Energy and Environment News

Energy and Environment News

March 24, 2015

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Energy Outlook.  According to energy consultancy PIRA, U.S. shale production will likely flatten next quarter before declining slightly as companies reduce capital spending amid the low oil price environment.  This report confirms a similar claim made in a monthly report from OPEC, which also reported that U.S. oil output will decline later this year.  Reuters

Oil.  According to EIA’s Weekly Petroleum Status Report, the volume of crude oil stored at Cushing, Oklahoma — a significant delivery point for West Texas Intermediate crude supplies —  is at its highest level on record. Although inventories at Cushing are at a record high,  storage utilization remains below record levels due to additional storage capacity that has been added over time.  EIA

Coal.  According to studies by the Government Accountability Office, the Interior Department’s inspector general, and nonprofit research groups,  the Federal Government has collected less in royalty payments than is legally required for the extraction of coal from public lands.  While the Interior Department is taking steps to scrutinize documentation issues, large discounts on royalty payments for coal companies, and noncompetitive lease sales, editors at the New York Times argue that the government should further impose a “carbon adder” on coal sales to help offset the impacts of greenhouse gas emissions and climate change.   NY Times

Climate Change.  Anne Stausboll writes in the Financial Times that institutional investors ought not divest holdings from companies related to fossil fuels, but rather increase engagement with such companies as part of their “fiduciary duty”.  She argues that this legal responsibility positions investors to engage with the companies in which they are invested regarding the long-term management of climate change risks — a strategy more likely to impact companies’ climate change mitigation efforts than simply “passing the buck” to buyers on the open market.  FT

Energy and Environment News

Energy and Environment News

March 23, 2015

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Energy Policy.  The Supreme Court will hear a case this Wednesday pertaining to a provision of the Clean Air Act that calls for the EPA to regulate pollutants only when “appropriate and necessary”.  While industry advocates interpret the clause as a mandate that the Agency consider the financial impacts of its regulations at the beginning of the regulatory decision-making process, EPA representatives argue that costs should not be considered in deciding whether or not substances are harmful to human health and merit regulation — an opinion shared by editors at the New York Times.  NY Times

Nuclear.  As Germany moves toward its goal of phasing out all remaining nuclear reactors by 2022, a new report issued by the German government warns that taxpayers may end up paying for the cost of decommissioning if utilities are unable to do so.  In particular, future provisions for the decommissioning process have been questioned due to cost uncertainties related to the final disposal of nuclear waste and market factors such as falling electricity demand and government subsidies for “green energy” that are leaving utilities much less profitable.   WSJ

Oil.  Reuters reports that Saudi Arabia has indeed gained market share amid the oil price collapse.  Oil producers including Iraq, Venezuela, Russia, and Kazahstan have been partially replaced by Saudi crude supplies in Asia, the United States, and parts of Europe — and Saudi oil minister Ali al-Naimi confirmed that the nation is nearing a new production record of nearly 10 million barrels per day.  Reuters

Energy and Environment News

Energy and Environment News

March 20, 2015

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Energy Policy.  Today the Obama administration announced new rules for all hydraulic fracturing that occurs on federally owned lands. The regulations — which will take effect in 90 days — permit government workers to inspect cement barriers that line fracking wells, require companies to publicly disclose chemicals used in the fracking process, and set safety standards for how companies can store fracking chemicals.  NY Times

Climate Change.  Todd Stern, the top U.S. climate negotiator, expressed “cautious optimism” for a new global climate change pact scheduled to be finalized late this year.  Stern highlighted improved cooperation between the U.S. and China relative to 2009 efforts in Copenhagen, particularly with regard to agreements to expand clean energy production and limit carbon emissions.  WSJ

Oil.  Bloomberg reports that rising Russian crude exports present the next big “threat” to the global supply glut and plunging world oil prices.  In particular, Russian refineries are scaling back on the volume of crude that they process amid a weak Russian economy and subsequent lackluster demand for refined fuel products — which will allow more unprocessed Russian crude available for export on the world market.  Bloomberg

Natural Gas.  Ed Crooks of the Financial Times discusses the rising backlog of U.S. shale wells that have been drilled but have yet to be fracked and fitted with equipment necessary for oil extraction. While some analysts warn that the practice could stifle any recovery in prices, Crooks suggests that the practice is less widespread than estimated due to the diversity of U.S. shale producers — including many who “cannot afford the luxury” deferring well completions.  FT

Energy and Environment News

Energy and Environment News

March 19, 2015

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Energy Policy.  President Obama signed an executive order today that requires the Federal Government to cut greenhouse gas emissions by 40% from 2008 levels and increase the use of renewable electricity to 30% of its current electricity supply over the next ten years.  In conjunction with this executive order, a group of firms that supplies the Federal Government pledged to reduce its carbon footprint by 5 million metric tons over the same period.  WP

Oil.  Oil prices fell to fresh six-year lows today due to factors such as rising U.S. inventories and increasing crude production.  Additionally, while prices increased yesterday following the Federal Reserve’s indication that it would hold-off on raising interest rates, an interest-rate hike later this year is likely to strengthen the dollar — which will place additional downward pressure on oil prices.  WSJ

Shale.  Several of the world’s biggest oil companies have retracted efforts to expand fracking operations outside of the U.S.  While the collapse in crude oil prices is the underlying factor behind these companies’ decisions to halt investments in international fracking, obstacles such as sanctions in Russia, a fracking ban in France, a moratorium in Germany, and poor results in Poland have also hindered efforts to “re-create the U.S. shale boom” overseas.  WSJ

Coal.  In a Brookings “Policy Brief”, the authors note that even though coal is the largest source of carbon dioxide and other emissions, it will continue to play a significant role in the global energy market for many decades.  Specifically, they note that while coal-fired generation is declining in the United States, it is increasing in developing markets where access to cheap coal-based electricity is essential for economic development.  Brookings

Energy and Environment News

Energy and Environment News

March 18, 2015

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Energy Policy.  According to U.S. Interior Secretary Sally Jewell, the White House will focus on tightening standards for companies extracting oil, gas, and coal on taxpayer-owned land during the Obama administration’s final 22 months.  The Interior Department — which manages leases for approximately one-fourth of U.S. oil, gas, and coal projects — is expected to announce its proposed rules as early as this week.  WP

Oil.  Upon reports of record high crude-oil supplies in the U.S., the West Texas Intermediate crude oil price benchmark fell to new six year lows this week while the global benchmark, Brent crude, remained relatively stable.  While some industry experts expect the “WTI-Brent spread” — or the price difference between the two benchmarks — to widen due to growing U.S. stockpiles, other analysts predict that it will narrow as Brent prices fall due to higher output from Iraq and lower demand during spring refinery maintenance.  WSJ

Oil & Gas.   The Financial Times notes that U.S. shale production has fared modestly better than analysts’ expectations due to producers’ ability to cut costs and increase productivity. These cost cuts and productivity gains are largely due to: (1) increased pressure on suppliers of drilling rigs, hydraulic fracturing, and other services, (2) focused spending on companies’ most productive rigs, and (3) improved techniques, such as “assembly line” drilling models.  FT