April 17, 2023 — Two bills aimed at restricting some of the ERCOT electric grid benefits enjoyed by Texas bitcoin miners have passed the Texas Senate and are awaiting action in the House.

For those unfamiliar, creating bitcoin is achieved through digital encoding that uses a large amount of electricity, referred to as “bitcoin mining,” like precious metal mining.

There are about 30 such mines in Texas.

Texas is one of the largest hubs in the world for bitcoin creation, mostly because of the friendly business atmosphere and low electricity prices, but a quick influx of bitcoin miners over the past year or so has slowed down the ERCOT permitting process and caused some disappointment among mining companies.

And while the increase in such mining in Texas has been encouraged by Gov. Abbott and there were assurances by some proponents that the mining operations would shut down quickly during times of high state energy grid energy use such as during the most recent Christmas holidays — and bitcoin miners have made good on their agreements — some lawmakers and their constituents have raised new concerns about the energy-intensive nature of the business.

There are also concerns about the companies’ potential abuse of their participation in ERCOT’s Responsive Reserve Service program, which is designed to protect the grid but along the way can also put significant money into the pockets of bitcoin miners, paying them to shut down electrical usage during high demand……
 

April 17, 2023 — Two bills in the Texas Legislature calling for a gold-backed digital (crypto) currency exclusively for Texas remain stuck in committees more than 5 weeks after their introduction.

Some state legislators have been calling for a return to the gold standard, particularly on a statewide basis, even as national lawmakers are reluctant to concur and are deeply concerned about speculative talk about an issuance of a Central Bank Digital Currency (CBDC) to replace the US dollar.

In a similar vein, Miami and New York have tested issuance of tokens that could eventually become official state currency, and despite misgivings by some national lawmakers such CBDCs have been undergoing testing both by the US in other nations.

CBDCs would be issued directly by central banks rather than by the US Department of the Treasury, as is the US dollar.

Texas state Sen. Bryan Hughes‘ Senate Bill 2334 went to the Senate Finance committee on March 23rd, where’s it’s remained and its companion bill and Rep. Mark Dorazio’s identical House Bill 4903, was referred to the House State Affairs committee, where there hasn’t been much action on the bill…..
 

April 17, 2023 — The Texas Senate has unanimously approved a renewal of the TCEQ under the state Sunset guidelines, sending the committee substitute of SB 1397 to the House, which is expected to acknowledge receipt by Wednesday.

Sen. Charles Schwertner‘s bill (Rep. Keith Bell‘s HB 1505, which has been languishing in the House Environmental Regulation committee, is the House companion) as passed in a substitute would increase penalties that can be slapped on industries and late additions to the bill now allow more time for public testimony.

The final bill passed on Monday spent three weeks in the Senate Natural Resources and Economic Development committee, with a substitute bill included last Tuesday, which the committee sent along to the full Senate.

SB 1397 now allows the TCEQ to consider variations in punishment to “a repeat violator;” creates an enforcement diversion program for small businesses and local governments; creates a permit for concrete batch plant operations supporting a public works project; and requires the legislative Environmental Flows Advisory Group to adopt a biennial statewide work plan for updating environmental flow standards, according to the bill analysis…..
 

By Alex Mills

On President Biden’s first day in office two years ago he signed an executive order pledging the United States will reduce net greenhouse-gas emissions to zero by 2050.

His very ambitious goal sounds good, almost too good to be true.

The Energy Information Administration (EIA) at the U.S. Department of Energy recently released its Annual Energy Outlook covering energy production and consumption and forecast little change in petroleum consumption in 2050. U.S. petroleum and other liquids consumption will remain fairly level between 2022 to 2050 at 16 million barrels per day and 21 million barrels per day, according to EIA.

A major reason some forecast little change in petroleum consumption by 2050 is the many important uses of crude oil, natural gas and other petroleum products….
 

April 11, 2023 — Debate and concerns about Brenham Sen. Lois Kolkhorst’s and Galveston Sen. Mayes Middleton‘s SB 624 — placing renewables under the PUC — continue as the bill remains in the Business & Commerce committee since late last month.

The bill (see the bill analysis here) would also increase control of renewable energy building by the Texas Parks and Wildlife Commission (TPWC) as a way to protect natural environments from uninhibited placement of turbines and/or solar panels.

The TPWC would be tasked with writing renewable impact statements for proposed project construction…
 

April 7, 2023 — The Railroad Commission of Texas assessed $1,029,351 in fines involving 287 enforcement dockets against operators and businesses at the Commissioners’ Conference on Tuesday.

The Commission has primary oversight and enforcement of the state’s oil and gas industry and intrastate pipeline safety.

Twenty-two dockets involved $255,601 in penalties after operators failed to appear at Commission enforcement proceedings.

Master Default Orders can be found on the RRC Hearings Division webpage.

Operators were ordered to come into compliance with Commission rules and assessed $184,300 for any oil and gas, LP-Gas, critical infrastructure, or pipeline safety rule violations…
 

By Alex Mills

While the surprise announcement of oil production cuts of 1.66 million barrels per day from OPEC+ members sent prices soaring on international markets this week, the price of natural gas in the U.S. has dropped to unusually low levels.

Just before OPEC+ members were scheduled to meet on Monday, April 3, the group announced the production cuts surprising those in attendance who were expecting the group to continue without changes.

Crude oil prices on the international exchange for Brent crude rose to $85.73 and to $81.41 on the NYMEX. Last week WTI was trading at an average of $69.

Meanwhile, the spot price for natural gas dropped to $2 per million British Thermal Units (mmBtu).

“U.S. natural gas prices are at the lowest levels in almost 3 years as mild weather and the oil industry’s drilling spree have created a perfect storm, with associated gas accounting for roughly a third of natural gas output,” OilPrice.com stated. Associated gas is produced from oil wells, and oil production in the U.S. is at record highs as is natural gas production….
 

April 4, 2023 — The New Mexico natural gas and oil assets owned by Cibolo Energy Partners affiliate Pecos Oil & Gas have been acquired for $330 million by Riley Exploration Permian, Inc.

Pecos simultaneously has issued about $220 million in fresh senior unsecured notes with an annual interest rate of 10.5% to mature in April, 2028….
 

April 4, 2023 — The Texas Senate Business & Commerce committee heard witnesses last week on SB 1287, with some debate over the addition of renewable electrical generation and its effect on the reliability of the ERCOT grid — now a committee substitute version, as CSSB 1287, of the bill adopted on Friday heads to Senate.

The legislation is intended to provide incentive for companies to build their new power plants as close as possible to customers.

Sen. Phil King‘s bill would give rulemaking authority to the PUC for pricing ERCOT transmission services in an attempt to ease the cost burden on consumers as Texas expands its power services, effectively setting a cap on prices Texans pay for producers to connect to the grid….
 

April 3, 2023 — A Texas Senate bill allowing quick day-ahead bidding for power generators in the ERCOT market passed from a committee with a substitute bill on Monday, while the equally controversial Senate Bill 6 is also apparently ready for Senate debate as Senators fast-track electric grid-related legislation.

SB 7 (and the identical companion, Rep. Todd Hunter’s House Bill 4832) from Senators Charles Schwertner and Phil King is aimed at bringing more certainty to the state power market, especially during times of electricity load and/or demand stress.

SB 7 has been in the Senate Business and Commerce committee since March 9th, with public hearing and testimony taken March 23rd and again Monday, April 3rd…..
 

March 30, 2023 — The University of Texas at Austin is leading a new energy consortium in partnership with six New Mexico and Texas universities and two national laboratories for development of the …

March 30, 2023 — Sitting on the beach, taking in the breeze, you might think the sea air is better for you than its inland equivalent. But researchers at the University of Houston have found that the air along the Gulf of Mexico coast in Texas can be more polluted due to its highly processed and acidic chemical components of particulate matter, which are microscopic solid or liquid particles in the air.

Shan Zhou, research assistant professor of atmospheric chemistry, led the new study published in the research journal “Environmental Science & Technology.”

“We found that ocean air was hazier and more polluted than the land breeze. The next question we had was why is it not clean? We concluded the microscopic particles known as particulate matter or aerosols from the Gulf of Mexico contain high concentrations of sulfate, which originates from anthropogenic (human-generated) shipping emissions. The emissions likely pump a lot of chemicals over the gulf and with a strong sea breeze, it brings that polluted air to land,” said Zhou, a faculty member in UH’s College of Natural Sciences and Mathematics who is the first and corresponding author of the study….
 

By Alex Mills The data has been collected and it is official: Energy production in the United States set a record in 2022. Total U.S. energy production last year was 102,748 quadrillion British …

This Texas Energy Report database is published each quarter and is updated as earnings are released throughout the reporting period.

 
Southwestern Energy

• Generated $3.2 billion net cash provided by operating activities, $1.8 billion net income and $1.5 billion adjusted net income (non-GAAP)
  – Adjusted EBITDA (non-GAAP) of $3.3 billion and free cash flow (non-GAAP) of $848 million
• Reduced total debt by over $1.0 billion, including the repayment of Term Loan B in December 2022, lowering leverage to 1.3x net debt to adjusted EBITDA (non-GAAP)
• Repurchased $125 million of common stock
• Received ratings upgrades to one-notch below investment grade from all three credit agencies; positive outlook by Fitch in August 2022 and S&P in January 2023
• Reported proved reserves of 21.6 Tcfe; post-tax PV-10 of $37.6 billion and pre-tax PV-10 (non-GAAP) of $46.4 billion using SEC prices

…

A statement-of-intent analysis from the author indicates the bill in question is intended to keep cities from transferring money from municipal electrical utilities if it would cause budget problems and possible rate increases for the utilities — the Texas Energy Report is tracking this bill closely
 

March 24, 2023 — A Texas Senate bill that’s setting off alarms in San Antonio, Austin and elsewhere has not yet moved out of the Business & Commerce committee.

Both the San Antonio Express-News and the San Antonio Report have written about official reaction to Sen. Charles Schwertner‘s SB 1110 (filed in late February) which they say has the potential to prevent 72 cities in the state from transferring budget money from their municipal-owned or operated electric utilities to their general budgets.

Sen. Schwertner is chairman of the committee, and he’s countered complaints by saying the bill is “not a ban on transfers,” but a ban on what he calls “excessive” transfers.

The senator has stated that such transfers would be prohibited “if the transfer would result in a rate increase or financial deficit for the municipal utility (bill analysis) and transfers “in the municipal utility’s cost of service study.”

In the bill analysis by the senator, it was stated that “Many municipally owned utilities (MOU) direct a portion of electricity revenue annually to a general fund for use by the city,” but “Little is known about how general fund transfer revenues are used by cities once they are redirected from an MOU to a city government.

“The percentage directed to be transferred is often included in an MOU’s cost of service study that determines customer rates, even if the transfer results in the MOU raising rates.

“There have been instances where a city required a large transfer of revenue from the MOU to their general fund, putting the utility in debt, which caused the utility to raise customer rates.

“Had the city not required such a large transfer, there would be no need to raise customer rates to fill the budget deficit.

S.B. 1110, the analysis says, is intended to prevent a city from “transferring revenue to their general fund from an MOU if the transfer would result in a deficit for the utility or a rate increase for customers.

“S.B. 1110 also prevents MOUs from including these general fund transfers as part of the MOU’s cost of service study.

CPS Energy and representatives from the cities of Austin and San Antonio have joined others — including the Texas Public Power Association — in testifying this past Tuesday before the committee against the bill, with one San Antonio official (the city’s chief financial officer) saying the bill would result in “catastrophic loss of revenue” that would have a big impact on city services….
 

By Alex Mills

The oil industry in Texas, and throughout the United States, witnessed a decline in price recently as high inflation, rising interest rates, and troubles in the banking system have created fears of the economy entering a recession and further damaging demand.

Crude oil prices are down 40% from a year ago ($120 per barrel compared to $69 on Wednesday). Gasoline and diesel prices followed the decline in oil with the U.S. retail gasoline averaging $3.422 on March 20 down from$4.239 a year ago and diesel averaging $4.185 compared to $5.134 last year.

Federal Reserve Chairman Jerome Powell announced Wednesday the Federal Reserve Bank is increasing interest rates another 0.25% taking it from 4.75% to 5.00%.

He said inflation remains elevated and the Fed expects inflation to be 3.5% by the end of the year.

Chairman Powell also said the U.S. economy is slowing down, and he expects real GDP (gross domestic product) to grow slightly at a rate of 0.4%….
 

In 2021, 26% of eligible U.S. customers participated in their state’s retail choice program, or 13.2 million U.S. residential electric customers, based on data from our Annual Electric Power Industry Report. The participation rate in U.S. residential retail choice programs remained relatively unchanged from 2019 to 2021, following several years of modest growth.

In states with retail electricity choice programs, customers can choose to purchase their electricity directly from a retail energy supplier rather than from their local utility. Their local utility then delivers the purchased electricity to their home through the traditional power grid system. Retail choice programs differ from traditional utility services, where the utility both procures electricity for the customer (either by generating the electricity itself or by purchasing it from a supplier) and delivers it to the customer’s home….
 

March 15, 2023 — A Texas House bill filed by Rep. Trent Ashby would give voters the decision on whether to okay a Constitutional amendment to improve internet access in certain unserved and underserved areas at a cost of about $5 billion.

HB 9 would create the Texas Broadband Infrastructure Fund using $5 billion from the Texas Economic Stability Fund (the “Rainy Day” fund) to allow the state comptroller and the PUC power to direct the funding to targeted areas.

House Speaker Dade Phelan has designated the bill as a priority in the current session; it’s now in the House State Affairs committee….
 

March 15, 2023 — Proposed laws to go to voters for funding the upkeep of roads servicing O&G-related areas of Texas are back, with Midland Rep. Tom Craddick and Odessa Rep. Brooks Landgraf filing bills to bring state tax money back to communities through the creation of a fund and the mechanisms needed to administer it, along with an alternative plan.

House Joint Resolution (HJR) 27 would create the GROW (“Generate Recurring Oil Wealth”) fund, to be paid by legislative appropriations, severance taxes, grants and gifts.

The resolution, “providing for the creation of and use of money in the Grow Texas fund and allocating certain general revenues to that fund, the economic stabilization fund, and the state highway fund,” is now in the House Appropriations committee….
 

March 14, 2023 — Texas should have exclusive jurisdiction to regulate greenhouse gas emissions in the state, according to state Sen. Brian Birdwell‘s SB 784, which is now in the Senate Natural Resources and Economic Development committee.

If passed, the bill would pre-emt regulation by local authorities of greenhouse gases and would be under jurisdiction of the Texas Commission on Environmental Quality (TCEQ).…