Author: Shiloh

This week’s news of a new Environmental Protection Agency (EPA) report showed that methane emissions from the largest oil and natural gas-producing basins fell 44 percent between 2011-2013; and also dropped in seven oil and natural gas-producing basins by up to 87 percent from 2019-2023. Following the update, Texas Railroad Commissioner Wayne Christian criticized the Biden Administration for creating new rules and taxes on oil and gas producers and power plants:

“President Biden’s own EPA said the quiet part out loud that the industry is already mitigating methane emissions, revealing that the true motive behind his horrendous policies is to squeeze the life out of the oil and gas industry,” said Commissioner Wayne Christian. “Radical environmentalists love to pick and choose ‘science’ that justifies their ‘sky is falling’ narrative that the world is ending and fossil fuels are to blame. But this couldn’t be further from the truth, just like they like to ignore the fact that EPA regulated emissions are down 78 percent in the last fifty years.

President-elect Trump’s number one priority should be to scrap Biden’s onerous and unnecessary methane rules and taxes attacking…
 

December 11, 2024 — The University of Texas at Austin joined top energy companies in issuing a report to the Texas Legislature advising the steps it could take to advance the state’s growing hydrogen industry. The report, issued by the Texas Hydrogen Production Policy (TxH2) Council, provided several key recommendations focusing on safety, environmental protection, and regulatory clarity and efficiency. UT is the only university represented on the council.

“The work carried out by my colleagues and I on the committee will significantly advance the growth of the hydrogen sector in Texas so that we can maintain our unparalleled role as a global leader in all forms of energy production,” said Professor Brian A. Korgel, Ph.D., director of the UT Energy Institute, who serves as one of the 11 members of the council. “It is an honor to contribute to the important work of the Texas Hydrogen Production Policy Council as we seek to ensure that the potential of hydrogen is fully tapped to bring greater economic opportunities and maintain reliable energy supply across Texas.”

The full report “Hydrogen Energy Development in Texas” is available online.

Via UT’s Energy Institute, Bureau of Economic Geology and Center for Electromechanics, among numerous other programs, the University is poised to take a leading role in providing the research and guidance required to implement the recommendations made by the council.

One central recommendation of the report is for development of training and education programs to improve public awareness of hydrogen, increase public acceptance of hydrogen, and enhance safety. UT is uniquely equipped to play a leading role in such programs due to its broad expertise in hydrogen, as well as other sectors and existing programs integral to the broader hydrogen industry, including geothermal, nuclear and solar initiatives…
 

December 5, 2024 — New Mexico is the nation’s second-largest oil and gas producer (behind Texas). It is the home to cutting-edge federal research and houses a busy port of entry through which a growing volume of goods passes from Mexico, the nation’s No. 1 trade partner.

Yet, New Mexico’s economy has historically lagged other Southwest economies and the nation. It ranks low in household income and educational attainment, and its population has little changed over the past decade, while the populations in neighboring Texas and Arizona have boomed.

However, 2023 highlighted the state’s considerable upside. New Mexico achieved solid economic growth in part due to a booming energy sector and trade with Mexico.

State builds on a noteworthy 2023

New Mexico’s economy, measured by GDP, notably expanded last year. State output grew 6.8 percent, outpacing the nation’s 2.9 percent increase (Chart 1). Much of this growth was attributable to the burgeoning energy industry. Mining contributed 4.2 percentage points to the New Mexico state GDP in 2023.

Downloadable chart

This is in stark contrast to the sluggish growth persistent through most of the 2010s. Notably, New Mexico’s annual GDP growth averaged 1.0 percent from 2010 through 2022, lagging the nation as a whole, which expanded 2.3 percent annually. By comparison, Texas’ annual GDP growth was 3.3 percent and Arizona’s was 3.1 percent during that period.

Despite the recent gains, the state’s economic output remains relatively small. New Mexico’s GDP was $135 billion in 2023, compared with $2.6 trillion in Texas. Even with record-high levels of energy production, economic growth has cooled slightly this year, though oil price volatility can distort measurement of the value of state-level real (inflation-adjusted) GDP.

Slow job growth rate, sparse population pose challenges

New Mexico is the fifth-largest state by land area, with 121,697 square miles. It is also one of the least-populated states. The economy has long faced significant structural challenges. The state labor market is relatively small, with just 888,000 on nonfarm payrolls, a fraction of the 14.2 million jobs in Texas. The state’s annual job growth rate of 0.7 percent from 2010 through 2019—compared with 2.3 percent for Texas—has historically trailed the nation (Chart 2).

Downloadable chart

This sluggish pace reflects a lack of economic diversity and investment, as well as reliance on government and tourism jobs.

New Mexico had 2.1 million residents in 2023. The state’s population grew just 2.3 percent from 2010 to 2023, compared with the nation’s increase of 8.3 percent (Chart 3). The state has experienced both domestic outmigration and slow natural increase (births minus deaths). More New Mexicans have left the state than new residents have arrived every year since 2012, with the exception of 2020.

Downloadable chart

New Mexico’s stagnant population and socioeconomic issues, such as low educational attainment and high poverty rates, pose additional constraints. The state’s labor force participation rate of 57.5 percent in August 2024 is below its neighbors—Texas (64.4 percent) and Arizona (62.3 percent). However, Texas and New Mexico unemployment rates were identical, 4.1 percent, in August.

Additionally, Texas and Arizona attract businesses more readily than New Mexico, reflecting the benefits of their strong and diverse business sectors. New Mexico ranks in the middle of the pack in business tax climate at No. 23, according to the Washington, D.C.-based think tank the Tax Foundation. That is less favorable than Texas at No.13 and Arizona at No.14.

Educational attainment also presents a challenge to workforce development. While the share of the population 25 years and older with a high school diploma or a college degree has gradually increased in the past 10 years, the state trailed the U.S. In 2023, 31.6 percent of New Mexico’s population 25 years and older had a bachelor’s degree or higher versus 36.2 percent of the U.S.’s population.

Median household income in 2023 was $60,980 compared with $80,610 nationally. Nearly one-fifth of New Mexicans (17.8 percent) lived in poverty in 2023, according to American Community Survey data. The state also has a higher rate of food insecurity relative to the nation.

Roughly 10 percent of the state is Native American, including a portion of the Navajo Nation, which extends across the Four Corners region into Arizona and Utah and operates as a sovereign nation with its own separate administrative structure. Indigenous peoples have some of the highest poverty rates in the state at 30.5 percent. Those living on tribal land often confront poorly developed infrastructure and little economic growth.

Energy fuels economic expansion

Challenging the state’s sluggish past, the energy sector has led the recent turnaround in state output. Mining has long been a major industry in New Mexico. Miners historically sought out precious metals as well as fuel resources, such as coal and uranium. More recently, hydraulic…
 

December 5, 2024 — R Street recently concluded a series that evaluated state and local permitting challenges to various energy infrastructure types, with a focus on the resources needed for electricity generation. That research was prompted by anecdotal evidence suggesting an overall worsening environment for the permitting of energy infrastructure at the state and local level. Our research confirmed this impression, though to different extents for different energy types. In this piece, we examine energy infrastructure types aggregately, rather than individually, to inform policy recommendations that are applicable to improving and expediting state and local permitting of energy infrastructure.

Two simultaneous market forces are putting increased pressure on the market entry of new electricity generating resources and related infrastructure in the United States: rising electricity demand and the need to replace existing generation.

From 2010-2020, annual electricity consumption was relatively stagnant, with retail sales declining by about one percent over the same period. But, as Figure 1 shows, total electricity demand has been rising since 2020, increasing by 144 terawatt hours (TWhs), or 4 percent.

Figure 1: Retail Sales of Electricity in the United States

Source: U.S. Energy Information Administration, “Electricity Data,” U.S. Department of Energy, last…
 

December 5, 2024 — After nearly a year of extensive analysis, the Texas Hydrogen Production Policy Council has delivered a report to the Texas Legislature outlining actionable steps to bolster Texas’ leadership in the hydrogen industry.

The 11-member Council, established by the Legislature and chaired by RRC Chairman Christi Craddick, was tasked with making recommendations to lawmakers on updates necessary for the oversight and regulation of production, pipeline transportation, and storage of hydrogen.

The hydrogen industry is already well-established in Texas, primarily serving the petrochemical and refining industries. For over 50 years, hydrogen has been produced in dozens of facilities throughout the state. Pure hydrogen pipelines, extending over 1,000 miles, have been operating safely in Texas, supporting the industry’s robust infrastructure.

Texas’ existing hydrogen infrastructure and comprehensive regulatory framework for safety and environmental compliance have contributed to the state’s current standing as a global leader in conventional hydrogen production.

While the report recommends that Texas leverage its existing regulatory structure to lead the charge on hydrogen policy, it also specifies areas…
 

December 5, 2024 — Lithium-sulfur batteries have never lived up to their potential as the next generation of renewable batteries for electric vehicles and other devices. But ​SMU mechanical engineer Donghai Wang and his research team have found a way to make these Li-S batteries last longer – with higher energy levels – than existing renewable batteries. 

The research team has been able to prevent Li-S batteries from producing an unwanted side effect known as polysulfide dissolution that appears over time, shortening their lifespan. 

“This breakthrough could lead to more durable, long-lasting batteries,” said Wang, the Brown Foundation Chair of Mechanical Engineering and Professor of Mechanical Engineering at SMU Lyle. His research focuses on the design and synthesis of nanostructured functional materials and energy storage technologies like Li-ion batteries and also beyond Li-ion technology.

A study published in the journal Nature Sustainability shows that the team’s newly developed hybrid polymer network cathode allows Li-S batteries to deliver over 900 mAh/g (milliampere-hours per gram mass), compared to the typical…
 

By Alex Mills

America’s energy policy is in for a major overhaul.

President-elect Trump announced this week the appointment of two key members to his cabinet relating to energy issues. North Dakota Governor Doug Burgum will serve as Secretary of Interior and Colorado businessman Christopher Wright was nominated as Secretary of Energy. Both must be confirmed by the Senate.

Burgum also will serve as the chair of the new National Energy Council, which will consist of all departments and agencies involved in the permitting, production, generation, distribution, regulation, transportation, of all forms of American energy, and will therefore have a seat on the National Security Council, Trump said,

The National Energy Council will coordination among federal agencies to advance American energy. “By establishing U.S. energy dominance, we can jumpstart our economy, drive down costs for consumers and generate billions in revenue to help reduce our deficit,” Burgum said.

Before entering politics, Burgum headed a software company, which was acquired by Microsoft in 2001 and has been in a variety of businesses until he was elected Governor in 2016.

Burgum ran for President but failed to gather enough support and closed his campaign in December 2023.

North Dakota is the third largest …
 

U.S. production of associated-dissolved natural gas, or associated natural gas, increased 7.9% in 2023 compared with 2022, averaging 17.1 billion cubic feet per day (Bcf/d) last year, according to data from Enverus Drillinginfo. Associated natural gas production, which is natural gas produced by wells that predominantly produce oil, comes mainly from five major oil-producing regions in the United States—the Permian, Bakken, Eagle Ford, Anadarko, and Niobrara.

Record U.S. crude oil production in 2023 generated large volumes of associated natural gas. The Permian Basin in West Texas and southeastern New Mexico accounted for 46% of U.S. crude oil production in 2023 and was the largest source of U.S. associated gas production last year at 11.5 Bcf/d. In 2023, around two-thirds of total U.S. associated natural gas production came from the Permian region, similar to 2022.

In 2023, 2.3 Bcf/d of associated gas was produced in North Dakota’s Bakken region, which accounted for 70% of the region’s total natural gas production—the largest share among the five oil-producing regions. The Eagle Ford region in southern Texas was the source of 1.8 Bcf/d of associated…
 

By Alex Mills

Donald J. Trump’s victory is welcome news to many companies including those in the energy business.

There is no doubt that Trump supports a strong domestic oil and gas industry. His “drill, baby, drill” slogan was believed to signal to the industry and others that he support policies that will keep the U.S. as the largest oil and natural gas producing country in the world.

Even though crude oil prices remained relatively flat at $71 per barrel, the stock market surged the day after the election. It was the fifth-best one-day on U.S. stock markets, according to the Wall Street Journal. The Dow rose some 1,500 points a 3% increase for a record high. The Nasdaq and the S&P 500 both exceeded 2% gains, while the Russell 2000 jumped 4%.

Energy sector stocks increased an average of 3%. The stocks of integrated oil companies ExxonMobil and Chevron rose 5% and 7% respectively and refiner Valero witnessed a 10% rise while midstream pipeline operator Kinder Morgan’s stock was up 8% during the week ending on Nov. 6.

Utility stocks also had gains. NRG had a 2% rise and CenterPoint was…
 

By Alex Mills

Fifty years ago, America’s economy and national security was thrown into chaos following the oil embargo. As a major importer of oil, the United States suffered from higher oil prices, shortages of petroleum products form coast-to-coast, gasoline lines, and inflation.

Much has changed since 1974. Today, the U.S. is a net exporter of oil and other energy sources, according to a report from the Energy Information Administration at the U.S. Department of Energy.

“In 1974, the United States consumed more energy than it produced domestically and was a net importer of energy from other countries,” EIA stated in its recent Monthly Energy Report. “Today, the United States produces more energy than it consumes domestically and is a net exporter of energy to other countries.”

EIA said U.S. energy production increased 68% from 1974 to January-June 2024 (the most recent data available).

“Increased crude oil and natural gas production, brought about by improvements in drilling techniques such as hydraulic fracturing and horizontal drilling beginning in the 2000s, drove much of the growth in total energy production,” EIA said.

“The increase in energy production over the last two decades has turned the United States into the world’s largest crude oil and natural gas producer today and from a net energy importer to a net energy exporter starting in 2019,” EIA said. “U.S. net energy imports in the…
 

Natural gas produced from the three largest tight oil-producing plays in the United States has increased in the last decade. Natural gas comprised 40% of total production from the Bakken, the Eagle Ford, and the Permian compared with 29% in 2014.

Combined crude oil and natural gas production from these plays more than doubled over this period as hydraulic fracturing—also known as fracking—and horizontal drilling have allowed producers to access and extract more crude oil and natural gas from tight formations. However, production of associated natural gas, which is natural gas produced from predominantly oil wells, has increased more rapidly from these tight oil plays. Natural gas production from these plays more than tripled—an increase of 22 billion cubic feet per day (Bcf/d)—over the period compared with crude oil output, which more than doubled—an increase of 4 million barrels per day (b/d).

We define oil wells as those with a gas-to-oil ratio (GOR) of less…
 

October 22, 2024 — The University of Texas says it has a “new cooling technology could change how heat is managed in electronic devices—from tiny semiconductors to massive data centers.”

The university writes that “a team led by scientists and engineers at The University of Texas at Austin have created a new “thermal interface material” that could organically remove heat from high-powered electronic devices, reducing or even eliminating the need for extensive cooling. The new material, made from a mix of liquid metal and aluminum nitride, is much better at conducting heat than current commercial materials, making it optimal for cooling.

“The research is published in the journal Nature Nanotechnology.

“The power consumption of cooling infrastructure for energy-intensive data centers and other large electronic systems is skyrocketing,” said Guihua Yu, professor in the Cockrell School of Engineering’s Walker Department of Mechanical Engineering and Texas Materials Institute. “That trend isn’t dissipating anytime soon, so it’s critical to develop new ways, like the material we’ve created, for efficient and sustainable cooling of devices operating at kilowatt levels and even higher power.”

Cooling accounts for about 40% of data center energy usage, or 8 terawatt-hours annually. The researchers estimate their technology could shave 13% off that cooling requirement—or 5% off overall data center energy usage—a significant savings if applied across the industry. The heat dissipation capabilities also allow for significant growth in processing power.

The new discovery is part of a larger effort to realize the potential of thermal interface materials. These materials are designed to dissipate heat generated by electronic devices, reducing the need to cool those devices.

However, a gap exists between how much cooling these materials should theoretically be able to achieve and what they’ve done in real-world tests.

By Alex Mills

As winter approaches, forecasters predict the weather in the U.S. will be a little colder this year, but energy costs will be about the same as last year.

The Energy Information Administration (EIA) at the U.S. Department of Energy issued its winter forecast recently stating most U.S. households will spend about the same or less on energy than they did last winter.

“Generally, retail energy prices in our forecast are less than they were last winter, but temperatures across much of the country are set to be colder this year, meaning homes will use more energy for space heating,” EIA stated. “The combination of lower prices and colder weather results in relatively little change in expenditures.”

Natural gas is the largest energy source to generate electricity and heat homes and businesses. EIA said the Henry Hub natural gas spot price will average around $3.10 million British thermal units (MMBtu) in 2025.

EIA estimated the cost of energy across the U.S. and said the South will have the lowest cost at $487 followed by the West at $573 and the Midwest at $586. The Northeast had the highest estimated cost at $772.

Fuel inventories are an important source of winter supply and natural gas and propane currently have high inventories compared with their previous five-year (2019–2023). “These relatively high inventories have helped keep prices for those fuels below year-ago levels,” EIA stated.

“We assume this winter will be colder than the last winter…
 

Refinery margins for petroleum refiners across the world are shrinking, indicating reduced profitability from refining crude oil and selling petroleum products. Declining margins are the result of relatively weak demand for petroleum products even as global refining…
 

October 9, 2024 — CenterPoint Energy is going even more high tech in predicting extreme weather problems.

The multistate natural gas and electricity utility headquartered in Houston has a new agreement to work with Technosylva, a company specializing in extreme weather risk mitigation solutions as well as wildfire science, with a plan to utilize predictive analytics and artificial intelligence for preparation of CenterPoint’s infrastructure and assets in “extreme weather prone regions.”

The two companies on Tuesday announced a Memorandum of Understanding that allows CenterPoint constant monitoring of extreme weather risks, including analysis that can lead to predictions and mitigation solutions throughout CenterPoint’s network, which includes Texas, Ohio, Indiana, Louisiana, Mississippi and Minnesota.

The company says it’ll focus on “an all-weather hazards approach.”

The collaboration is part of CenterPoint’s previously-announced …
 

October 8, 2024 — Some new research from The University of Texas at Austin highlights the powerful — and sometimes counterproductive — role that very strict regulatory standards and stakeholder pressure can play in driving environmental improvements within the oil and gas industry. The certified market, a place where only firms who meet environmental criteria can sell gas (at a premium price), had the biggest single impact on environmental outcomes in the oil and gas industry.

The energy industry, particularly oil and gas companies, is under increasing pressure to decarbonize due to the increase in extreme weather events associated with climate change. Some of these companies have begun to voluntarily reduce their greenhouse gas footprint, motivated by social responsibility, pressure from activists, market opportunities or simply copying efforts of peer firms.

According to UT, the study, produced by researchers from both the LBJ School and Cockrell School, reveals that “while firms can respond to external pressure by making changes that enhance environmental performance, the nature and type of pressure significantly impact the outcomes. Not all activist efforts yield the same results, even when operating under similar financial constraints, and markets with very high barriers to entry may unintentionally hinder progress. These findings emphasize the need for strategic, well-targeted actions to ensure lasting environmental benefits at both the firm and industry levels.

“Some firms have begun to address the issue of natural gas flaring– whether out of a sense of social responsibility, fear of environmental activists, search for new market opportunities, or an impulse to mimic peer firms,” said LBJ School professor and a study co-author Varun Rai. “However, studying such complex drivers in real-world settings and with highly detailed market and resource data is challenging. To address that, in this paper we formulate a general framework that captures each of these factors, apply it to build an empirically-grounded model, and provide insights into the distribution of outcomes in the oil and gas industry’s flaring performance in the US.”

“Researchers developed an agent-based model—an increasingly important computational modeling technique in the AI era that relies on resolving the components of a system rather than specifying its aggregate dynamics—to simulate the decision-making processes of energy firms…
 

September 27, 2024 –The preliminary winner of a shares auction for control of a Citgo Petroleum parent company is an affiliate of activist investing company Elliott Investment Management, with a bid consisting of cash and credit valued at $7.286 billion, a court filing reveals.

The Citgo parent company is PDV Holding.

That Elliott affiliate is Amber Energy, which is owned by a group of strategic US energy investors led by Elliott.

Among the chief rivals to Amber in the bidding process were US oil refiner CVR Energy and mining company Gold Reserve.

Citgo assets include the Texas and Louisiana refineries along with another in Illinois.

Citgo is known to refine and process more than 800,000 barrels of oil per day, the seventh-largest US refiner.

Amber said on Friday it expects to close the deal…
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By Alex Mills

Oil and gas activity declined slightly during the third quarter as the industry outlook turned negative, according to oil and gas executives responding to the Dallas Fed Energy Survey.

“The business activity index, the survey’s broadest measure of the conditions energy firms face in the Eleventh District, decreased from 12.5 in the second quarter to -5.9 in the third quarter,” the Dallas Fed stated.

The business activity index was 0 for the 91 exploration and production (E&P) firms interviewed compared with -18.1 for the 45 services firms surveyed, suggesting activity was unchanged for E&P firms but declined for service firms, the Dallas Fed stated.

“The company outlook index turned negative in the third quarter, plunging 22 points to -12.1, suggesting modest pessimism among firms,” the Dallas Fed stated. “The overall outlook uncertainty index jumped 25 points to 48.6, suggesting mounting uncertainty.”

Oil and gas production was mixed in the third quarter, according to executives at E&P firms. The oil production index increased from 1.1 in the second quarter to 7.9 in the third quarter, suggesting oil production slightly increased in the quarter. Meanwhile, the natural gas production index declined from…
 

By Alex Mills

Crude oil and natural gas prices were flat during the first half of September, but the Energy Information Administration expects prices to rise by the end of this year.

Crude oil prices on the New York Mercantile Exchange dropped below $70 per barrel briefly but bounced back to $73 on Sept. 19.

“More oil will be taken out of inventories in the fourth quarter of 2024 that we previously expected because OPEC+ announced that they will delay production increases until December,” EIA stated in its Short-Term Energy Forecast.

“Although market concerns over economic and oil demand growth, particularly in China, have increased, causing oil prices to fall, OPEC+ production cuts mean less oil is being produced globally than is being consumed. We expect the Brent crude oil spot price to average $82per barrel in the fourth quarter of 2024.”

“We forecast natural gas prices will remain relatively flat in the upcoming shoulder season during September and October before prices rise through the end of 2025,” EIA stated. “Price increases in 2025 reflect U.S. natural gas production that does not keep pace with growth in U.S. liquefied…