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BRACING FOR NEW ENGLAND WINTER: A tight global gas market and existing pipeline constraints put New England in a “precarious position” going into the dead of winter, the region’s grid operator said in a notice yesterday.
ISO New England, Inc., which oversees the wholesale electricity market in Maine, Massachusetts, New Hampshire, Rhode Island, Connecticut, and Vermont, explained that those conditions increase the likelihood of operators having to employ planned outages to manage power demand in the event of extreme winter weather.
"In recent years, oil and [liquified natural gas] have filled the gaps when extended periods of very cold weather have constrained natural gas pipeline supplies," ISO President and CEO Gordon van Welie said in a statement. "Higher prices globally for these fuels, as well as pandemic-related supply chain challenges, could limit their availability in New England if needed to produce electricity this winter."
Timothy Fox, vice president of ClearView Energy Partners, called ISO’s notice a “preemptive warning” for the region, which is heavily reliant on imported liquified natural gas as it lacks pipeline infrastructure comparable to other regions in the U.S.
“This is not new,” Fox told Jeremy of van Welie’s outlook. “I mean, New England has been facing, as ISO New England says … these well-documented natural gas pipeline constraints. That has been a hurdle.”
That the National Oceanic and Atmospheric Administration has projected the eastern U.S. to see warmer-than-average temperatures this winter offers some measure of hope that the overall likelihood of blackouts is lower than it would be if standing market conditions were expected to meet extreme, prolonged cold.
But weather is unpredictable, and the unlikely sometimes happens, Fox said.
“It’s important to note though that any severe prolonged extreme weather events can be difficult for any grid,” he said, noting the freeze and accompanying outages Texas faced in February.
The politics: New England states, along with their blue counterparts in the West, have well-established ambitions of reducing reliance on fossil fuels. Each of the six states covered by ISO’s operations has an emissions reduction target, and all but New Hampshire’s are in statute. Those targets have been directly connected to the states’ energy policymaking in recent years.
For example, a Massachusetts law passed in 2016 requires the state to procure 9.45 million megawatt hours of clean energy generation, meaning hydro, solar, or wind — not gas.
As energy prices inched higher throughout the fall and early projections warned of some measure of trouble for import-reliant New England, Republicans and the oil and gas industry took special aim at such state and national policies for leaving the region vulnerable.
A coalition of Appalachia-based oil and gas industry groups, in a recent letter to Democratic Sen. Elizabeth Warren of Massachusetts, pointed to the fact that six of the last seven planned interstate pipeline projects planned to transport gas throughout the east have been paused or cancelled.
“It’s astonishing that New England has been forced to import Russian-produced natural gas in winter months because misguided politics get in the way of Americans having access to domestic energy produced just a few hundred miles away,” they wrote.
At the same time, environmental groups and Democrats have articulated the problem much differently, blaming industry for the existing price volatility and insisting that the current environment should spur the transition to carbon-free energy.
Both sets of arguments remain in play this winter, Fox said.
“I think even if there's a great disruption, these states are very unlikely to shift away from their aggressive decarbonization agenda,” he said. “Easing these — this pipeline and LNG constraint by building more pipeline or LNG import projects is very unlikely.”
Welcome to Daily on Energy, written by Washington Examiner Energy and Environment Writer Jeremy Beaman (@jeremywbeaman). Email email@example.com for tips, suggestions, calendar items, and anything else. If a friend sent this to you and you’d like to sign up, click here. If signing up doesn’t work, shoot us an email, and we’ll add you to our list.
REPORT: BIDEN TO PRESSURE GERMANS ON NS2 IF PUTIN MOVES INTO UKRAINE: The Biden administration plans to urge Germany to put an end to the Nord Stream 2 natural gas pipeline if Russia were to invade Ukraine, Bloomberg reports.
The report coincides with a scheduled meeting this morning between Presidents Joe Biden and Vladimir Putin, during which Biden will discourage Putin from moving into the neighboring country as Russia scales up its military presence, the White House said during a call with reporters yesterday.
Since Biden lifted sanctions against the pipeline earlier this year, Republicans have been pushing for sanctions to be reintroduced in legislation to thwart growing Russia’s influence in Europe, although Democratic leadership has resisted the GOP’s efforts. The report could have some bearing, however, on the fate of Democratic Sen. Bob Menendez’s amendment to the National Defense Authorization Act to introduce sanctions in the event that Russia invades Ukraine.
EXXONMOBIL ANNOUNCES PERMIAN-SPECIFIC NET-ZERO TARGET: The oil supermajor announced yesterday it intends to reach net-zero greenhouse gas emissions from operated assets in the Permian Basin by 2030 (note that that does not include emissions from customers' use of the fuels), part of a broader goal of reducing emissions intensity among its upstream operations by 40-50% by the same date.
Exxon said its plan involves electrification of operations in New Mexico and Texas, to improve methane monitoring, and to make equipment upgrades.
A major piece of the plan is also the commitment to end routine flaring, the burning off of excess natural gas, by 2022.
Jon Goldstein, senior director of regulatory and legislative affairs at the Environmental Defense Fund, said the announcement represents a “growing consensus” among firms of all sizes to end flaring as part of their operations. Goldstein noted restrictions on the practice in New Mexico and Colorado and suggested overall movement at state regulatory levels and from the likes of Exxon show “that there's a clear path here for the Environmental Protection Agency to end the practice of routine flaring at the federal level as well.”
Why flaring, and why now: The Biden EPA’s proposed methane regulations, announced last month, would prevent flaring at new and existing oil wells “where a sales line is available,” so new rules are already in the works with which firms will have to comply if they are finalized.
It’s also no secret that oil and gas firms are under special scrutiny and pressure from policymakers, the market writ-large and (notably in Exxon’s case), corporate boards, to reduce emissions.
To those ends, flaring represents a loss on multiple fronts: to the environment, to producers, and royalty owners, Goldstein explained.
“What you've got here [in flaring] is a market failure,” he said. “The oil is what the producers are really going after. That's the more lucrative commodity, and so they're investing in the infrastructure to get that oil to market. The gas is almost viewed as a nuisance.”
One final note: Exxon dropped the Permian news on the same day that CEO Darren Woods appeared at the World Petroleum Congress in Houston.
"The fact remains, under most credible scenarios, including net zero pathways, oil and natural gas will continue to play a significant role in meeting society's need," Woods said at the conference.
SAUDI ARAMCO HEAD WARNS OF SOCIAL UNREST FROM LIMITING OIL AND GAS: The head of Saudi Aramco, the world’s largest oil company, asserted yesterday that the world will need oil and gas for multiple more decades and warned of “social unrest” if prices were to balloon due to government policies to limit or ban them.
CEO Amin Nasser said during a speech yesterday at the World Petroleum Congress that he and other oil leaders at the meeting are “committed to a net-zero economy,” but he described “an ever more chaotic energy transition” that threatens the developing world.
“Energy security, economic development, and affordability imperatives are clearly not receiving enough attention,” he said. “Until they are, and unless the glaring gaps in the transition strategy are fixed, the chaos will only intensify.”
Insert Biden administration: Nasser’s words and those of other big oil heads at the conference served quite different points of emphasis than did David Turk’s, who is the Biden administration’s deputy energy secretary.
"There is not an alternative to stepping up and fixing the threat to climate change," Turk said during the conference. He also said the industry needs to "step on to the plate."
The administration and other major governments in the West are operating on fundamentally different premises than the one Nasser expressed, focusing on expanding on renewable energy and limiting new fossil fuel production.
A COAL STOCKPILE LOW: Domestic coal stockpiles in September hit their lowest monthly level since March 1978, the Energy Information Administration writes in a blog put out this morning.
A boost in coal-generated electricity over the hot summer, coupled with the fact that reserves were already diminishing due to retirements of coal plants, were responsible for the dip, EIA says.
NORTH CAROLINA SITED FOR TOYOTA BATTERY PLANT: The Japanese automaker announced yesterday that it selected the Greensboro area for a $1.29 billion battery manufacturing plant.
Toyota plans to ultimately hire 1,750 workers to support plant operations, which the company said will initially consist of four production lines with each capable of producing batteries for 200,000 vehicles per year. An expansion to six lines, capable of supporting 1.2 million vehicles per year, is also planned.
EU TRADE HEAD DUBS UNION-MADE ELECTRIC VEHICLE CREDIT “DISCRIMINATORY": Democrats’ proposed tax credits for American-made, union-built electric vehicles would be bad for consumers, hurt the bloc’s auto manufacturers, and run afoul of WTO trade rules, EU Trade Commissioner Valdis Dombrovskis said.
Dombrovskis objected to the credits, which grant purchasers of a union-made EVs a $4,500 tax credit in addition to a general $7,500 credit per EV purchase. The latter credit would apply only to U.S.-assembled vehicles after five years under the proposal.
The credits together would “result in unjustified discrimination against EU car and car component manufacturers,” Dombrovskis wrote in a letter.
With his comments, Dombrovskis stands in the company of Canada and Mexico, as well West Virginia Sens. Joe Manchin, a Democrat, and Shelley Moore Capito, a Republican. Each has objected to the credit for similar reasons.
MUSK TOO: Tesla CEO Elon Musk said that the electric vehicle credits are unnecessary and bashed the Democratic bill as a whole. “Honestly, I would just can this whole bill,” Musk said in a virtual appearance at the WSJ’s CEO Council Summit.
Note that Tesla’s cars would qualify for the EV credit but not the union-made added credit.
Musk also said that the $7.5 billion in subsidies for charging stations in the House version of the bill are unnecessary.
“Do we need support for gas stations? We don’t,” he said. “Delete it.”
BEZOS PUTS UP MILLIONS FOR ENVIRONMENTAL WORK: Amazon founder Jeff Bezos’s Earth Fund announced yesterday it will give $443 million to various organizations in support of environmental causes, including the Biden administration’s Justice40 initiative.
Nineteen grants worth $130 million will go to organizations involved with Justice40, which was established in January by executive order to deliver “40 percent of the overall benefits of relevant federal investments to disadvantaged communities.”
Reuters Global oil CEOs stress need for fossil fuels despite push for cleaner energy
Bloomberg Meet the new climate refugee in town: coyotes
E&E News Major U.S. utilities plan coast-to-coast, EV-charging network
THURSDAY | DEC. 9
1:30 p.m. 210 Cannon The House Select Committee on the Climate Crisis will hold a hearing entitled “Cleaner, cheaper energy: Climate investments to help families and businesses.”