Energy and Environment News

Energy and Environment News

August 20, 2015

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Energy Policy.  According to the European Union’s energy and climate commissioner, the global climate deal designed to prevent worldwide temperatures from rising is under threat unless more countries submit emission-reduction targets and the region substantially accelerates technical negotiations.  With just three months until the Paris Climate Conference, only 56 out of more than 190 countries have submitted targets.  WSJ

Mining.  Amid plunging commodity prices, mining companies are exploring low-margin operations as a source of new revenue, refining, blending, and trading ores themselves rather than leaving these tasks to multinational commodity traders as has historically been done.   With industrial metals and coal at lows last seen during the financial crisis, the share prices of many companies have collapsed by more than half in the past year; however, due to oversupply, raw materials prices are likely to remain low for an extended period.   WSJ

Energy Policy.  The World Bank is aiming to set a global standard to stop the routine flaring of unwanted gas from oil wells.  The Bank’s executives hope that the world’s largest oil-producing countries and companies will participate, and believe that the effort will help cut greenhouse gas emissions and improve access to energy in low-income countries.  FT

Global Warming.  According to a study published yesterday, scientists may have overstated China’s carbon dioxide emissions by more than 10 percent due to inaccurate assumptions about the country’s coal­-burning activities.  While the findings do not affect estimates of the total level of greenhouse gases in the atmosphere — an accumulation that is measured independently — they may affect discussions of how much relative responsibility China bears for global warming. NY Times

Oil.  A federal auction in the Gulf of Mexico yesterday attracted the lowest interest from producers since 1986 — a clear sign that the fortunes of oil companies are worsening.  The industry is beginning to sacrifice production out of concern that the oil price collapse will not rebound, but rather last through 2016 and 2017.   NY Times

Energy and Environment News

Energy and Environment News

August 19, 2015

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Climate Change.  The recent drought overrunning California may not be cyclical, but rather the start of permanent, more arid conditions caused by global warming.  The state is balancing severe cutbacks in water for farms, homeowners, and businesses amid robust demand for new housing and a general economic resurgence.  NY Times

Energy Policy  The costs of OPEC’s plan to protect its share of the world’s oil market by out-producing rivals are steeply increasing. Grant Smith of Bloomberg notes that as oil prices slump to six-year lows, the organization’s most vulnerable nations could expect increased political turmoil, budget deficits, and other near-term crises.  Bloomberg

Oil. According to data released today by the Energy Information Administration, U.S. crude stockpiles unexpectedly increased by 2.6 million barrels to 456.2 million barrels — inventories not seen at this time of year in at least 80 years.   Analysts at the Wall Street Journal had originally predicted a decline of 1.1 million barrels on the week.   WSJ

Energy and Environment News

Energy and Environment News

August 18, 2015

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EPA.  The Environmental Protection Agency has proposed new rules aimed at curbing methane emissions associated with oil and natural gas drilling.  The rules, which are part of a broader, more ambitious White House initiative to cut methane emissions, would require new oil and gas wells to install technologies that prevent and monitor methane emissions leaks.  WSJ

Energy Policy. The Obama administration gave Royal Dutch Shell final clearance yesterday to resume its drilling operations in the Arctic Ocean, which is estimated to hold as much as 20% of the world’s undiscovered oil and gas.  Environmental groups have vowed to fight the administration’s approval in order to protect the fragile Arctic environment from further mishaps related to deep-water drilling.  Reuters

Oil.  While oil prices have fallen to their lowest level in years, gasoline costs have been much slower to decline amid summer demand peaks, costly summer gasoline blends, and regional refinery troubles.  Industry analysts predict that gasoline prices will begin to fall toward $2 per gallon as the summer driving season comes to an end.  WP

Climate Change.  According to a study sponsored by the Environmental Defense Fund, natural gas facilities lose about 100 billion cubic feet of natural gas a year and may contribute the largest fraction of emissions coming from natural gas.  If counted in the EPA inventory, these newly discovered leaks would increase the agency’s system-wide emissions estimates associated with natural gas by about 25 percent.  NY Times

Energy and Environment News

Energy and Environment News

August 17, 2015

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Energy Policy.  Iran’s Supreme Leader announced today that his country would not allow the recent nuclear deal to become an avenue for the U.S. to interfere with the political, economic, and cultural life of the Islamic Republic.  He accused the U.S. of intending to infiltrate Iran through the accord, and noted that the fate of the deal is unclear as it has not been approved on either side yet.  WSJ

Oil.  The plunging price of crude oil poses a threat to states like Texas, North Dakota, Colorado, and Pennsylvania that have had booming oil and natural gas production due to fracking practices.  Companies have had to slash their payrolls this summer, suspend payments to investors, and cease borrowing — developments that many predict will result in a painful consolidation among oil producers. NY Times

Energy Outlook.  Reuters notes that the Department of Commerce’s decision last week to allow the export of U.S. crude to Mexico comes at a time when foreign appetite for U.S. oil appears to be waning.  While Mexico will most likely take advantage of the new opportunity as a means of improving its own refinery operations,  oversupply of crude on the global market will likely keep U.S. exports constrained for some time.  Reuters

Oil.  Nick Butler of the Financial Times discusses the dilemma that Saudi Arabia faces ahead if it continues its strategy of over-production in an attempt to force other producers out of the market.   Butler notes that developments such as the Iran nuclear accord — which threatens to increase global supplies even further and heighten Iran’s influence in the region — and the resilience of the U.S. shale industry threaten to push prices down even further; he speculates that based on history, the kingdom will likely exercise caution and change its policies before prices truly bottom out.  FT

Energy and Environment News

Energy and Environment News

August 14, 2015

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Energy Policy.  The U.S. Commerce Department informed members of Congress today that it intends to approve an application from Mexico’s national oil company to enter into oil trade agreements with U.S. companies, thereby eroding the four-decade U.S. ban on domestic crude exports.   U.S. oil companies have been pushing the Obama administration to relax restrictions so that they can sell excess oil in higher-priced foreign markets.  WSJ

Oil Outlook.  According to Reuters, recent oil price declines have opened up opportunities for U.S. energy sector dealmakers and private equity managers to begin restructuring or buying assets from oil companies in need of quick cash.   Private equity firms — known for having a high risk tolerance and a longer horizon for investments — are eager to make these deals, particularly given long-run expectations that oil prices will return to around $100 a barrel with new demand stemming a growing middle class in developing countries.  Reuters

Energy Policy.  Fifteen U.S. states — led by West Virginia— have prepared to challenge the EPA’s Clean Power Plan on grounds that the policy breaches states’ rights and will harm the economy by raising electricity prices and threatening the reliability of power supplies.  The states are seeking to freeze the implementation of the plan through an injunction, saying that the plan’s deadlines would require states to begin cutting emissions immediately. FT

Solar.  Reuters reports that the U.S. solar market is “on fire” — installations of solar panels are expected to increase by one third this year, solar power has become price-competitive with gas and coal-fired power in place such as California, and the industry will likely benefit from the Obama administration’s plan to curb power plant emissions.  Counter to these developments, private investors seem to view investments in solar as risky, fearing that low oil prices will reduce demand for alternative energy. Reuters