looking at.”

The new EPA rule is sure to face legal challenges. Eerily similar to the West Virginia v. EPA verdict, in which the government agency lost big, lawsuits will likely also claim “the emissions rule far surpasses the EPA’s legal authority, triggers the major questions doctrine and violates administrative law.”

Fossil fuels are and will continue to be in the foreseeable future the reliant and resilient backbone of the energy grid. We cannot place our fate in the hands of technology that currently fails to demonstrate commercial viability.

The EPA’s final rules will impact grid reliability and put American’s safety and livelihoods at risk.

Source: Foxnews.com

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The post New Biden EPA rule puts all of us at risk of energy shortages appeared first on Energy News Beat.

 

Energy News Beat

Ukrainian drones hit a major oil refinery owned by state-controlled Rosneft PJSC in Ryazan, southeast of Moscow, just as the facility’s crude-processing had recovered from a previous strike.

The overnight attack caused a fire at the plant, a person in the Ukraine military who is familiar with the matter told Bloomberg News. The person spoke on condition of anonymity because they aren’t authorized to discuss the information publicly.

“The Ryazan region was attacked by an unmanned aerial vehicle,” regional Governor Pavel Malkov said on his Telegram account Wednesday, without giving further detail. Videos posted on Russian Telegram channels purported to show the plant on fire, but they couldn’t immediately be verified by Bloomberg.

Rosneft, the nation’s largest oil producer, didn’t immediately respond to a request for comment during a public holiday in Russia.

Oil-processing, one of Russia’s most important industries, has been a target of Ukrainian drone attacks since late January. Kyiv is seeking to curb fuel supplies to Russian forces on the front line and cut the flow of petrodollars to the Kremlin’s coffers as Moscow’s invasion continues into its third year.

Ukraine has targeted some of Russia’s key refineries, at times causing partial or complete shutdowns, with recent strikes at the Slavyansk and Ilsky plants in southern Russia. Driven by drone-inflicted damage and seasonal maintenance, Russia’s average daily processing rates were close to an 11-month low as of late April.

The Ryazan refinery, located some 200 kilometers (124 miles) from the Russian capital, was damaged by another Ukrainian drone in mid-March, and had been gradually ramping up its oil-processing operations since then.

In the period from April 18-24, the facility exceeded the operational level seen before the March attack, processing more than 300,000 barrels a day, according to a person familiar with Russian industry data. The plant has a nameplate capacity of 17.1 million tons of crude per year, equivalent to around 340,000 barrels a day, making the refinery one of Russia’s largest.

Russia has been targeting major Ukrainian cities with missile and drone strikes since it began the February 2022 invasion. It has claimed a recent deadly bombing campaign that has killed dozens in Ukraine is retaliation for attacks on its territory.

At least three people were killed and three injured when the southern city of Odesa came under ballistic missile attack early Wednesday, regional Governor Oleh Kiper said on Telegram. Civil infrastructure was also damaged in the strike, he said.

On Monday, a ballistic missile struck one of Odesa’s parks, killing five civilians.

Ukraine’s northeastern city of Kharkiv and the surrounding region have also faced relentless Russian strikes using so-called guided bombs. Local authorities said early Wednesday that 10 residential buildings were damaged.

Source: Rigzone.com

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The post Ukrainian Drone Attack Sets Major Russian Oil Refinery on Fire appeared first on Energy News Beat.

 

Energy News Beat

Three and a half years into the Biden Administration, and to an ordinary citizen on the ground it might seem like not that much has changed as to energy. Despite hundreds of government actions and initiative in an all-of-government regulatory onslaught to transform the energy economy, the important things have been remarkable stable. Production of oil and gas are actually up, and prices increases have been relatively modest — far less than one might have anticipated from the extreme regulatory hostility to production. The percentage of what is called “primary energy” (that is, energy for everything, not just electricity) coming from fossil fuels has remained nearly unchanged. EIA data here for 2022 (latest I can find) show about 79% of U.S. primary energy from fossil fuels, barely changed since Biden took office, and indeed very stable for decades.

Perhaps this situation of stable energy production and consumption results because it reflects what markets and consumers want and need to satisfy their demand for energy. So do you think that the hyperactive regulators might just relax and let the consumers have what they want?

Unfortunately, that is not how this works. Even as the energy producers and consumers have figured out endless workarounds to avoid the fossil fuel suppression that the Bidenauts attempt to impose, the little regulatory tyrants have been busy preparing new bouts of punitive restrictions. Last week saw a round of some of the most sweeping regulatory edicts yet. The regulators really plan to put the people in their place this time.

In the new round, the regulators have gotten farther and farther away from anything realistic, anything consistent with the laws of physics or thermodynamics, anything that might actually work. We are now well into the world of fantasy and delusion.

On last Thursday (April 25), the Administration, via the EPA, announced a suite of no fewer than four final rules “to Reduce Pollution from Fossil Fuel-Fired Power Plants.” Essentially, this is the replacement for the Obama Administration’s so-called “Clean Power Plan,” that ordered a complete re-do of the electricity generation system to gradually shutter fossil fuel plants and replace them with unworkable “renewables.” That Plan got struck down by the Supreme Court in June 2022 for being far beyond anything the EPA was authorized to do under its statutes.

So here is the new Rule covering the comparable subject. The title is “New Source Performance Standards for Greenhouse Gas Emissions from New, Modified, and Reconstructed Fossil Fuel-Fired Electric Generating Units; Emission Guidelines for Greenhouse Gas Emissions from Existing Fossil Fuel-Fired Electric Generating Units; and Repeal of the Affordable Clean Energy Rule.” The document is 1020 pages long because, hey, we’re the EPA, and anything worth doing around here deserves a Rule of at least a thousand pages.

And how does this new Rule achieve the goal of reducing “greenhouse gas emissions”? You could probably spend all week trying to read the thing without ever figuring that out. EPA’s press release makes the following claim:

“EPA’s final Clean Air Act standards for existing coal-fired and new natural gas-fired power plants limit the amount of carbon pollution covered sources can emit, based on proven and cost-effective control technologies that can be applied directly to power plants.”

And what is the “proven and cost-effective control mechanism” they are talking about? The AP summarizes it here in a few words:

Coal-fired power plants would be forced to capture smokestack emissions or shut down under a rule issued Thursday by the Environmental Protection Agency.

It’s the “capture of smokestack emissions” — otherwise known as carbon capture and storage, or CCS. I had a post last August at the time this Rule had been proposed and comments were being received. In my August post I highlighted some of the comments, including those from the states of Ohio and West Virginia. Those comments made mincemeat of any possible claim that CCS technology was either “proven” or “cost-effective.” Not only has it never been proven, but it’s impossible for it ever to work economically. There are many long quotes from comments in that post. Here are just a few.

From the Ohio comment, page 4:

A study of 263 carbon-capture-and-sequestration projects undertaken between 1995 and 2018 found that the majority failed and 78% of the largest projects were cancelled or put on hold.  After the study was published in May 2021, the only other coal plant with a carbon-capture-and-sequestration attachment in the world, Petra Nova, shuttered after facing 367 outages in its three years of operation. . . . [T]his [SaskPower] facility is the world’s only [remaining] operating commercial carbon capture facility at a coal-fired power plant.   And it has never achieved its maximum capacity.  It also battled significant technical issues throughout 2021—to the point that the plant idled the equipment for weeks at a time.  As a result, the plant achieved less than 37% carbon capture that year despite having an official target of 90% . . . . 

From the West Virginia comment, pages 24 – 25:

Take efficiency to start. CCS units run on power, too. An owner can get that power from the plant itself. But this approach makes the plant less efficient by increasing its “parasitic load”—and CCS more than triples combustion turbines’ normal parasitic load. . . . This is the cause the Wyoming study analyzed that showed installing CCS technology would devastate plants’ heat rates and lower net plant efficiency by 36%.

There is endless more of same. The fact is that CCS technology is neither “proven” nor “cost-effective.” It is nowhere after 30 years of trying because it cannot be done economically. It cannot be done economically because it is, in effect, a war against the Second Law of Thermodynamics. To capture more and more of the CO2 from the plant takes more and more of the plant’s output of energy, until in the limiting case you use all the energy of the plant and still some small amount of the CO2 escapes. The whole idea of CCS is to avoid having the disorder of the universe increase by the method of putting sufficient energy into trying. Won’t ever work. See also, perpetual motion machines.

Well, the sensible comments have all been rejected and EPA has just gone ahead and done what it was always planning to do, which is to order up something that can’t ever work economically and can only result in forcing the closure of an energy system that works without any idea of something realistic to replace it.

The deadlines for this start around 2030. Most likely between now and then either the Supreme Court will strike this down, or we’ll get a Republican administration that will sweep it all away. In the meantime we have completely ignorant and tyrannical regulators ordering up an energy system that can’t possibly work and heedless of the enormous destruction that they will likely cause if not stopped.

And that’s only part of what these fools were up to last week on the energy front. Here from Wednesday (April 24) is a “Fact Sheet” issued by the White House on another totally delusional effort: “Biden-⁠Harris Administration Sets First-Ever National Goal of Zero-Emissions Freight Sector, Announces Nearly $1.5 Billion to Support Transition to Zero-Emission Heavy-duty Vehicles.”

I’ve got some news for them: the freight transportation sector (trucks and railroads) is not going to convert to electricity any time soon. At least this announcement was not a regulation mandating the conversion, but only the supposed setting of a “national goal,” with no idea of how it could possibly be achieved or at what cost. The $1.5 billion mentioned is an irrelevant rounding error of a figure that maybe could buy 10,000 new electric trucks (in a sector with at least 3 million existing non-electric ones), and the 10,000 trucks would be mostly useless for the purposes in question.

These people become more and more detached from reality with each passing day. They seem to have no idea how much damage they are doing, and they don’t care a bit. Somehow they have convinced themselves that they are “saving the planet,” when if they could do even a little arithmetic they would know that their efforts cannot possibly move the needle on that effort. It’s just another week in the Biden Administration energy clown show.

Source: Manhattancontrarian.com

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The post The Biden Administration Ever More Delusional On Energy appeared first on Energy News Beat.

 

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Energy Secretary Jennifer Granholm battled House Republicans at a budget hearing on Wednesday, defending the Department of Energy’s efforts on grid reliability, electric vehicles and natural gas exports.

It was Granholm’s third appearance before a Capitol Hill committee this year, and it might have been her toughest yet.

The Energy and Commerce Committee features some fierce Biden administration critics, including Energy, Environment and Grid Subcommittee chair Jeff Duncan (R-S.C.).

“The Department of Energy has pursued a radical climate agenda to impose new federal regulations for household appliances electrical equipment, voting, construction and natural gas usage,” Duncan said. “It’s putting the ‘American Dream’ further and further out of reach for many struggling families.”

Duncan and other Republicans criticized the administration’s proposed fiscal 2025 budget, released earlier in March, which they said was an unreasonably large ask for DOE considering stubborn inflation and high interest rates.

But despite the partisan fury, the hearing offered Granholm a chance to provide meaningful updates on a number of controversial issues like EV charger infrastructure, EPA power plant regulations, the liquefied natural gas-export pause and others.

Here are some takeaways:

Where are the EV chargers?

Republicans lambasted the secretary over the slow rollout of EV chargers, despite a healthy federal investment.

A bipartisan infrastructure law program that provided $7.5 billion to support charging infrastructure has resulted in only 7 charging stations. Even Democrats expressed displeasure with the program.

“Despite the significant investment, the rollout has progressed slower than anybody wants,” said Rep. Debbie Dingell (D-Mich.) “We need to be perfectly frank about this.”

Granholm said DOE has provided 35 states with funding and expects the program to produce 1,000 charging stations by the end of the year.

She pinned the slow rollout time on connecting chargers to the grid, which she said can take up to 18 months due to permitting timelines and missing grid infrastructure.

“There are permitting issues at the state level, so the states are finding a little bit of difficulty,” Granholm said. “But all of these solicitations are out and the states now have their plans, so we’re going to start to see more and more of the public chargers available throughout the course of this year and beyond.”

Republicans asked if such developments suggest the White House should slow its push to increase EV ownership. Two recent reports say EV sales are facing a slower rate of growth due to stalling consumer interest and a lack of available charging stations.

But Granhom said that the administration remains bullish on EVs.

“We are not concerned that we are moving too fast,” she said. “In fact, we are seeing a great uptake in EVs — a 30 percent increase year over year — which I think any automaker would be happy to have.”

New details on LNG study

In response to Republican questions, Granholm revealed new details on the administration’s pause on liquefied natural gas export permitting as it reviews climate and price concerns.

The DOE secretary said she personally recommended the LNG pause to President Joe Biden due to the unprecedented rise in exports in the last five years.

“That was my recommendation,” Granholm said. “In 2018, we were exporting 4 BCF [billion cubic feet per day] at that point. Today, we have the capacity to do 14 BCF.”

Rep. August Pfluger (R-Texas), who recently led a bill through the House to overturn the LNG pause, H.R. 7176, said many energy companies have expressed to him and to DOE that the pause could be disastrous due to the uncertainty created in future export contracts.

“I understand that some in the industry who may have pending authorization requests are not happy,” Granholm responded. ” But our review is in the public interest, and not in the interest just of the oil and gas industry.”

Granholm also revealed which labs were doing the study: the National Energy Technology Laboratory in Morgantown, West Virginia, and the Pacific Northwest National Laboratory in Richland, Washington.

The study should wrap up, she added, by “the end of this year, maybe the beginning of January of next year.”

Grid reliability

Republicans asked if DOE could take a larger role in advising EPA over power plant rules that could result in a greater number of retiring fossil fuel generation in the next decade.

Those questions speak to a concerted effort by Republicans to focus on grid reliability, as they believe Biden administration regulations could result in grid blackouts due to disappearing, at-the-ready fossil fuel plants.

“Are you comfortable allowing EPA to take actions that effectively dictate the electricity generation mix and negatively affect the energy policy of the nation,” committee Chair Cathy McMorris Rodgers (R-Wash.) asked Granholm.

Granholm said DOE is fully behind the EPA’s initiative to limit emissions from existing plants. The department and EPA already have a memorandum of understanding that allows the two to coordinate on reliability issues.

“I’m very comfortable that what they have proposed is doable, and that it will, in fact, increase our energy security,” said Granholm.

She did concede, however, that the nation could use more pipeline infrastructure, something that House Republicans have been urging for years.

“I think we definitely need to build new pipelines for hydrogen, for the movement of CO2, as well as traditional energy,” Granholm said.

Energy efficiency week

Democrats pushed back on Republican messaging on energy efficiency, arguing such rules are commonsense wins for all Americans.

“Of course, committee Republicans continue to target these standards, passing ridiculous bills that are nothing more that gifts to their corporate polluter friends that will raise prices for middle class Americans,” said ranking member Frank Pallone (D-N.J.).

Pallone indicated that House Republicans could bring back a slate of bills targeting a variety of energy efficiency rules for floor votes as soon as next week.

In April, Republicans were planning to vote on six bills that would prohibit DOE from implementing or enforcing efficiency standards for home appliances if they are not “technically feasible or economically justified” and if they do not result in “significant conservation of energy.”

The measures targeted everything from air conditioners to clothes dryers and refrigerators.

Floor votes on the bills were canceled after Republicans took up Israel foreign aid and Iran oil sanction bills. Now, Democrats and Granholm are again gearing up to defend DOE’s energy efficiency agenda against potential upcoming Republican legislative attacks.

“We have been doing this since 1975, … and we have saved consumers trillions of dollars,” Granholm said. “I would say to those who criticize, don’t underestimate the ingenuity of the private sector to reach these standards and to provide consumers with lower cost appliances and more efficient appliances.”

Source: Eenews.net

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The post 4 takeaways from Granholm’s fiery House hearing appeared first on Energy News Beat.

 

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The United States on Wednesday (1 May) issued hundreds of fresh sanctions targeting Russia over the war in Ukraine in action that took aim at Moscow’s circumvention of Western measures, including through China.

The US Treasury Department imposed sanctions on nearly 200 targets and the State Department designated more than 80 in one of the most wide-ranging actions against Chinese companies so far in Washington’s sanctions aimed at Russia.

The US imposed sanctions on 20 companies based in China and Hong Kong, following repeated warnings from Washington about China’s support for Russia’s military, including during recent trips by Treasury Secretary Janet Yellen and US Secretary of State Antony Blinken to the country.

China’s support for Russia is one of the many issues threatening to sour the recent improvement in relations between the world’s biggest economies.

“Treasury has consistently warned that companies will face significant consequences for providing material support for Russia’s war, and the US is imposing them today on almost 300 targets,” Yellen said in a statement.

Russia’s embassy in Washington did not immediately respond to a request for comment.

Liu Pengyu, spokesperson for China’s embassy in Washington, said the government oversees the export of dual-use articles in accordance with laws and regulations, adding that normal trade and economic interactions between China and Russia are in like with World Trade Organization rules and market principles.

“The Chinese side firmly opposes the US’s illegal unilateral sanctions,” he said.

The United States and its allies have imposed sanctions on thousands of targets since Russia invaded neighboring Ukraine. The war has seen tens of thousands killed and cities destroyed.

Washington has since sought to crack down on evasion of the Western measures, including by issuing sanctions on firms in China, Turkey and the United Arab Emirates.

Treasury’s action on Wednesday sanctioned nearly 60 targets located in Azerbaijan, Belgium, China, Russia, Turkey, the United Arab Emirates and Slovakia it accused of enabling Russia to “acquire desperately-needed technology and equipment from abroad.”

The move included measures against a China-based company Treasury said exported items for the production of drones – such as propellers, engines and sensors – to a company in Russia. Other China and Hong Kong-based technology suppliers were also targeted.

The State Department also imposed sanctions on four China-based companies it accused of supporting Russia’s defense industrial base, including by shipping critical items to entities under US sanctions in Russia, as well as companies in Turkey, Kyrgyzstan and Malaysia that it accused of shipping high priority items to Russia.

“The concern about entities in the PRC supplying Russia’s war is in focus at the highest levels of the Department and the administration. The reason is very simple: the PRC is the leading supplier of critical components for Russia’s defense industrial base, and Russia is using them to prosecute its war on Ukraine,” a senior State Department official said.

“If the PRC were to end its support for exporting these items, Russia would struggle to sustain its war effort.”

The Treasury also targeted Russia’s acquisition of explosive precursors needed by Russia to keep producing gunpowder, rocket propellants and other explosives in Wednesday’s action, including through sanctions on two China-based suppliers sending the substances to Russia.

Chemical weapons, future energy

The US also accused Russia of violating a global ban on chemical weapons.

The State Department also expanded its targeting of Russia’s future ability to ship liquefied natural gas, or LNG, one of the country’s top exports.

It designated two vessel operators involved in transporting technology including gravity based structure equipment, or concrete legs that support offshore platforms, for Russia’s Arctic LNG 2 project.

Previous US sanctions on Arctic LNG 2 last month forced Novatek, Russia’s largest LNG producer, to suspend production at the project which suffered a shortage of tankers to ship the fuel.

Also targeted were subsidiaries of Russia’s state nuclear power company Rosatom as well as 12 entities within the Sibanthracite group of companies, one of Russia’s largest producers of metallurgical coal, the State Department said.

Washington also imposed sanctions on Russian air carrier Pobeda, a subsidiary of Russian airline Aeroflot.

The US Commerce Department has previously added more than 200 Boeing and Airbus airplanes operated by Russian airlines to an export control list as part of the Biden administration’s sanctions over the Russian invasion of Ukraine.

Navalny

The State Department also targeted three people in connection to the death of late Russian opposition leader Alexei Navalny, the best known domestic critic of President Vladimir Putin, who died in February in a Russian Arctic prison.

Russian authorities say he died of natural causes. His followers believe he was killed by the authorities, which the Kremlin denies.

Wednesday’s action targeted the director of the correctional colony in Russia where Navalny was held for the majority of his imprisonment, as well as the head of the solitary confinement detachment and the head of the medical unit at the colony where he was imprisoned before his death.

The officials oversaw the cells where Navalny was kept in solitary confinement, the walking yard where he allegedly collapsed and died and Navalny’s health, including in the immediate aftermath of his collapse, the State Department said.

Source:  Euractiv.com

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The post US issues hundreds of sanctions targeting Russia, takes aim at Chinese companies appeared first on Energy News Beat.

 

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Weekly data by EIA reveals crude stockpiles of 7.3 million barrels for the week to April 26, a sharp swing from a draw of 6.4 million barrels posted the previous week.
Standard Chartered: the fastest rate of stock draws in the first half of 2024 should happen in May and June.
We’re entering a key period for oil fundamentals that will determine whether the market will tighten further or disappoint.

Energy markets have kicked off the new month on the back foot, with oil prices sliding 3% in Wednesday’s intraday session following a surprise U.S. inventory build amid lingering uncertainty about future oil demand growth.

Weekly data by the Energy Information Administration (EIA) reveals crude stockpiles of 7.3 million barrels for the week to April 26, a sharp swing from a draw of 6.4 million barrels posted the previous week.

That marks the highest inventory levels since last June. Meanwhile, the Fed is expected to keep its benchmark federal-funds rate steady at around 5.3%, its highest level in more than two decades amid stubbornly high inflation.

Thankfully, the oil and gas outlook appears more bullish on a global scale. According to commodity analysts at Standard Chartered, oil supply and demand balances show a significant tightening in the current year, a sharp contrast to large surplus conditions of early 2023.

StanChart’s model shows a cumulative global stock draw of 189 million barrels (mb) in H1-2024 compared to a build of 218 mb recorded over last year’s corresponding period which overhung the market and flattened forward price curves.

According to their model, the fastest rate of stock draws in the first half of 2024 should happen in May and June, essentially meaning that we are now entering a key period for oil fundamentals that will determine whether the market will tighten further or disappoint.

StanChart says the key metric to watch is global oil demand, which they have predicted will hit an all-time high of 103.1 mb/d in May and rise further to 103.8 mb/d in June. The analysts have forecast y/y demand growth at 1.62 mb/d in May and 1.74 mb/d in June.

Interestingly, the EIA has similarly forecast June demand to clock in at 103.8 mb/d, but is cautious about May, predicting demand of 102.2 mb/d. The  H1 draw in StanChart’s model takes place in May and June, while the EIA sees nearly half of the H1 draw taking place in June alone.

All eyes will be trained on OPEC+ when it holds its next ministerial meeting on June 1 in Vienna. It’s, however, unlikely that analysts and industry experts will have garnered adequate information on actual May and June fundamentals at that point, meaning they will have to largely rely on reflected indicators, such as market spreads, prices and sentiment. StanChart’s model shows that OPEC has scope to increase output by over 1 mb/d in Q3 without increasing global inventories. However, the analysts have pointed out that the organization is unlikely to make any dramatic moves without knowing whether the expected H1 tightening was fully delivered in May and June. Given this backdrop, StanChart has predicted the supply deficit to exceed 2 mb/d in August if production stays at current levels. StanChart says oil markets are yet to price in the potential deficit.

Gas Markets Turn Bullish

A late cold snap has paused the European gas injection season, with EU gas inventories have risen over the past seven weekdays while the inventory build above the five-year average has now contracted for 13 consecutive days. According to the latest Gas Infrastructure Europe (GIE) data, Europe’s natural gas Inventories stood at 71.60 billion cubic meters (bcm) on April 28, good for a y/y increase of 3.09 bcm and 18.15 bcm above the five-year average. However, the cold snap has not materially affected the long-term bearish view that spare storage capacity is likely to become constrained in late summer, although it pushed back the timing of the tightness by about three weeks.

Natural gas markets have also been reacting to possible fresh sanctions on Russian gas. TotalEnergies (NYSE:TTE) CEO Patrick Pouyanne has predicted that natural gas and LNG prices will spike after the EU sanctions Russian gas from the Yamal LNG project.

“If the EU sanctions Yamal LNG, the price of LNG will go up quickly and globally our portfolio will benefit. It’s a positive if there were sanctions, not a negative, because the cash from Yamal is quite limited. European leaders understand that their security of supply today relies on LNG and they don’t want to see price rises again… what I understand is that they might have some ideas, but from 2027 on, not before,”  Pouyanne told Reuters.

Source: Oilprice.com

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The post The Next Two Months Will Be Critical For Oil Fundamentals appeared first on Energy News Beat.

 

Energy News Beat

ENB Pub Note: This is a disaster waiting in the wings. The “Climate Corps” would be looking to shut down any business that is not “controled” by AI or the government. Make no mistake, this is a power grab.

 

With the national debt racing toward a record $35 trillion, President Joe Biden released his budget proposal Monday, including an eye-popping $8 billion for a “Climate Corps” program.

Enthusiastically supported by Green New Deal architects New York Democrat Representative Alexandra Ocasio-Cortez and Massachusetts Democrat Senator Ed Markey, Biden’s Climate Corps would hire 50,000 government workers annually by 2031 with the explicit yet vague mission of “tackling climate change.” Any guesses which political party these workers will be supporting?

The budget proposal made good on Biden’s pledge during the State of the Union to triple the number of workers from the original 20,000 he proposed last fall.

One can only surmise the Climate Corps would focus on carrying out Biden’s 2020 campaign vow to “end fossil fuel.” Since taking office, his administration has done their best to make good on this promise.

They have targeted the oil and gas industry at every opportunity, from executive orders curtailing leasing on federal land to the so-called “Inflation Reduction Act” that contained more than $369 billion dollars of green giveaways.

The Climate Corps has been likened to President Franklin Roosevelt’s Depression Era jobs program, but there has never been legislation nor appropriation of such an expansive government program without congressional approval.

For context, the National Aeronautics and Space Administration (NASA) has a workforce of less than 20,000, as does the Environmental Protection Agency (EPA). Both of those agencies have a clear mission and are funded through and accountable to Congress.

Much like the Biden administration’s “special presidential envoy for climate,” the Climate Corps skirts constitutional congressional oversight. There are no details on leadership, staff, selection criteria, or even budget. When so-called Climate Czar John Kerry brazenly refused to comply with oversight requests, my organization filed a lawsuit. If past is prologue, the Climate Corps is likely to employ a similar tactic.

But it shouldn’t come to this. Congress can and should use the power of the purse to stop this boondoggle from moving forward. According to Article I, Section 9, Clause 7 of the U.S. Constitution, “No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.”

Conservatives have learned the hard way about the difficulties in repealing government entitlement programs once enacted. Look no further than Obamacare, which Republicans tried and failed to unwind, despite controlling all three branches of government in 2017. As President Ronald Reagan once observed, “a government bureau is the nearest thing to eternal life we’ll ever see on this earth.”

With his poll numbers among young voters lagging over his handling of Israel’s war against Hamas terrorists, Biden badly needs a bone to throw the youth. His administration has already pledged to sign a bipartisan bill cracking down on TikTok, which will add even more fuel to the fire.

Biden is fond of saying, “Don’t tell me what you value. Show me your budget—and I’ll tell you what you value.” Applying that logic to the latest budget, one finds $8 billion for climate workers and $4.7 billion for the emergency situation at the border. It tells us everything we need to know about his misplaced priorities.

Even if the overall budget is dead on arrival, Congress can use its constitutionally allotted powers to kill the Biden Climate Corps before it launches, and let’s hope they seize the moment. Republicans have complained mightily about the weaponization of government and the targeting of political opponents. Thousands of young people door-to-door canvasing for climate change will be both.

We should not spend tax dollars so Gen Zers can knock on the doors of those deemed in need of climate change education, nor should it be gathering signatures of those who support their agenda.

A program the size of the Climate Corps, without congressional approval, must be stopped as blatantly unconstitutional. Failure to do so undermines the rule of law and threatens an industry so vital to our economy and national security.

Source: Msn.com

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Florida lawmakers have approved new legislation that would strike mention of “climate change” from many state laws, focusing them instead on energy security.

The final version of the bill, which was awaiting Gov. Ron DeSantis’ signature as of April 30, strengthens mutual-aid guidelines for power providers, helps harden electric and gas networks against cyberattacks and directs the state to investigate whether nuclear power is a viable path forward for Florida.

But it removes all explicit mentions of climate change, including by shortening a passage that would have obliged the state to “recognize and address the potential of global climate change wherever possible.” Instead, the bill directs the state only to “promote the cost-effective development and use of a diverse supply of domestic energy resources.”

The bill also eliminates a wide collection of guidelines for government to increase energy efficiency and reduce fossil fuel emissions. The new bill prohibits new wind energy construction within one mile of Florida’s coastlines, and language prioritizing fuel-efficient government vehicles or energy-efficient meeting spaces was removed.

The legislation reverses the last vestiges of a policy first put in place by then-Republican Gov. Charlie Crist in 2008, which passed unanimously in the Florida legislature. It was meant to account for the effects of climate change and how it could or should affect Florida’s energy policy.

Florida Republican Rep. Bobby Payne, who sponsored the new legislation, said a focus on climate change would have added difficulty to the task of meeting Florida’s energy needs.

“We’re protecting consumers, we’re protecting consumer pricing, we’re protecting them with great reliability and we’re protecting to make sure we don’t have a lack of energy security in our state. That’s where we’re moving as far as our policies.”

Crist, now a Democrat, told The Associated Press “It’s disappointing to see a continuing lurch in the wrong direction, particularly when Florida, with our coastline, is probably the most vulnerable to rising sea levels.”

“I mean if we don’t address it, who’s going to?” Crist said. “It breaks my heart.”

Gov. DeSantis has until May 15 to sign the bill.

Source: Scrippsnews.com

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What Powell Said about rate hikes, no rate cuts, rate cuts, and the QT slowdown while getting rid of MBS entirely.

By Wolf Richter for WOLF STREET.

“Hike” and “rate hike” were mentioned 8 times by reporters and by Powell during the FOMC’s post-meeting press conference today. Those terms weren’t mentioned at all in the press conferences during Rate-Cut Mania, which were all about “rate cuts,” how many and when.

Powell was obviously unenthusiastic about rate hikes, and thought it “unlikely that the next policy rate move will be a hike” – “our policy focus is really how long to keep policy restrictive,” he said. But rate hikes weren’t even on the table before, so that alone was a big shift, from a bunch of rate cuts to having to deal with the possibility of a rate hike. One step at a time.

What would it take for the Fed to hike rates?

“We need to see persuasive evidence that our policy stance is not sufficiently restrictive to bring inflation down to 2%,” he said. “We look at the totality of the data to answer that question. That would include inflation.  Inflation expectations and all the other data, too.”

The Fed could hike rates “if we were to come to that conclusion that policy wasn’t tight enough to achieve that, so it would be the totality of all the things we’re looking at; it could be [inflation] expectations, it could be a combination of things. If we reach that conclusion – and we don’t see evidence supporting that conclusion – that’s what it would take for us to take that step,” he said.

“So, if we were to conclude that policy is not sufficiently restrictive to bring inflation sustainably to under 2%, then that would be what it would take for us to want to increase rates,” he said.

Is there a timeframe of persistent inflation that would trigger a rate hike? “These are going to be judgment calls. Clearly restrictive monetary policy needs more time to do its job. That’s pretty clear based on what we’re seeing. How long that will take and how patient we should be depends on the totality of the data and how the outlook evolves,” he said.

Was there a discussion at the meeting about a rate hike? “The policy focus has been on what to do about holding the current level of restriction. That’s where the policy discussion was in the meeting,” he said.

Oh deary, where did my rate cuts go?

“So, let me address cuts,” Powell said. “Obviously, our decisions we make on our policy rate will depend on the incoming data, how the outlook is evolving, and the balance of risks, as always. We’ll look at the totality of the data. We think that policy is well positioned to address different paths that the economy might take.”

“We don’t think it would be appropriate to dial back our restrictive policy stance until we’ve gained greater confidence that inflation is moving down sustainably to 2%,” he said.

“If we had a path where inflation proves more persistent than expected, and where the labor market remains strong, but inflation is moving sideways, we’re not gaining greater confidence. That would be a case in which it could be appropriate to hold off on rate cuts.”

“There are other paths that the economy could take which would cause us to want to consider rate cuts.” One path “would be that we do gain greater confidence if inflation is moving sustainably down to 2%,” he said. “Another path could be an unexpected weakening in the labor market, for example.”

“For us to begin to reduce policy restriction, we want to be confident that inflation is moving sustainably down to 2%. For sure, one of the things we would be looking at is the performance of inflation. We would be looking at inflation expectations. We would be looking at the whole story. Clearly, incoming inflation data would be at the very heart of that decision.”

Wait-and-see is now entrenched?

“My colleagues and I today have said that we didn’t see progress [on inflation] in the first quarter. And I’ve said that it appears then that it’s going to take longer for us to reach that point of confidence. I don’t know how long it will take. I can just say that when we get that confidence, then rate cuts will be in scope. And I don’t know exactly when that will be,” he said.

“What do we now see in the first quarter? Strong economic activity. We see a strong labor market. We see inflation. We see three [bad] inflation readings. I think you’re at a point there where you should take some signal. We don’t like to react to one or two months of data. But this is a full quarter.  We are taking signal. And the signal we’re taking is it’s likely to take longer for us to gain confidence that we’re on a sustainable path to 2% inflation. That’s the signal we’re taking,” he said.

“My expectation is that we will, over the course of this year, see inflation move back down. That’s my forecast. But my confidence in that is lower than it was because of the data we’ve seen,” he said.

“We actually have the luxury of having strong growth and a strong labor market, very low unemployment, high job creation, and all of that. And we can be patient. We will be careful and cautious, as we approach the decision to cut rates,” he said.

What’s the chance of no rate cuts?

“I don’t have a probability estimate for you. But all I can say is that we didn’t think it would be appropriate to cut until we were more confident that inflation was moving sustainably at 2%. Our confidence in that didn’t increase in the first quarter.  And, in fact, what really happened was we came to the view that it will take longer to get that confidence.”

“But there are paths to not cutting. And there are paths to cutting. It’s really going to depend on the data.

QT slowdown to avoid accidents that could stop it prematurely.

“The decision to slow the pace of runoff does not mean that our balance sheet will ultimately shrink by less than it would otherwise, but rather allows us to approach its ultimate level more gradually,” Powell said.

“In particular, slowing the pace of runoff will help ensure a smooth transition, reducing the possibility that money markets experience stress, and thereby facilitating the ongoing decline in our securities holdings that are consistent with reaching the appropriate level of ample reserves,” he said. The Fed has already shed over $1.5 trillion in assets since it started QT in July 2022.

Why even slow QT? “It’s really to ensure that the process of shrinking the balance sheet down to where we want to get it is a smooth one and doesn’t wind up with financial market turmoil, the way it did the last time we did this,” Powell said in reference to the repo market blowout in the second half of 2019, which caused the Fed to step back in with large-scale repo operations that quickly undid a big part of QT-1. And that’s to be avoided this time.

The FOMC’s statement and Implementation Notes today already outlined the basics of the QT slowdown:

Starts in June
Cap for Treasury runoff reduced to $25 billion from $60 billion
Cap for MBS runoff stayed at $35 billion
If MBS run off faster than $35 billion a month, then the excess will be replaced with Treasury securities, and not MBS.

Getting rid of MBS entirely. What Powell added in the press conference was the Fed’s intention “to hold primarily Treasury securities in the longer run,” meaning they want to get rid of MBS entirely. Powell cited this intention as the reason for not reducing the runoff rate of MBS, and for not replacing any excess MBS runoff over the $35 billion cap with MBS, but with Treasury securities.

This unchanged cap also means that QT will speed up when the housing market unfreezes and sales volume goes back to more normal levels, which would trigger a much faster rate of mortgage payoffs, which would trigger a much faster pace of passthrough principal payments to holders of MBS, such as the Fed. And passthrough principal payments being the primary way in which MBS come off the balance sheet, it would speed up QT, and could push QT to a maximum pace of $60 billion a month.

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Daily Standup Top Stories

TotalEnergies considers moving stock listing to New York over favorable oil and gas views in U.S.

Highlights of the Podcast

00:00 – Intro

01:36 – TotalEnergies considers moving stock listing to New York over favorable oil and gas views in U.S.

04:05 – When Worlds Collide – U.S. Gulf Coast Refiners Face Challenges To Accessing Heavier Crude Oil

10:27 – Markets Update

12:18 – Large Crude Inventory Build Rocks Oil Prices

13:22 – Chesapeake Energy Corporation Q1 Earnings Report

16:02 – Diamond Energy, Q1 2024 Highlights

18:00 – Outro

 

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Video Transcription edited for grammar. We disavow any errors unless they make us look better or smarter.

Michael Tanner: [00:00:15] What’s going on, everybody? Welcome into the Thursday, May 2nd, 2024 edition of the Daily Energy News Beat stand up. Here are today’s top headlines. First up, TotalEnergies considers moving stock. Listening to New York over favorable oil and gas views from the Twilight Zone. Absolutely unbelievable story. We will then kick over and cover when worlds collide. U.S. Gulf Coast refiners face challenges to assessing heavier crude oil. That’ll wrap up our news segment. We will then pop over and cover all things finance first. Talk about what Jerome Powell specifically mentioned in relates to where interest rates are going, which played a huge role on the absolute pounding that crude oil prices got today. We also saw a large EIA crude oil inventory build, which did not help prices either. Mainly the reason we were down so much today. And we will then kick over and quickly cover some specific earnings. We saw Chesapeake and Diamondback come in today, and I think there’s some interesting, notes on both of them relative. So we will cover all that and a bag of chips guys. As always check us out. World’s greatest website www.energynewsbeat.com I am Michael Tanner in for Stuart Turley who is on assignment. I’ll be holding it down today so low. He’ll be back in the chair with me on, Monday after the weekly recap. [00:01:35][80.8]

Michael Tanner: [00:01:36] So let’s go ahead and kick this off TotalEnergie’s moving stock listing to New York over favorable oil and gas views in the US. Absolutely right. Somebody is moving to New York City to get better oil and gas law as well. Well, I’ll read straight from the article here. This is Bloomberg. TotalEnergies is increasingly making noise about moving its stock listing to New York, adding much more chatter around European giants potentially being attracted to the U.S investors greater enthusiasm from oil and gas companies. Holy smoke would not have said that two years ago. Next paragraph. The French giant is considering switching, in part because ESG and this is a quote, in part because ESG policies in Europe have more weight, according to Chief Executive officer, Patrick Yang. He told the, the French Senate, you don’t mean you’re done a French Senate. This unbelievable, on climate change goals. Quote, we’re losing European shareholders while U.S. investors are still buying the stock. He did say that the company will, quote, seriously study such a step and prevent its findings to the board in September. That was, based on his conference call last week with analysts. I mean, this is causing a lot of shakeup right now. We already know that Glencore is trying to do a coal merger or, acquisition of a coal, spinoff, and that is being looked at very badly upon the London Stock Exchange. They’re considering moving all of their operations over to the United States. It’s pretty unbelievable. Here’s Eric Meyer, head of RBC Capital Markets in France. We love these guys. Europe’s, virtuous attitude when it comes to ESG norms. Free traders say, or say on pay may have been naive at times in front of trading partners, but economic interests above all, it’s a good point of if and again, for as much as we complain about what’s going on here in the United States, you also have to look at it’s a lot tougher to do business over there in, in, in Europe, we know that shell is also possibly considering doing this. And especially as we’ve seen, prices continue to rise relative to where they are now or relative to where they have been. Excuse me. I think, you know, more and more people are going to see this, but we could see TotalEnergies, move out of France and come over here to the US. Would be would be really interesting. They’re saying all options are on the table, you know, that. You know, to give you guys a quick idea, the total energy is valued at about eight times earnings, whereas Exxon is about 12 times earnings. So there is a little bit of a valuation difference there. Does it have to do with where they’re listed. Who knows. All right. [00:04:05][149.1]

Michael Tanner: [00:04:05] Let’s move to the next one here. When worlds collide U.S. Gulf Coast refiners faces challenges to assessing heavier crude. This is a little bit of in the weeds, but since I’ve got the solo show today, I’ve got the keys to the Kingdom. I wanted to bring this up. We’ve talked a lot on the show about refining margins, and I talk about that relative to when the EIA releases all their I, I, I, I like to look at the supply. We bring it up every once in a while in terms of what’s going in and out of the refineries from a utilization standpoint. But there also is something to refining these refineries, being able to handle a certain type of crude, specifically heavier crude. Obviously, you can have an idea. West Texas Intermediate, which is the standard oil price oil composition that people base everything off of. We’ve heard of that. You can imagine that is almost green looking. It’s a vial. It’s very easily pouring in. It’s definitely a little bit see through if you only have a little bit of to. That’s that light, sweet, crude. What comes up from Mexico, what comes up from Venezuela. What comes from Russia is really a heavy crude, which is almost could be considered more of a paste. Now heavier crude has a lot of impurities in it which cause it to. Trade at a, discount relative to the light sweet crew. But what it also requires is different retrofitting on the refineries. And because of some of the stuff that’s happened in Mexico, specifically over their future forecasted supply of oil, it’s it’s kind of thrown some of these refineries into into whack here. So I’m going to go ahead and read a few, a couple paragraphs out of here. The prospect of decreased crude oil supplies from Mexico, the top international supplier, to the US Gulf Coast, is creating uncertainty among heavy crude focused refineries, Mexico’s state owned country, Pemex or Petro. Pemex instructed its trainee use unit to cancel 436,000 barrels a day of crude exports for April and decided, and to supposedly focus on producing domestic oil at its new or processing the domestic oil at its new 340,000 barrels per day. Does Baucus refinery and or existing plants, while this refinery startup is not nearly as imminent as Pemex says, the cancellation of Mexican crude imports could be problematic for U.S. refiners with plants built to run heavy crude a necessary ingredient reading to optimize operations and yield. Adding to this complexity of the situation is the upcoming start of the Trans Mountain pipeline expansion and recent reinstatement of U.S. sanctions on Venezuelan crude. And this is from, you know, they go on to examine sort of the potential fallout from this decision from Pemex in terms of where those heavy crudes were going. Specifically, the heavy crude is going to be less and less available. So they the really great overview. I’d recommend going to energy Newsbeat and reading this. Andy, if you can go ahead here and pull up. Figure one the typical qualities of Pemex crude oil. You’re going to see the different grades there Olmec es mas, Maya and Altair. You’ll notice that Maya is their, flagship grade. Basically, it’s the majority of their, exports are specifically coming in that Maya flagship blend. The interesting part is that that Maya crude blend does definitely have a little bit of a smaller gravity. You see, the API gravity of the Altamira is a little bit lower sitting at 15.5, whereas the Maya is about 2021 to 20. With this restriction in Mexico now sending their a lot of their domestic heavy crude to within with all of this crude from Mexico now and Pemex staying within Mexico, it goes to wonder where are these U.S. Gulf Coast refineries going to find their heavy crude? We also know Venezuela is this. The sanctions are ramping back up. People of you know, we we drew a little bit of oil. There was a few loads coming out of Venezuela, but now the prospects per se of a lot more oil coming out of Venezuela is not going to happen. So a lot of what these Gulf Coast refineries are dealing with right now, what this analysis shows is it tries to plant out where exactly are these going to come from. And the big the big, big answer, specifically in this article, as I mentioned, was that Trans Mountain pipeline, which flows from Edmonton all the way down to British Columbia and the Puget Sound system, where there are a bunch of refineries. Canada also has a decent amount of heavy crude. So if we have to now shift ourselves and buying it from Canada, those differentials are a little bit different. You pay a little bit more of a premium for the Canadian heavy crude than you would the Mexican heavy crude. So all of a sudden now the spreads on what a refinery can make or not, it could go down. And specifically if you’re talking about, you know, the margin that makes up the refining basis, it could get very interesting here. I love this breakdown. You know, via RB, RB and energy. We do a lot of that stuff. You know, it’s a $25 billion investment that Trans Mountain pipeline. So whether or not that’s going to be able to completely take over or not it’s going to be interesting. You know, the this article goes on to say the extent to which an individual refinery can lighten up its crude slate by very, varies by, say, switching to lighter crudes would increase cost given that light crude is more expensive than heavy goods. However, the light heavy crude differential continues to narrow and may narrow further on the US. On the U.S Gulf Coast, as measured by West Texas Intermediate, spread to Houston. You know, these these narrower differentials are expected to incentivize some Gulf Coast refiners to shift towards lighter crude slates. Further, we expect the minimal impact of crude runs, an increase in Latin America imports. or they they see minimal impact to overall crude runs in some increases to Latin American imports, to the United States Gulf, excluding Venezuela. So it looks like they’re thinking a lot of this is going to come from, from, Latin America, Canada and be able to fill the gap. But very interesting what Mexico, has decided to do. And it kind of gives you a little bit of behind the scenes on a lot of what these, refineries are dealing with on the back end. [00:09:49][343.9]

Michael Tanner: [00:09:49] So we’ll go ahead and jump over to the finance segment, guys. But before we do that, as always, the news and analysis you just heard is brought to you by, the world’s greatest website, www.energynewsbeat.com. The best place for all your energy and oil and gas news. Appreciates you in the team. Doing a tremendous job making sure that website stays up to speed. Everything you need to know to be the tip of the spear when it comes to the energy and the oil and gas. Is, as you can hit the description below for all the timestamps links to the articles. Appreciate all the, feedback and support. You can also check us out. Dashboard.energynewsbeat.com as always energynewsbeat.com world’s greatest website. [00:10:26][37.2]

Michael Tanner: [00:10:27] Let’s flip over to finance here for the markets. Markets were up in the morning. Jerome Powell decided to come out and give a little bit of a crazy not a crazy speech but a little bit of a dampening speech on the market. And markets absolutely tumbled, finished actually down on the day after being up almost 85 points on the S&P 500. We’ve now fallen about 75 points. Market closed about 5018. That’s about three quarters of a percentage point down. Nasdaq was down about 0.7 percentage points. Ten year yields two year yields fall 1.45 percentage points. Ten year yields fall only one percentage point dollar index down about, 3/10 of a percentage point. Bitcoin down 5%. Below 60,000 at 57,000. And then we get to crude oil who dropped about $3.33 today to 7917 as we currently sit here in stand, which is lower than we’ve seen it. And, you know, I think there’s there’s two reasons why the overall markets have done pretty poorly today. Obviously FOMC you know they they meet today the you know they they they held its benchmark interest rates at its current level. You know we kind of all thought that you know we know they have priced in a few rate cuts. But based on some of the info that’s come out the FOMC decided to keep interest rates. Where they are in that 5.25 guidance range. You know it. Jerome Powell always decides to speak afterwards. And and basically he’s quote was they’re prepared to maintain the current target range the federal funds as long as appropriate. they also said they would slow the pace of reducing its balance sheet starting in June. That decision ensures money markets don’t experience an episode of volatility and stress, as seen in September 2019, so interest rates from the federal funds stay the same. Which means, you know, overall, markets are going to take a little bit of a hit relative to the fact that we were hoping for some rate cuts coming in. And you can see the broader markets did like that. [00:12:18][110.7]

Michael Tanner: [00:12:18] You know, another reason oil prices were down, as I mentioned, 79 and 16 was the fact that we did have crude oil inventories come out today. EIA estimated a 7.3 million barrel build for the street for, the crude oil inventory reserves. That compares to a 6.4 million barrel draw. Last week we saw gasoline, inventories rise by 300,000 barrels, in which we saw a draw of 600,000 barrels. Yesterday, gasoline production was about 9.4 million barrels daily, which compared to, one, well, 9.1 million barrels during the previous week. Distillates we saw draw the inventory about 700,000 barrels, on those distillates, adding about 4.5 million barrels per day. So, I mean, you know, there was I think it was swinging on crude oil inventories. And if stew was on here, he’d say, hey, maybe we need to check the numbers a little bit. I won’t necessarily go that far, but I do think, you know, these wild swings we’re experiencing on the on the crude oil inventories front is indicative of that. The the market may not be as solid as we think it. And and as we kind of swing back and forth, it it continues to hurt to earnings. [00:13:22][63.7]

Michael Tanner: [00:13:22] I want to cover, Chesapeake and Diamondback. We’ll start with Chesapeake. You know, this is going to be a bloodbath per usual or not per usual, but clearly, because the fact that we’re releasing earnings here and in Q1, you know, we’ve got a couple different things here. Net cash provided by operating activities for Chesapeake came in at a cool $552 million. They delivered about 112 million of adjusted free cash flow, you know, due to quarterly combined base and variable debit of about $0.71 per common share holder. reaffirmed its core, borrowing credit base, to about 2.5 billion, to about 2.5 billion. And that variable breaks down into a variable dividend of $0.14 and a base dividend of about $0.57. You know, here’s here’s the other interesting part. As I mentioned, net income was only 26 million or adjusted net income, about 80 million. Obviously the street didn’t like this. You know, you you, you you miss on earnings. You know, they’re down about 20% or you know the a slight miss on earnings. You know $0.56 a share. Street was averaging about was hoping for about $0.70 a share. So not quite unfortunately what the street was wanting. Their stock today was trading down. Let me pull it up here. Stock down was 3.5 percentage points. on the fact that natural gas prices actually rose today a little bit. Not rose, but they, they out lost natural gas. Natural gas dropped 2.8 percentage points. Chesapeake now down 3.8 percentage points. So a four percentage points increase on the downside mainly because I mean the market I think is is adjusting the fact that if prices don’t turn around, it’s going to be tough, tough for Chesapeake in these companies, to keep making money. You know, they, they, they’re they, they talk about how they’re building their productive capacity with over 46 ducks and their and keep deferring what they would call turret titles or turning lines, which means, hey, who knows what’s going to happen? We’re just going to wait. See how we’re going to play and we’re going to turn these guys on, but we can turn them on. So, you know, not good on Chesapeake side. I do want to point out that, I mean, they’re still spending money, folks. It’s 354 million of CapEx being spent in Q1. What they’re spending CapEx on, I have no idea. I don’t know what you’d be spending CapEx on in this environment. But, hey, sometimes you got to do what you got to do. They are drilling, you know, you know, there’s no Eagle Ford. They’re just drilling Haynesville in Marcellus. Relative to, what they what they’re saying. So truly 300 of of CapEx, there’s non drilling, you know, field and corporate CapEx that could definitely be associated with it. But there’s still find a ways to spend money. Folks. I think the street is going to somehow figure out and it’s going to come to them at some point okay guys. What’s what’s what’s going on here? What what’s going on? Why are we spending $3 million of gas prices below $2? But that’s just me. [00:16:02][159.8]

Michael Tanner: [00:16:02] Look at Diamondback real quick. I mean, they’re only down, you know, just just to give you guys a quick thing. They were only down 2.5 percentage points. Oil’s down 3.5 percentage points. So there actually saw a little bit less of a drop relative to what oil prices did. Mainly because of their, impending merger with Endeavor Resources. They’re still hoping that gets approved here. Quarter four of 2024. But to give you guys an idea. Net cash provided by operating activities 1.3 billion operating cash flow before working capital changes. You know, that’s a mouthful, right? There was 1.4 billion. CapEx was still 609 million free cash flow, 791 million base dividend of about $0.90 per share and a variable dividend of about one point, one dollars and $0.07. Which means it’s about a basically a $2 per share, or excuse about $2 per share. And that implies, a 3.8 annualized return or a 3.8 annualized yield, based on that closing price of about $205. So. Absolutely. Good stuff for Diamondback. I mean, they continue to to keep on keepin on. They went ahead and drilled, 79 wells, 69 in the Midland Basin, ten in the, ten in the Delaware Basin, and completed 101 wells. I they’re a pretty big rig program. I don’t know exactly how many. But we we do know that they’re they completed 30 lower Sprayberry Wells, 919 Wolfe camp, a 16 Joe Mill, Wells, 15 Wolfe Camp, B-12, middle Sprayberry six Wolf camp, d Wells and three Upper Sprayberry well. So they continue to, to chunk along. They they also did release some of their guidance. You can go check out I mean, we we we we we are big fans of Diamondback here on the show. They, you know, we always say good management, good numbers. The team over there, continues to make smart acquisitions. I think this merger with endeavor is only going to make them stronger. And I think that’s partly what you’re seeing in this, in this in this earnings call in terms of, you know, where they came in relative to how far their stock fell relative to where oil prices fall. [00:17:59][116.9]

Michael Tanner: [00:18:00] So, great day all around, guys. It’s the end of the week though. So I’m going to go ahead and let you guys get out of here. Appreciate for checking us out. World’s greatest website energynewsbeat.com. You’ll see a long form interview with With stew tomorrow and conversations with Stu Energy. You will see our weekly recap on Saturday, and we will be back in the chair Monday for everyone. We will see you. Have a great weekend. We’ll see you Monday. [00:18:00][0.0][1062.1]

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