Newsclips-

SPECIAL

The Texas Energy Report NewsClips – Sunday April 5, 2020

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Asterisk * following headline indicates news content may be limited or unavailable at the source because it’s password protected.

 

Lead Stories

 

MSN – April 3, 2020

Vladimir Putin agrees to deep cuts as markets brace for price rebound

Russian President Vladimir Putin, finally succumbing to mounting pressure from the Opec and the US after a protracted standoff that has sent oil prices reeling in a debilitating price war, said on Friday he was ready for deep oil production cuts, a move that would have far-reaching positive implications on the oil market by propping up prices and reviving the fortunes of oil exporters.

Putin, speaking in a televised video conference with Russian government officials and domestic oil producers, proposed to cut combined oil production by around 10 million barrels per day, or around 10 per cent of global output, while firmly putting the blame for the collapse in oil prices on Saudi Arabia.

 

 

Weather Channel – April 2, 2020

2020 Atlantic Hurricane Season Expected to Be More Active Than Normal, Colorado State University Outlook Says

The 2020 Atlantic hurricane season is predicted to be more active than usual, according to an outlook released Thursday by the Colorado State University Tropical Meteorology Project.

The group led by Dr. Phil Klotzbach calls for 16 named storms, eight hurricanes and four major hurricanes. A major hurricane is one that is Category 3 or higher (115-plus-mph winds) on the Saffir-Simpson Hurricane Wind Scale.

This forecast is above the 30-year average (1981 to 2010) of 12 named storms, six hurricanes and three major hurricanes.

 

 

Reuters – April 3, 2020

Oil billionaire Dan Wilks acquiring stakes in hard-hit U.S. service firms

Oil billionaire Dan Wilks this week took a large stake in a struggling U.S. shale fracking company days after his Wilks Brothers investment group took over a frack sand provider.

U.S. shale producers this year have stopped most drilling and fracking as oil prices fell below the cost of production. Spending on fracking is expected to fall 44% this year, say analysts, as Saudi Arabia and Russia last month vowed to pump full bore to grab market share, accelerating a glut brought on by the coronavirus pandemic.

Wilks personally took a 10% stake in ProPetro Holding Corp, a once fast-growing Texas oilfield firm that fracks and completes shale wells, according to a regulatory filing. It was the fracking mogul’s second bet on the distressed oilfield services sector in less than a week.

 

 

Roll Call – April 2, 2020

Citing virus, nuclear agency pulls back inspectors

As dozens of nuclear power plants prepare for intricate refueling operations this spring, they’ll be without the usual complement of on-site inspectors from the Nuclear Regulatory Commission, which has told its monitors to work from home because of the COVID-19 pandemic.

The agency and the primary industry group say the change in oversight does not pose a threat to the public.

“Nuclear power plants also have plans to maintain appropriate staffing under adverse conditions,” the agency said. “The NRC will require plants to shut down if they cannot appropriately staff their facilities.”

Still, the decision has raised alarm from the Union of Concerned Scientists.

 

Oil & Gas

 

New York Times – April 3, 2020

A meeting planned for Monday between officials of the Organization of the Petroleum Exporting Countries, Russia and other oil producers, which had buoyed hopes for a deal to end the turmoil in energy markets, has been put off, according to two OPEC delegates.

The news comes as lingering tensions have surfaced once again between Saudi Arabia, OPEC’s de facto leader, and Russia over who is to blame for the recent collapse in oil prices. On Friday, Russian President Vladimir V. Putin partly blamed Saudi Arabia for the price drop. The Saudis responded with angry statements from their ministers of foreign affairs and energy blaming Russia. ….

The OPEC delegates indicated that further talks would be required before moving ahead with a meeting, which has now been rescheduled for Thursday. Saudi Arabia had called for the meeting last Thursday, responding to pressure from President Trump.

 

 

CNBC – April 3, 2020

Trump says ‘we’ll work this out’ and ‘get our energy business back’ at meeting with oil CEOs

President Donald Trump said that the U.S. will “get our energy business back,” as he met with oil executives from at least seven companies amid the ongoing collapse in oil prices.

“We’ll work this out and we’ll get our energy business back. I’m with you 1,000%. It’s a great business, it’s a very vital business,” he said. Trump added that he’s “looking very seriously” at an infrastructure package.

The meeting included CEOs from Exxon, Chevron, Occidental Petroleum, Devon Energy, Phillips 66, Energy Transfer Partners and Continental Resources founder Harold Hamm.

The president said that the energy executives did not ask for a bailout, although tariffs were discussed. “Am I thinking about imposing it [tariffs] as of this moment? No. But if we’re not treated fairly, it’s certainly a tool in the tool box,” he said at a White House briefing after his meeting with energy executives.

 

 

Wall Street Journal – April 3, 2020

Trump Administration Discussed Shutting Oil Production in Gulf of Mexico*

The Trump administration has discussed a mandated shutdown of oil production in the Gulf of Mexico due to the coronavirus spreading among workers on offshore platforms, according to people familiar with the matter.

It is unclear whether the proposal, which comes as several workers on oil platforms test positive for the new virus, is still under serious consideration. But shuttering gulf platforms over health concerns would also have the effect of curtailing U.S. oil production amid a world-wide glut of oil that has sent prices plummeting.

If the U.S. shut down all Gulf of Mexico production, it would cut about two million barrels a day from overall U.S. production of about 13 million barrels a day. Such forced cuts would be controversial with many in the oil industry, the people said.

 

 

Wall Street Journal – April 5, 2020

Oil Investors Grow Desperate for Supply Cuts Amid Glut*

The oil market is in a race against time.

The postponement of an emergency summit Monday to discuss unprecedented global supply cuts means producers are more likely to lose that race. As the world’s leading exporters, Saudi Arabia and Russia, continue to trade barbs, a global glut of crude is expanding.

Planes are grounded, streets are empty and factories are shut. That adds up to a huge fall in demand for oil. But producers in many cases haven’t curtailed production.

Now investors say the world could run out of storage for its excess oil in just a few months. Tankers of crude are floating at sea with nowhere to go. And energy companies—which collectively have hundreds of billions of dollars in debt maturing in coming years—are starting to file for bankruptcy.

 

 

ABC News – April 3, 2020

Disaster in motion: 3.4 million travelers poured into US as coronavirus pandemic erupted

An ABC News investigation offers sobering insight into how COVID-19 has spread and penetrated so broadly, so deeply and so quickly in the United States. It also helps explain why Americans, no matter where they live, must continue to heed the warnings of health officials to self distance and why the virus likely was here far earlier than first realized.

With the advent of COVID-19, the world has officially entered a dangerous new phase where a surge in international travel in recent decades served as the springboard — jet fuel, really — for an infectious disease potentially to kill hundreds of thousands in the U.S. and infect the global economy at breathtaking speed. …

Those travelers from China included more than 228,000 Americans returning home and hundreds of thousands of Chinese nationals arriving for business, academics, tourism or to visit family.

 

 

April 3, 2020

Financial Times Editorial Board: Virus lays bare the frailty of the social contract*

Radical reforms — reversing the prevailing policy direction of the last four decades — will need to be put on the table. Governments will have to accept a more active role in the economy. They must see public services as investments rather than liabilities and look for ways to make labour markets less insecure. Redistribution will again be on the agenda; the privileges of the elderly and wealthy in question. Policies until recently considered eccentric, such as basic income and wealth taxes, will have to be in the mix.

If there is a silver lining to the Covid-19 pandemic, it is that it has injected a sense of togetherness into polarised societies. But the virus, and the economic lockdowns needed to combat it, also shine a glaring light on existing inequalities — and even create new ones. Beyond defeating the disease, the great test all countries will soon face is whether current feelings of common purpose will shape society after the crisis. As western leaders learnt in the Great Depression, and after the second world war, to demand collective sacrifice you must offer a social contract that benefits everyone.

Radical reforms – reversing the prevailing policy direction of the last four decades – will need to put on the table. Governments will have to accept a more active role in the economy. They must see public services as investments rather than liabilities, and look for ways to make labour markets less insecure. Redistribution will again be on the agenda; the privileges of the elderly and wealthy in question. Policies until recently considered eccentric, such as basic income and wealth taxes, will have to be in the mix.

 

 

San Antonio Express News – April 3, 2020

Valero closes two ethanol plants, retools third to make hand sanitzer*

Valero Energy Corp. has temporarily closed two of its ethanol plants and is retooling a third to make hand sanitizer as gasoline demand collapses globally.

Ethanol, produced from corn processed in the plants, is used in gasoline, but the coronavirus pandemic has kept many commuters at home.

“When gasoline consumption goes off the cliff, ethanol goes right away with it,” said Geoff Cooper, president and CEO of the Renewable Fuels Association. Valero’s closure of the two plants in Albert City, Iowa, and Albion, Neb., will result in the furlough of about 135 workers, a company official confirmed.

 

 

Dallas Morning News – April 3, 2020

Fort Worth arts philanthropist Anne Bass dies at 78*

Heir Sid Bass’s father Perry Bass built an oil fortune along with Sid’s uncle, the legendary Sid W. Richardson

Philanthropist Anne Hendricks Bass, a significant contributor to the Fort Worth arts scene and former wife of billionaire Sid Bass, has died at 78. Bass died Wednesday in New York, according to a notice published in The New York Times. The cause was not reported.

She was born in Indianapolis and attended Vassar College in Poughkeepsie, N.Y.

In 1965, she married Sid Bass, her college sweetheart. The couple was married for more than 20 years. ….

After the couple divorced in 1988, she kept a low profile. But her name made headlines again in 2007, when she and her partner, the painter Julian Lethbridge, were taken hostage at her estate in South Kent, Conn., for a night by three men. Her butler was later charged in the home invasion.

 

 

Bloomberg News – April 4, 2020

A Lame-Duck Regulator Who Became the Face of Shale in Oil Wars*

In just a matter of weeks, Ryan Sitton went from being a lame-duck commissioner of an obscure Texas agency to one of the key figures in a global effort to save the oil market from plummeting prices.

Sitton, a Republican who lost the primary election for his own seat on the Texas Railroad Commission just one month ago, said Thursday that he had spoken with Russian Energy Minister Alexander Novak about cutting global oil supplies and planned to have a conversation with Novak’s counterpart in Saudi Arabia. Two weeks ago, he spoke with OPEC Secretary General Mohammad Barkindo and was invited to attend a meeting this summer in Vienna.

To be clear, these kinds of exchanges between state-level regulators and national energy ministers about capping global oil supplies are not common. In fact, if Sitton attends that OPEC meeting, he would be the first member of the state Railroad Commission to do so since the 1980s. He’s earning a seat at the table just as the OPEC+ alliance, which includes Saudi Arabia and Russia, tries to form a global coalition to cut output, put an end to a war over market share and tries to form a global coalition to cut output, put an end to a war over market share and stem the rout in crude prices brought on by the Covid-19 pandemic.

Also: Texas would curb oil output under broader deal by Trump -regulator

 

 

Reuters – April 3, 2020

Phillips 66’s Gray Oak pipeline opens up storage amid oil glut

Phillips 66 Partners LP will offer shippers storage on its Gray Oak crude oil pipeline system in Texas because of an urgent need for tank space, the company said on Friday, as an oil glut in the United States worsens from a sharp falloff in fuel demand.

Crude storage space has quickly filled since the coronavirus pandemic has halted movement around the world and sharply decreased fuel demand. At the same time, a price war between Saudi Arabia and Russia has flooded the market with crude and pushed oil prices lower.

 

 

Reuters – April 3, 2020

A union official accused Exxon Mobil Corp on Friday of using “scare” tactics and exploiting economic uncertainty caused by the coronavirus pandemic in negotiations with workers at its Baytown, Texas, refinery, allegations the company denied.

Exxon has begun meeting with small groups of union-represented employees after rejecting two contract extension proposals from the union, said Ricky Brooks, president of United Steelworkers union local 13-2001, which represents hourly workers at Baytown.

 

 

Bloomberg News – March 25, 2020

Why One of the World’s Largest Oil Suppliers Might Be Shutting Wells

High inventories of oil and low prices are forcing Venezuela to consider shutting wells, adding a dire context for Nicolas Maduro’s handling of an economy already under stress from the coronavirus crisis.

Overall production plummeted to 464,000 barrels of oil a day last week, according to two people with access to the data who asked not to be named because the information is private. That’s down about 38% from February. Meanwhile, inventories of about 30.9 million barrels are sitting with no buyers on the coasts of Venezuela, Togo, Singapore, Malaysia, India and China.

That’s forcing Maduro’s government to consider shutting wells, one person said. It’s a decision that would come as ventures that make up more than half of Venezuela’s output have dwindled over the past weeks.

 

 

Wall Street Journal – April 1, 2020

Walter Russell Mead: The Trump-Russia Showdown Over Oil*

Iran, which exported more than 5.5 million barrels of oil a day before the 1979 revolution, has seen its daily oil exports fall from 2.3 million barrels before the U.S. reimposed sanctions in 2018 to an estimated 250,000 barrels today. Like Venezuela, it must sell a substantial amount of oil at a discount on the black market to evade sanctions. At Iran’s hour of greatest need—groaning under U.S. sanctions, hammered by one of the worst coronavirus outbreaks in the world, with its economy already in something close to free fall—Moscow has stabbed it in the back. …

This issue isn’t going away. Antifrackers will have to think more seriously about the place of energy in U.S. foreign policy. Concerns about climate change and the other environmental drawbacks associated with fracking have their place in that discussion, but so too does the geopolitical importance of the American energy boom. Do we want a world in which countries like Iran, Russia and Saudi Arabia rig markets in their favor and use their oil wealth to shape the course of world events? Do we want to be tied indefinitely to Middle Eastern oil suppliers whose values and interests are often opposed to ours?

It would be ironic to say the least if Democratic opposition to fracking gave Mr. Putin the whip hand in his competition with Mr. Trump.

 

 

Reuters – April 1, 2020

John Kemp: U.S. oil output set to plunge as storage fills

Ultra-low oil prices and full storage tanks and pipelines will force an unprecedentedly fast decline in U.S. output this year as producers are forced to choke or shut old wells and cut back new drilling. In normal times, it usually takes an average of 4-5 months for lower prices to filter through into a reduction in new drilling and 9-12 months to feed through into a decline in output.

But the current adjustment is likely to be much faster as the industry struggles to cope with the largest economic and price shock since the Great Depression of the 1930s.

Production warfare between Saudi Arabia and Russia, compounded by the enforced shut down of much of the business and transport system as a result of coronavirus, has created an enormous oversupply.

 

 

Washington Post – April 2, 2020

Liam Denning: Trump’s 10 Million Barrel Tweet Is Performance Art*

Look, we all know basing anything on a tweet from President Donald Trump is a fraught exercise. But oil prices jumped as much as 24% on the back of this on Thursday ….

There’s an implacable mathematical problem confronting all oil producers: The world will soon run out of places to store excess barrels. Trading house Trafigura now estimates 35 million barrels a day — or one-third — of global oil demand has disappeared amid Covid-19 related distancing. When storage maxes out, oil prices will crash further. That will wreak havoc on frackers, but will also accelerate the burn rate on Russia’s and Saudi Arabia’s financial reserves. When refiners stop taking all that crude oil, production will be cut anyway.

Far better for Moscow and Riyadh to do that in the context of a grand bargain, especially if, as some in the oil industry are calling for, the U.S. agrees to contribute some cuts of its own. To be clear, U.S. oil production will start dropping after the summer anyway. But if oil is to avoid hitting the storage wall, then deep cuts would have to begin almost immediately; as Kevin Book of ClearView Energy Partners put it to me on Thursday: “Tweets travel at the speed of light; barrels move at 10 knots.”

 

 

S&P Global Platts – March 30, 2020

Analysis: Pandemic response in Mexico puts gas demand, imports at risk

As the number of reported coronavirus cases in Mexico continues to mount, an uptick in social distancing and work-from-home measures in the country are posing significant downside risk to natural gas demand from both power generators and industrial end-users.

In a Monday morning news conference, Mexican President Andrés Manuel López Obrador said the country’s Public Health Ministry would soon announce new measures to confront the virus, reiterating an earlier request that citizens remain in their homes.

As of midday Monday, the number of reported coronavirus cases in Mexico was quickly approaching 1,000, according to the most recent data from the Johns Hopkins Coronavirus Resource Center.

 

 

Houma Today (LA) – April 1, 2020

Dual crises take toll on Louisiana oil industry

Shell has pulled out of a multibillion-dollar deal to renovate a liquefied natural gas terminal in Calcasieu Parish, citing uncertain market conditions and the coronavirus crisis. The company’s Dallas-based partner, Energy Transfer, expects to continue the project but reduce its size. Energy Transfer expects to “evaluate various alternatives to advance the project,” including finding another equity stake partner. The project was estimated to create up to 5,000 construction jobs and 200 permanent full-time jobs once operational. …..

The layoffs have already begun in Houma, which is particularly dependent on offshore oil and gas production, said Matt Rookard, chief executive officer of the Terrebonne Economic Development Authority.

“People are trying to figure out how this will play out,” he said.

ExxonMobil reduced 20% of its refining operation Monday at its Baton Rouge facility, said Tyler Gray, president of Louisiana Mid-Continent Oil and Gas Association.

 

 

Midland Reporter Telegram – March 30, 2020

D. Kirk Edwards, Latigo: Trump, RRC need to step up and save US oil industry

Let me start out with a simple analogy. You have a water hose hooked up to your house. We will call your house the Permian Basin. The other end is your garden. We will call that end the Gulf Coast refining complex. As we all know, the water flows very well from the hose until the worst thing possible can happen — it gets plugged off. Spoiler alert: We are now within one month of that hose being completely plugged off.

How and why is this happening? First, we all are experiencing oil dumping that is killing demand by the Saudis and Russians vis-a-vis with the economic impact of the coronavirus. Demand is being devastated everywhere and refiners are seeing their gasoline and jet fuel sales devastated. They are forced to slow down their refineries to minimum levels just to keep them running. Refiners are clearly not needing as much oil as they needed a month ago and won’t until the virus passes by our country, and we are all getting back to something like normal.

 

 

Midland Reporter Telegram – March 30, 2020

Henry Bonilla: Steer clear of panic-driven oil policies

With the global economy headed toward recession, there are already signs Russia and Saudi Arabia fear unintended consequences of their profiteering. As we move forward, the U.S. should stay the course with free-market principles and honest competition, no matter how tough it can be.

Let’s remember why Russia and OPEC are colluding in the first place. The United States has become a net exporter of energy, largely due to advances in hydraulic fracturing. It was the wildcatter spirit, a drive to innovate, compete, and do the impossible that fueled this revolution and created thousands of jobs – not price fixing and quotas.

Saudi Arabia’s move to flood the market in 2014 took its expected toll but many domestic producers were able to weather the storm, cut costs, become more efficient, and thrive. Production limits and export quotas on Texas crude would punish these producers in order to protect the less efficient companies. This would undermine the competitive dynamics that made this country a global energy powerhouse in the first place.

 

 

Bloomberg News/Houston Chronicle – March 27, 2020

Canadian crude is so cheap it costs more to ship it than buy it*

Canadian heavy crude has become so cheap that the cost of shipping it to refineries exceeds the value of the oil itself, a situation that may result in even more oil-sands producers shutting operations.

Western Canadian Select crude in Alberta dropped $2.84 to a record low of $6.45 a barrel on Thursday, according to Bloomberg data going back to 2008, almost as cheap as a Starbucks venti-sized pumpkin spice latte. Synthetic crude, produced from oil-sands bitumen that’s been run through an upgrader, is in even worse shape: the price tumbled $9.94 to $10.85 a barrel, also a record-low.

Canadian heavy crude now costs less than the price paid by a company with long-term contracts to ship it down Enbridge Inc.’s Mainline and Flanagan South systems to Texas. That’s a problem for oil-sands producers like Cenovus Energy Inc., which has commitments to ship 75,000 barrels a day down the system. MEG Energy Corp., another heavy oil producer, has contracts to ship 50,000 barrels a day and has plans to expand to 100,000 barrels a day in the second half of 2020.

 

 

March 30, 2020

Beaumont Enterprise: Groves mayor must support TPC victims, stop excusing company

Hundreds of residents in Mid-County have something in addition to coronavirus weighing on their minds. Their homes were damaged by the Nov. 27 explosion of the TPC Group plant, and their lives have been on hold ever since because most of them have not yet been fully compensated for their losses. In our Sunday follow-up, residents told us they are being offered less than they believe they deserve, or they are worried their homes have as-yet undetermined levels of damage. Some are torn between taking what they are offered now, or suing the company and hoping for full payment, a process that would take much longer and might have an uncertain outcome.

It’s a tough dilemma, and they don’t know how long this ordeal will drag out. At the very least, they deserve the support of public officials who have been elected to stand up for them when they need them most. TPC needs to know it is facing a united front of residents and elected officials who want these claims resolved as quickly and fairly as possible.

 

 

Houston Chronicle – March 29, 2020

Rob Gavin: Oil has a new best friend: government*

The oil industry, always proud of its wildcatting, risk-taking, rugged indivualist heritage, has become the lastest bastion of American capitalism to seek government intervention when capitalism isn’t quite working out for them. Like the banks before them, oil companies want the market to rule and government off their backs — until they stop making money.

Oil companies sought their own piece of the massive stimlus bill whizzing through Congress, including billions of dollars to buy for the Strategic Petroleum Reserve, a way to take surplus crude off the market and support sliding prices. Here in Texas, some companies want the Texas Railroad Commission to impose limits on production to slow the flood of oil as demand collapses, again with the hope it will lift prices.

Imagine that. Government telling companies what to do.

 

 

Midland Reporter Telegram – March 27, 2020

Thomas J. Pyle, American Energy Alliance: Oil & gas industry should stand by free-market principles despite price crisis

Everyone in the oil business knows there are ups and downs, and booms and busts. But after every downturn, the oil and gas industry always emerges stronger than before. That is, so long as industry continues to be guided by the principles of the free market and not the whims of government bureaucrats.

If we allow the current crisis to shift our belief system, we will all eventually pay the price. Instead of competing to be the best businesses, companies will compete for the most government favors. Instead of keeping the overreaching government at an arm’s length, both federal and state governments will be encouraged to take more and more control over our lives and the businesses that local families have worked so hard to create.

The Permian Basin was made great because of scrappy and hard-working West Texans who turned opportunity into reality, not because of who happened to occupy the White House. Let’s keep it that way.

 

 

World Politics Review – March 24, 2020

How Increased U.S. Shale Oil Production Led to the Breakdown in Russia-Saudi Relations

The Saudi oil price war also has important implications inside the kingdom. Just days before the momentous announcement of increased output, Saudi authorities conducted mass arrests of members of the royal family and military officials perceived as unsupportive of MBS’ accession to the Saudi throne. The government said the arrests were based on alleged corruption, but the purge is widely viewed as a warning to rival members of the royal family or supporters in the Saudi military and wider public that dissent will not be tolerated, even when oil prices are down. The purge also clears some opponents from MBS’ path to succeed his father, King Salman, as the head of state.

But MBS knows well that oil price wars are blunt instruments. Plunging prices hurt all producers, including Saudi Arabia and its allies like Kuwait and the United Arab Emirates, which have been calling for a return to negotiations. As the price war drags on, it becomes a test of wills among producer countries, which must cut government spending to survive on reduced oil revenues.

 

 

Nasdaq – March 23, 2020

SA Marketplace Roundtable Talk: Oil And The Global Game Of Chicken

The coronavirus outbreak and the effects of COVID-19 have gone deeper and wider than most people would have expected. That applies just as much to markets as anywhere. Whether it’s a tech sector that is supporting our new work from home or re-rating as expensive EV/Sales multiples make less sense; a healthcare industry under the spotlight to find a vaccine, a cure, or provide treatment to patients; or various parts of the financial sector that have shown acute strain as the economy goes into the freezer for a few weeks, at least, there are no real safe havens or quiet zones.

We shared a three-part Marketplace Roundtable a week ago that covered the immediate reaction and the high-level takeaways. But as news moves faster than ever, it’s become clear that this is going to be a long-term issue and needs more review. So, we will be assembling regular roundtables on specific sectors and topics to share Marketplace authors’ insights on what’s going on and how they are handling it.

 

 

Teipei Times – March 22, 2020

Oil demand catastrophe makes price war a sideshow

Since dropping below US$25 a barrel this week, an 18-year low, Brent crude has swung violently, with investors trying to assess the impact of OPEC+ output increases against falling demand due to measures to contain COVID-19.

On four occasions in the past two weeks, the global benchmark posted daily price swings of more than 10 percent.

Taking a snapshot of how much oil consumption is collapsing is impossible, but traders put the drop somewhere between 10 million and 20 million barrels a day, with some saying it might be falling even more.

 

Utilities

 

Energy News Network – March 30, 2020

Can this North Dakota co-op prove the potential of carbon capture and storage?

Project Tundra represents a potential harbinger for the technology that could extend the viability of coal power.

In a tiny North Dakota town, a small electric cooperative utility has proposed the largest carbon capture project ever built to store emissions from a 1970s-era lignite coal plant.

The proposal comes after a legacy of failed carbon sequestration attempts at other power plants around the country and despite a $1.3 billion price tag.

Carbon capture and storage advocates say Project Tundra will be different and represents an important harbinger of how coal can continue to coexist in an electric grid still requiring baseline power, especially in rural areas with thin renewable energy assets and brutal weather. Beyond simply burying carbon in caverns, capture advocates foresee a world where sequestered emissions from industrial plants become a commodity for sale to customers in need of it for their own production.

 

Alternatives & Renewables

 

Re News Biz – April 3, 2020

BayWa flush for 250MW Texas wind build

BayWa has secured a tax equity commitment from a consortium led by GE Energy Financial Services for the 250MW Amadeus wind farm in the US state of Texas.

The project has also executed a hedge agreement with Morgan Stanley and closed on a construction loan with Commerzbank.

Amadeus is already under construction and is expected to be placed in service in the fourth quarter of 2020.

 

Regulatory

 

Houston Chronicle – April 2, 2020

Henry Cisneros, William Fulton: State will boom again if leaders address transportation, housing in the Texas Triangle*

Once we are out of the current economic straits, this growth will most likely be sustained for decades to come. There are many reasons, but one of the most important is the fact that Houston is the an important part of one of the world’s most important economic units: the Texas Triangle, stretching from Dallas and and Fort Worth on the north to Austin and San Antonio at the southwest corner, with Houston anchoring the southeast corner.

The Triangle is made up of only 35 out of Texas’s 254 counties. But 18 million people live in those 35 counties — 66 percent of the state’s population. A surprisingly large number of the Triangle’s people live in large cities. ….

Houston will survive the current COVID-19 and oil-price related downturn. But it will continue to prosper — and help the rest of Texas prosper — only if the state’s leaders recognize that Texas is incrasingly a large, complex and metropolitan state.

 

________________________

 

The Texas Energy Report NewsClips – April 3, 2020

Click on each headline to read more of the story at the source.
Asterisk * following headline indicates news content may be limited or unavailable at the source because it’s password protected.

 

Lead Stories

 

Bloomberg News/Yahoo! News – April 2, 2020

Shipping U.S. Oil to China Costs Half as Much as the Cargo

The cost of hauling oil from the U.S. to China has skyrocketed to nearly $10 a barrel — almost half of what the American benchmark crude is currently valued at — as the price war spurs a rush for ships.

Glencore Plc’s shipping arm provisionally booked very large crude carrier Seeb to ship oil from the U.S. Gulf Coast to China in the first half of May at $19.5 million, according to shipbrokers and fixtures seen by Bloomberg. The rate has jumped from $6.55 million in early March as Saudi Arabia booked vessels to unleash a flood of crude and traders scrambled for ships for floating storage.

 

 

S&P Global Platts – April 2, 2020

OPEC+ plans extraordinary meeting Monday via webinar to discuss oil cuts

The OPEC+ alliance plans an extraordinary meeting Monday via webinar to try and broker a deal on production cuts, according to delegates, following mediation by US President Donald Trump this week between Saudi Arabia and Russia on their oil price war.

But Russian energy minister Alexander Novak has yet to confirm his participation.

The OPEC secretariat and Saudi energy minister Prince Abdulaziz bin Salman are coordinating the meeting, the delegates said.

No time has yet been set, and it was unclear if countries outside the OPEC+ coalition were invited.

Also: Middle East oil producers brace for painful times as ‘war’ prices kick in

 

 

Oil Price – April 1, 2020

Unprecedented Demand Destruction Marks The Return Of The Super Contango

The double supply-demand shock of the past month threw the oil futures market into another super contango. And this super contango is already beating previous records.

The super contango is representative of the state of the oil market right now: the growing glut with shrinking storage capacity as oil demand craters, OPEC’s leader and the world’s top exporter, Saudi Arabia, intent on further cratering the market with a supply surge beginning this month. Storage costs are surging, and so are costs for chartering tankers to store oil at sea for future sales when traders expect demand to recover from the pandemic-hit plunge.

The market structure flipped into contango in early February, when the Chinese oil demand slump in the coronavirus outbreak led to lower estimates for oil consumption. A month and a half later, oil consumption is set to plunge by 20 million bpd, or 20 percent, this month. Add to this the Saudi supply surge, and here we have what analysts expect to be the largest glut the oil market has ever seen.

 

 

Financial Post – April 2, 2020

Producers explore creation of North American oil cartel to manage output amid worsening crisis

As the Canadian oil sector weathers one of its lowest points ever, a new movement is gaining momentum with producers and the Alberta government to create a North American cartel that could manage production across the continent and stabilize the industry.

The idea is gaining currency among many smaller, independent producers who are feeling the pain from a dramatic drop in oil prices, including in Alberta and also throughout the U.S., particularly in Texas, where a legal framework for cartels already exists.

Such an organization could, in theory, function like the Organization for Petroleum Exporting Countries or OPEC, which until recently had played the role of swing producer to stabilize prices. In recent weeks, OPEC kingpin Saudi Arabia decided to raise production to drive down prices in a move that is likely to squeeze out high-cost producers across North America and elsewhere.

 

 

MSN – April 2, 2020

Mnuchin Says Energy Firms Hit by Oil Rout Can Use Fed Lending

Treasury Secretary Steven Mnuchin said energy companies squeezed by the oil-price war can turn to the Federal Reserve’s lending facilities for aid but won’t get direct loans from his department.

“I have very limited ability to do direct loans out of the Treasury,” he said Thursday at a White House news conference on Thursday.

The $2.2 trillion coronavirus-related economic package authorizes the secretary to provide loans and grants to passenger airlines, cargo airlines, contractors and companies important to national security, Mnuchin said.

 

Oil & Gas

 

Reuters/CNBC – April 3, 2020

Brent reverses losses to rise above $30 a barrel in early European trading

Benchmark Brent crude oil futures reversed losses incurred during Asian hours in early European trading on Friday to rise above $30 a barrel, with hopes of a huge global supply cut deal to support prices still alive.

Brent crude futures were up 7%, or $2.10, at $32.04 per barrel by 0748 GMT. Brent soared as much as 47% during Thursday’s session, its highest intraday percentage gain ever, before closing 21% higher, but still at less than half the $66 it was trading at at the end of 2019.

U.S. West Texas Intermediate (WTI) crude also moved back into positive territory, rising 1%, or 28 cents, to $25.6 a barrel, after surging 24.7% on Thursday.

U.S. President Donald Trump said on Thursday he had brokered a deal which could see Russia and Saudi Arabia cutting output by 10 to 15 million barrels per day (bpd) – an unprecedented amount representing 10% to 15% of global supply.

 

 

Bloomberg News – April 2, 2020

Trump Administration’s Oil Diplomacy Looks Like Good Cop-Bad Cop

While President Donald Trump remains optimistic that Saudi Arabia and Russia will work out a deal to stabilize the oil market, his Energy Department took to scolding the Middle Eastern kingdom for defying U.S. calls to curb its output.

“Boosting production during this time of an unprecedented loss in global demand is frustrating, and does not represent the kind of deliberative planning we would like to see from partners,” the agency said in a statement. The kingdom has so far resisted U.S. pressure to back down from its price war with Russia, moving forward with its plan to pump record volumes of oil even as the coronavirus pandemic obliterates global demand.

Moments after the Energy Department statement went out, Trump told reporters during a press conference that he thinks the nations “will work it out over the next few days. They both know what they have to do,” he said. “I have confidence in both that they will be able to work it out.”

Also: Texas RRC Chairman applauds President Trump on energy negotiations

 

 

S&P Global Platts – April 2, 2020

US oil, gas rig count falls 45 to 721, amid continued market turmoil: Enverus

The US oil and gas rig count fell 45 this week to 721, data from Enverus showed Thursday, as producers continued to slash E&P budgets amid oil prices at low levels not seen since the early 2000s. The large domestic rig count drop follows an even steeper plunge of 47 last week, for a total decline of 92 rigs in two weeks, a nationwide decrease of 11%.

Twenty-two, or about half, of the 45 rigs operators gave back this week came in the Permian Basin of West Texas/New Mexico, leaving 374.

Oil rigs accounted for 41 of the 45 rigs lost this week, about 90% of the total decline, leaving 586 oil rigs working. Four losses were gas rigs, leaving 135.

 

 

Houston Chronicle – April 2, 2020

Record low oil prices could cost Texas universities $300 million*

Record-low oil prices could cost a fund that supports the University of Texas and Texas A&M systems at least $300 million in revenue.

State-operated University Lands, a company that oversees oil leases on land owned by Texas, expects to send $700 million to the Permanent University Fund this fiscal year, down from $1 billion in 2019 after oil prices plunged to about $20 per barrel this year during a price war and the coronavirus pandemic.

With prices that low, University Lands is not issuing new leases on the 2 million acres in the Permian Basin it manages and is telling the roughly 250 oil companies operating on state leases to delay drilling and wait for higher prices, if they can.

 

 

Houston Chronicle – April 2, 2020

OTC cancels Houston conference as coronavirus pandemic worsens*

Organizers of the Offshore Technology Conference, the largest oil and gas industry conference in the world, have canceled this year’s Houston event as the coronavirus pandemic continues to worsen in the United States and elsewhere around the globe.

Conference organizers had previously planned to postpone the event from May to either August or September but in a Thursday morning statement, said they are canceling in light of the pandemic, which continues to spread and could have potentially threatened attendees and the City of Houston.

Known in the industry as OTC and typically held in early May, the conference draws as many as 60,000 participants from dozens of nations around the world, many of which are also dealing with the pandemic.

 

 

Dallas Morning News – April 2, 2020

Texas jobless claims soar 600% in one month during the coronavirus pandemic*

Thursday’s economic fallout — a record-shattering 6.6 million new unemployment claims on top of last week’s unprecedented 3.3 million — almost certainly signals the onset of a global recession, with job losses that are likely to dwarf those of the Great Recession more than a decade ago.

In Texas, a state riding a streak of 117 straight months of job gains, initial unemployment claims soared by more than 600% in March over the previous month as shelter-in-place orders meant to stem the spread of coronavirus ravage the state’s economy. Texas claims rose from 65,216 in February to 461,554 in March, according to Labor Department data.

Nearly 276,000 Texans filed claims for unemployment benefits for the week ending March 28 — 120,000 more than the previous week and almost four times as high as previous peak months in 2017 when Hurricane Harvey swamped the state’s Gulf Coast.

 

 

April 2, 2020

El Paso Times: Here’s why Texas is infected with non-coronavirus political agendas

At the personal level, you might be using coronavirus as an excuse to avoid people you wanted to avoid. It’s only human.

But avoiding already unwanted social contact is no comparison to what is happening at the state and national levels. Your government officials are using coronavirus as a cover to pursue political and personal agendas that are doing people harm.

For example, the Trump administration has stopped enforcing environmental regulations against companies because, you know, the virus, the economy and all that jazz. ….

At the state level, Gov. Greg Abbott has issued an executive order banning medical procedures that are not “immediately medically necessary.” Attorney General Ken Paxton decided that Abbott’s order applies to abortions that are not deemed necessary to protect the life of the pregnant woman.

 

 

Reuters – April 2, 2020

Texas regulator aims to wrangle oil output cuts from Saudis, Russia

A little-known Texas state regulator waded into oil diplomacy on Thursday, calling Russia’s energy minister to discuss possible oil production curbs and angling for talks with Saudi Arabia as many producers in the U.S. state’s biggest industry warned it was near collapse.

But at least one analyst scoffed at the regulator’s attempt to broker a deal with Russia and the Saudis, noting that state officials could reduce output in the state if they really wanted, merely by enforcing existing regulations on producers. …

[RRC Commissioner Ryan] Sitton, one of three members of the Texas Railroad Commission, said he had a “really substantial, really exciting call” with Russian Energy Minister Alexander Novak. He also texted Saudi Arabian Energy Minister Prince Abdulaziz bin Salman Al-Saud, seeking to discuss the market collapse.

Background: OPEC Has Pulled Up a Chair for Texas Before

 

 

Texas Tribune – April 2, 2020

Local governments, already hard hit by the coronavirus, are facing a fresh budget threat: economic recession

While city leaders in Texas are trying to slow down the novel coronavirus pandemic, their financial officers are already warning about the damage a new economic recession will have on local budgets.

“We work on the budget year round, and we anticipate even the worst scenarios,” Houston Mayor Sylvester Turner said at a press conference Tuesday. “This one is even worse than anyone had imagined.”

Texas cities’ two biggest sources of money are typically property taxes and sales taxes. The protracted public health crisis’ effect on property taxes is still unclear. But there is certain to be a massive financial blow to sales tax revenues since officials shuttered businesses and limited Texans’ movements outside their homes as a necessary public health precaution to slow the virus’ spread. That’s according to Bennett Sandlin, the executive director of the Texas Municipal League, an organization that represents local governments across the state. ….

And the problems might be bigger in cities with economies tied to the energy sector, like Houston. The lower price of oil might decrease economic activity even more, increase unemployment and affect the city as a whole.

 

 

Houston Chronicle – April 2, 2020

With ‘world standing still,’ oil sector faces unprecedented crisis

Daniel Yergin, the oil historian whose annual CERAWeek by IHS Markit conference in Houston draws CEOs, sheiks and oil tycoons from around the globe, said the only comparable event was in the early 1930s, when the discovery of massive oil fields in East Texas, combined with the Great Depression, caused a collapse in prices that had never been repeated — up until now. …

The combination of coronavirus-related shutdowns combined and the oil price collapse is expected to result in the loss of at least 150,000 jobs — about one in 20 — in the Houston area this year, said Patrick Jankowski, economist for the Greater Houston Partnership, an economic development group. …

For now, expectations are that oil demand will continue to decline until governments start to loosen up social distancing measures. When that will come is anybody’s guess, but the belief is it will happen in the next few months.

For instance, Yergin said he was hopeful May’s oil figures would not be as bad as April and predicted that by January 2021 oil demand would be down only 3 million barrels per day — year over year.

 

 

Wall Street Journal – April 2, 2020

Approach Resources Sale Is Off After Oil-Price Collapse*

A joint venture formed by property mogul Sam Zell and private-equity firm Colony Capital has backed out of a deal to pump close to $200 million into Approach Resources Inc., the bankrupt West Texas oil-and-gas drilling company, amid a steep drop in oil prices.

The investors, who had formed a joint venture called Alpine Energy Acquisitions LLC to invest in Approach, said the oil company had breached certain “material” conditions in their deal, according to papers filed Thursday. Details of the Approach’s breaches of the conditions of the deal were blacked out in the court filing.

Now the buyers want their escrowed deposit back as well as reimbursement for their expenses.

 

 

Hart Energy – April 2, 2020

Enbridge Sells Ozark Natural Gas System to Black Bear

Enbridge Inc. sold natural gas pipeline transportation and gathering systems in the southeastern U.S., according to Black Bear Transmission LLC, which said it had acquired the assets for an undisclosed amount.

In an April 1 company release, Black Bear said it completed the acquisition of Ozark Gas Transmission LLC and Ozark Gas Gathering LLC from a subsidiary of Calgary, Alberta-based Enbridge.

Based in Houston, Black Bear is a portfolio company of Basalt Infrastructure Partner LLP’s second fund. The investment firm formed Black Bear through the acquisition of Third Coast Midstream LLC’s natural gas transmission business, which closed December.

 

 

Bloomberg News/Yahoo! News – April 2, 2020

First Few Shale Bankruptcies Probably Would Have Happened Anyway

This year’s dramatic crash in oil prices will probably be blamed by many energy companies for their ultimate demise. But the first wave of U.S. shale producers to file for bankruptcy probably would have had to seek protection anyway.

Whiting Petroleum Corp., facing more than a quarter-billion dollar debt maturity, filed for Chapter 11 on Wednesday. The double-whammy of Covid-19’s unprecedented hit to oil demand and a wave of supply unleashed as OPEC failed to reach a deal to curb output last month exacerbated pressures the North Dakota-focused producer was already feeling.

“Most all of the companies that will file in the coming weeks would have filed eventually,” said Kraig Grahmann, a partner with law firm Haynes & Boone LLP. “The outlook for highly leveraged E&P companies wasn’t that rosy even before these dramatic world events.”

 

 

Austin American Statesman – April 2, 2020

KMI suspends work; Blanco residents report muddy well water after drilling mishap

A drilling mishap on a gas pipeline project running beneath the Texas Hill Country appears to have sent thousands of gallons of a slurry into an underground waterway, muddying well water for at least two Blanco-area homeowners.

For now, Houston-based Kinder Morgan has suspended work in the area on its underground Permian Highway Pipeline, which has been bitterly opposed by Hill Country residents over environmental concerns. The 42-inch, 430-mile-long natural gas pipeline is scheduled to cut through 17 counties, passing through environmentally sensitive areas along the way. A company spokeswoman said only non-toxic material — clay and water — leaked below ground in the incident last weekend.

The general manager of the local groundwater conservation district says he suspects there’s no long-term danger posed to water quality and is taking water samples and analyzing them over the next several days.

But residents, their water the color of chocolate milk, are upset and angry.

 

 

Reuters – April 2, 2020

Oil firms Apache, Total make second major oil discovery offshore Suriname

Oil producer Apache Corp and its joint venture partner Total SA said on Thursday that they made their second significant oil discovery of the year in a closely watched area off the coast of South America’s Suriname.

Shares of Apache were trading more than 12% higher after surging nearly 21% at market open, on a day when oil stocks were generally stronger due to a recovery in global crude prices.

The discovery comes at a time when shale oil producers in North America are grappling with the worst oil price shock in decades, which has led several companies, including Apache, to cut spending for the year and slash dividends.

 

Bloomberg News – April 2, 2020

Negative Oil Prices? They’re Already Here*

The collapse in appetite for gasoline, jet fuel and diesel has been unprecedented in speed and scale. Goldman Sachs Group Inc. estimated Monday that with economies representing 92% of global gross domestic product now under some form of social distancing, the loss of demand this week stands at 26 million barrels per day, roughly a quarter below last year’s levels. Over a month, that’s almost 800 million barrels lost. Numbers since published from the shuttered economies of Italy and Spain suggest levels of destruction could be even worse. Spanish diesel demand is down 61%. The collapse is translating into a surplus that’s straining refineries, pipelines and the world’s limited ability to squirrel away oil. …

This all means that negative oil prices — when producers are effectively paying customers to take the oil — aren’t only possible, but already a reality. The global benchmarks for oil, West Texas Intermediate and Brent, have dropped about two-thirds this year. They aren’t about to dip below zero. You won’t get paid for filling up at the pump. In the neighborhood of $20 a barrel, though, where your oil is now matters almost more than how much it costs you to produce it.

 

 

Grist – April 2, 2020

How vulnerable is your community to coronavirus? These new maps reveal a familiar pattern

Jvion [the healthcare data firm] labels Harris County, Texas, as having a high vulnerability for COVID-19 — and a key socioeconomic influencer for that determination is its “above average environmental health hazard.” A new analysis from the University of Texas Health Science Center echoes Jvion’s map: The report shows where risk factors for severe COVID-19 outcomes (mostly preexisting health conditions) are distributed across Harris County to determine which neighborhoods are most at-risk of hospitalization and intensive care for COVID-19. Cross-referencing the EJScreen, it becomes clear that the Harris County map highlights communities in close proximity to industrial facilities and those at a higher risk of cancer from breathing airborne toxins.

“There’s a familiar pattern in these maps, and it’s a pattern that you see in mobility rates and mortality rates, race and ethnicity demographics, as well as the distribution of industry in our country,” said Corey Williams, the research and policy director for Air Alliance Houston. “All those things overlap to a great extent, so there is a correlation, but it’s difficult to prove causation.”

 

 

Associated Press/KCBD (Corpus Christi) – March 19, 2020

Port Aransas battles Big Oil to preserve its coastal vibe

Still recovering from the battering it took from Hurricane Harvey in 2017, the city is now grappling with the Port Authority of Corpus Christi’s unpopular plan to build a crude oil loading terminal and a desalinization plant on nearby Harbor Island.

To glimpse what that future might hold, Holt only needs to look west, down the ship channel, where tank farms and oil loading terminals are rapidly being built on Corpus Christi Bay. ….

“Harbor Island has a long and rich history of industrial development. It was once the largest crude marine terminal in the world,” said Sean Strawbridge, the CEO of the Port Authority of Corpus Christi. Old photos of the island show docks and rows of oil storage tanks.

The port, which has experienced tremendous growth since the U.S. lifted the ban on exporting oil in 2015, is now flush with ambition, projects and cash. Its stated objective is to become “The Energy Port of the Americas.” About 2.2 million barrels of oil, most of it piped in from the Permian Basin and Eagle Ford shale plays, moves through the port every day. The volume could more than double.

“In our view, 5 million barrels a day is the target for Corpus Christi,” Strawbridge said.

 

Utilities

 

Houston Chronicle – April 2, 2020

Electricity use dropping in Texas, especially in early morning, due to coronavirus*

Electricity use in Texas between 6 a.m. and 10 a.m. has been dropping over the past three weeks, a reflection economic activity is slowing statewide as the coronavirus pandemic spreads.

The state’s grid manager the Electric Reliability Council of Texas reported this week that early-morning electricity use is currently running about 10 percent less than normal. The report didn’t specify whether the drop was attributed to less residential, commercial or industrial use.

 

 

Community Impact – April 2, 2020

Data: Austin’s residential electricity usage up more than 30% since beginning of March

Across the city of Austin, residents who are working remotely from home or transitioning to online education are using more energy, according to Austin Energy data provided to Community Impact Newspaper. The total residential electricity usage has increased by more than 31.88% across Austin Energy’s service area since the last week of February, the new numbers show.

Throughout the week of March 21-27, Austin residents used 71.63 million kilowatt hours of energy. Three weeks prior, from Feb. 29-March 6, Austin Energy customers used 57.73 million kilowatt hours of energy. “At the end of the day, most people are going to see an increase in their utility use because they’re at home, and that’s where we want them to be,” Austin City Council Member Kathie Tovo said.

 

 

The Texas Energy Report – April 2, 2020

CenterPoint Adjusts CapEx, Distribution After Enable Income Loss, Names CFO*

CenterPoint Energy Inc. is taking action after a reduction in income from one of it’s big investments.

The Houston-based company explained that a newly-announced 50% distribution reduction by Enable Midstream Partners LP, of which CenterPoint is a 53.7% owner, will result in distributions to CenterPoint.

The bottom line is an expected loss of about $155 million a year on an annualized basis for CenterPoint.

Centerpoint also said its Chief Accounting Officer Kristie L. Colvin, who’s been with the company for almost 30 years, will be interim CFO, replacing Xia Liu who is expected to stay as a consultant through the end of the month

 

 

Huffington Post – March 31, 2020

Some rural electric co-ops continue power shut-offs during pandemic

Angela Haislip begged the power company not to cut off service to her elderly mother and stepfather, both stroke victims who depend on oxygen machines and nebulizers to breathe.

In more than 20 years, her parents had “never, ever, ever missed a payment” to the Halifax Electric Membership Corporation, the power co-operative that serves rural Warren County, North Carolina, she said. Haislip’s 70-year-old mother had actually overpaid last year by so much, she built up enough credit that she hadn’t had to pay for the first two months of 2020.

But amid the chaos of the novel coronavirus pandemic, her mother fell behind.

 

Alternatives & Renewables

 

Greentech Media – April 2, 2020

California’s solar output already outpaced demand at times. Then came the coronavirus

California grid operator CAISO has been curtailing renewable energy at record levels this year, as the state’s ever-rising share of solar power during daylight hours increasingly outpaces electricity demand. Adding to its challenges, the grid operator is now contending with falling power demand caused by the coronavirus pandemic.

San Francisco Bay Area counties issued a shelter-in-place order and mandated a halt to all nonessential work on March 17, and Gov. Gavin Newsom extended the order statewide two days later. In the following weeks, CAISO has recorded a significant drop in demand from shuttered businesses, largely centered on the Bay Area and served by Pacific Gas & Electric, and in regions served by utility Southern California Edison.

 

Regulatory

 

The Hill – March 30, 2020

Rupert Darwall, RealClear Foundation: The coronavirus pandemic versus the climate change emergency

Two lessons can be drawn. The first is the importance of governments and responsible international bodies focusing on genuine threats that can rapidly overwhelm our capacity to handle them. Something has gone very wrong when the World Health Organization, the lead institution coordinating the response to global pandemics, climbed on the climate bandwagon and called the Paris Agreement “potentially the strongest health agreement of this century” and listed climate change as the No. 1 threat to global health.

The second is resilience. Richer societies are better able to handle a pandemic than poorer ones. After the 2003 SARS outbreak, Singapore invested in a purpose-built National Centre for Infectious Diseases. Of larger economies, South Korea’s response has, so far, been the most successful; like Singapore, it can afford preparedness because it has a strong economy, reflected in its soaring greenhouse gas emissions. Since 1992, Korea’s carbon dioxide emissions have more than doubled and it is planning to grow them under the Paris Agreement.

 

_______________________________

 

The Texas Energy Report NewsClips – April 2, 2020

Click on each headline to read more of the story at the source.
Asterisk * following headline indicates news content may be limited or unavailable at the source because it’s password protected.

 

Lead Stories

 

Dallas Morning News – April 1, 2020

Texas reeling into recession from double blows of coronavirus and oil slump, Comptroller Glenn Hegar says*

Texas’ usually buoyant economy has just run over two sharp nails — coronavirus and low oil prices — and the resulting slowdown is dramatic, Comptroller Glenn Hegar said Wednesday.

“There’s no doubt that Texas is going to be in a recession — just like pretty much the rest of the world,” he said.

While data showing the scope of the state’s economic contraction won’t be out for another few weeks, Hegar said early signs from counties that collect sales tax on motor vehicle purchases and rentals showed significant declines for a limited part of last month — all that’s been reported so far. Other, nongovernmental measures have revealed that lower-income, hourly workers in Dallas and other major Texas cities already have been slammed with layoffs, leaving them vulnerable, he said. In the entertainment sector, movie theater box office receipts nationwide have virtually gone to zero, which hurts another cadre of workers, he said.

 

 

Reuters – April 1, 2020

Chinese buyers snap up U.S. oil purchases at widest discounts ever

China has increased U.S. crude purchases with some buyers snapping up cargoes at the widest discounts ever as sellers seek to offload excess supplies in Asia, six trade sources said on Wednesday.

China started processing in March applications from its companies to waive import tariffs on U.S. energy goods as part of the Sino-U.S. Phase 1 trade deal and they have since bought liquefied natural gas (LNG) and liquefied petroleum gas (LPG) from the United States.

The world’s largest crude importer is boosting U.S. energy imports at a time when the world is swamped with excess supply after the Organization of the Petroleum Exporting Countries (OPEC) and Russia failed to extend production cuts and as measures to curb the spread of the coronavirus undermined demand.

 

 

CNBC – April 1, 2020

U.S. oil industry pumps near record volumes even as demand and prices collapse

The U.S. continues to pump near record amounts of oil, but U.S gasoline demand continues to drop as the whole world sees less need for fuel.

The latest weekly data from the Energy Information Administration showed the U.S. oil industry was still pumping 13 million barrels of crude oil per day, just under record production highs.

At the same time, demand for gasoline fell to 6.7 million barrels a day from 8.8 million the week earlier. This time last year, drivers were using about 9.2 million barrels a day of gasoline. U.S. gasoline demand translates to the equivalent of 10% of global oil demand.

“Right now, we have a supply problem and a demand problem. That is unprecedented,” said Helima Croft, head of global commodities strategy at RBC.

 

 

S&P Global Platts – March 18,2020

Shareholders hit roadblocks on climate issues

Shareholder efforts to influence companies’ approaches to issues related to climate change have suffered blows from both financial regulators and a federal judge in recent weeks.

Staff for the U.S. SEC on March 6 said that Dominion Energy Inc., Sempra Energy and PNM Resources Inc. could justifiably exclude from their proxy materials shareholder resolutions calling for the companies to report on the risks that planned natural gas infrastructure could become economically stranded due to government climate policies. Commission staff also said there appeared to be a legal basis for Chevron Corp. and Exxon Mobil Corp. to block resolutions that would commit the companies to support policies aimed at reducing carbon-dioxide emissions and, in the case of Exxon, to create a climate-risk committee.

 

Oil & Gas

 

Reuters/CNBC – April 2, 2020

Oil rallies as Trump talks up truce hopes for Saudi-Russia price war

Crude oil futures jumped 10% on Thursday after U.S. President Donald Trump said he expected Saudi Arabia and Russia to reach a deal soon to end their oil price war and Russian President Vladimir Putin called for a solution to “challenging” oil markets.

Brent crude futures rose 11.36%, or $2.81, to $27.55 as of 0701 GMT, while U.S. West Texas Intermediate (WTI) crude futures increased 10.0% or $2.03, at $22.34.

Trump said he had talked recently with the leaders of both Russia and Saudi Arabia and believed the two countries would make a deal to end their price war within a “few days” – lowering production and bringing prices back up.

 

 

Reuters – April 1, 2020

Saudi oil supply hits record high despite U.S. pressure: sources

Saudi Arabia’s crude supply rose on Wednesday to a record of more than 12 million barrels per day, two industry sources said, despite a plunge in demand triggered by the coronavirus outbreak and U.S. pressure on the kingdom to stop flooding the market.

A producer pact to rein in oil production expired on Tuesday, removing restrictions on output by members of the Organization of the Petroleum Exporting Countries, as well as Russia and other producing nations.

Saudi Arabia had said that its oil exports would be about 10 million bpd, but it gave no indication of how much crude would go into storage.

 

 

CNBC – April 1, 2020

Oil prices could soon turn negative as the world runs out of places to store crude, analysts warn

Global oil storage could reach maximum capacity within weeks, energy analysts have told CNBC, as the coronavirus crisis dramatically reduces consumption and some of the world’s most powerful crude producers start to ramp up their output.

The coronavirus pandemic has meant countries have effectively had to shut down, with many governments imposing draconian measures on the daily lives of billions of people. It has created an unprecedented demand shock in energy markets, with storage space – both onshore and offshore – quickly running out.

At the same time, a three-year pact between OPEC and non-OPEC partners to curb oil output ended on Wednesday, paving the way for oil producers to ramp up production.

OPEC kingpin Saudi Arabia has pledged to hike output to a record high.

 

 

Oilman Magazine – March 31, 2020

Is Crude Oil Storage on Vessels the Answer?

Very Large Crude Carriers (VLCCs), Ultra Large Crude Carriers (ULCCs) and Suezmax vessels can carry between 1 MMbbl and 3 MMbbl of crude oil. They have the ability to transport crude nearly anywhere on the globe, but for a cost. Freight costs on these super tankers have typically been around $30,000/day to $40,000/day, but prices are rising. There are a finite number of these tankers available to charter and Saudi Aramco appears to have chartered 25 to 40 of them in a battle to gain market share over Russia. This increased demand recently drove prices to $110,000/day for Suezmax vessels and nearly $400,000/day for VLCCs and ULCCs. In addition to the increased demand, chartering prices have been hamstringed by the effect of COVID-19 on crew changes and inspections.

Is chartering a vessel to sit full and incur a daily chartering cost really the answer? The breakeven point depends on the chartering cost and how long the price of oil will stay this way. If a chartering contract with a vessel owner is signed at $100,000/day, the cost of that oil in floating storage is $3 million/month or $36 million/year. After adding in per-day chartering costs (as well as costs such as port, canal fees, etc.), the delivered price per-barrel will certainly eat into profits from lower priced oil.

 

 

Bloomberg News – April 1, 2020

Overflowing Oil Tanks Have Traders Eyeing Rail Cars for Storage

Oil companies are turning to rail cars to stash the crude they can’t sell, as the world runs out of places to store a growing glut of cheap barrels.

North American producers, refiners and traders are now looking to store excess oil in rail yards in Texas, Saskatchewan and Manitoba amid the crude market’s historic plunge and collapsing demand, according to people familiar with the matter.

With oil for May delivery trading at a steep discount to future months — a structure known as contango — more firms are hoarding barrels rather than sell at a loss. But crude tanks and supertankers are filling up fast, with the world projected to run out of storage space by the middle of the year, according to IHS Markit. In Canada, tank-tops could be breached within two to three weeks, Goldman Sachs Group said, while U.S. stockpiles last week rose for the 10th week, increasing by the most in three years.

 

 

CNBC – April 1, 2020

Energy CEOs will meet with Trump Friday at the White House as oil prices tumble

Chief Executives from at least seven energy companies are set to meet with President Donald Trump on Friday at the White House to discuss energy policy, according to sources familiar with the matter.

The meeting comes as U.S. oil producers struggle to breakeven on the back of tumbling crude prices. U.S. West Texas Intermediate crude lost more than half of its value in March — its worst month on record — and currently trades around $20.94 per barrel. At the beginning of the year, prices topped $60.

The meeting will include CEOs from Exxon, Chevron, Occidental Petroleum, Devon Energy, Phillips 66, Energy Transfer Partners and former Continental Resources CEO Harold Hamm. The companies are not looking for a bailout but rather want market forces to preside, according to one source.

Related: 9 US senators warn Saudi Arabia over oil price war with Russia

 

 

Houston Business Journal – April 1, 2020

Railroad Commission sets tentative date for oil production cut hearing*

Railroad Commission of Texas Commissioner Ryan Sitton said April 1 that he’s hopeful the oil and gas regulatory agency can hold a hearing to consider production cuts on April 14.

The Commission received a request March 30 to hold a public inquiry as to whether or not the agency should take the extraordinary action of setting limits on Texas oil production. The last time the Commission did so was in the 1970s.

Sitton said during a web presentation that commissioners have set a tentative date of April 14 to hold such a hearing, during which they will collect public feedback and input into whether setting production limits is a good idea and discuss how the nation and global community might come together to help the oil industry. The Commission could take a vote on whether to set those limits during its meeting on April 21, Sitton said.

 

 

Hays Free Press – April 1, 2020

Pipeline construction halted while ‘fluid loss’ incident investigated

Residents in Blanco County a mile or so upstream of where the Kinder Morgans Permian Highway Pipeline (PHP) crossed the Blanco River are reporting brown tap water coming from their wells.

One of them, who lives off FM 165 about a mile from the Chimney Valley Road turnoff in Blanco posted on Facebook that her tap water had turned brown. The post had a photo of the water, which also appeared foamy.

She also said a well service company had checked it out; however the company, Spring Branch Well, could or would not confirm any calls related to discolored water.

 

 

S&P Global Platts – April 1, 2020

Factbox: PVC demand falls amid coronavirus uncertainty

Demand for a resin used to make construction staples like pipes and vinyl siding has retreated in recent weeks, prompting startling price declines as PVC producers seek to unload volumes and traders scramble for buyers.

“There is demand destruction in this pandemic,” a US market source said. “This is completely different than anything we’ve seen in the past. Now the question is how quickly we can come out of it, and how long it’s going to take.” ….

In upstream markets, US spot ethylene prices reached a new all-time low on Wednesday, falling 0.25 cent to 9 cents/lb FD Mont Belvieu, the lowest price since S&P Global Platts began assessing spot ethylene in 2004.

 

 

Reuters – April 1, 2020

BP cuts spending by quarter, lowers U.S. shale output

BP on Wednesday cut its 2020 spending plans by 25% and will reduce output from its U.S. shale oil and gas business in the face of the collapse in oil prices triggered by the corononavirus outbreak.

BP and other big oil and gas companies are having to rein in spending sharply following the collapse in oil prices driven by a slump in demand because of the coronavirus crisis and a price war between top exporters Saudi Arabia and Russia.

“This may be the most brutal environment for oil and gas businesses in decades,” CEO Bernard Looney said in a statement.

 

 

Reuters/Nasdaq – April 1, 2020

Callon Petroleum taps advisers for debt restructuring -sources

Oil and gas explorer Callon Petroleum Co CPE.N has hired advisers to restructure its more than $3 billion in debt after a plunge in energy prices soured its acquisition of a rival, people familiar with the matter said on Wednesday.

Callon paid $740 million in stock to acquire Carrizo Oil & Gas Inc almost four months ago and assumed its $1.7 billion in debt obligations. While Callon’s debt does not come due until 2023, it is seeking to avoid a cash crunch amid falling revenue and dwindling financing options for energy producers.

Callon is working with debt restructuring attorneys and is also retaining the services of an investment bank, the sources said, adding that a decision on a specific course of debt restructuring was not imminent.

 

 

Zacks/Yahoo! News – April 1, 2020

Diamondback Energy Clips 5% Output View Amid Oil Price Plunge

In response to this weak oil scenario, Diamondback Energy, Inc. FANG recently announced plans to lower its production guidance for 2020. It also intends to hedge majority of its output.

Management stated that 2020 production is now expected to average at 295,000-310,000 barrels of oil equivalent per day (Boe/d), marking a 5% decline at the midpoint from its previous guidance of 310,000-325,000 Boe/d. For the full year, it now anticipates oil production in the range of 183,000-193,000 barrels per day (BPD), lower than previous quarter’s 195,000 BPD

 

 

Talk Business – April 1, 2020

Murphy Oil shrinks capital expenditures again, cuts executive pay

Amidst worldwide falling crude oil prices, Murphy Oil Corp. has further reduced its capital expenditures for 2020.

In March, the El Dorado-based oil and gas exploration company dropped its cap ex plans by nearly $500 million. On Wednesday (April 1), company lowered its plans to invest in exploration from $950 million to $780 million. Initially, Murphy Oil planned to spend $1.45 billion in capital investments.

Murphy’s board of directors also cut its quarterly dividend in half from 25 cents per share to 12.5 cents per share.

 

 

New American – April 1, 2020

Is Whiting Petroleum’s Bankruptcy a Harbinger?

The one-two punch of the oil war between Saudi Arabia and Russia combined with the COVID-19 shutdown of the U.S. economy was more than Whiting Petroleum could handle. With a $262 million payment due on Wednesday on its $2.8 billion of debt, the company filed for bankruptcy. President and CEO Brad Holly said the “severe downturn” in oil and gas prices forced his hand, and that bankruptcy and financial restructuring was the “best way forward.”

In early January, the price of West Texas Intermediate (WTI) crude was over $62 a barrel. This meant that the company’s nearly half a billion barrels of proven reserves, mostly in the Bakken Formation, gave it a value north of $30 billion. The company’s stock was selling at more than $8 a share.

But today, WTI is priced at $20 a barrel, and Whiting’s stock, after being halted briefly following the bankruptcy announcement, is now trading at $0.37 a share. The market now values the company at less than $10 billion.

 

 

Reuters – April 1, 2020

Cheniere seeks U.S. permission to put Oklahoma Midship natgas pipe in service

Cheniere Energy Inc has completed the Midship natural gas pipeline in Oklahoma at a cost of around $1 billion and is seeking federal regulators’ permission to put it into service, according to a filing made available on Wednesday.

Cheniere has asked the U.S. Federal Energy Regulatory Commission (FERC) for permission to put the project into service “at the earliest time possible, but no later than April 17, 2020, in order to meet the needs of its shippers,” the filing says.

Cheniere, the nation’s biggest liquefied natural gas (LNG) exporter and biggest consumer of gas, started work on the project around February 2019. Midship includes nearly 200 miles (322 kilometers) of 36-inch (91-centimeter) pipe.

 

 

Houston Chronicle – April 1, 2020

Q&A: Cheniere Energy’s Jack Fusco on the future of LNG*

Q: Any updates about the construction for the expansion projects at Sabine Pass and Corpus Christi?

A: We had three more trains start up last year, so Train 5 at Sabine Pass and Trains 1 and 2 — both at Corpus Christi. We have seven trains up and running. Our engineering, procurement and construction partner Bechtel has done such a fantastic job with getting those trains built ahead of schedule and on budget. The analogy for us is that it takes 7 million man hours to build one of our liquefaction trains and it took 7 million man hours to build the Empire State Building. So we’ve effectively built seven Empire State Buildings in record-breaking time. I’m humbled by our performance and set the stage and the standard for LNG producers. ….

Q: Cheniere has been described as the largest single buyer of natural gas in the United States. Just how much gas is the company buying?

A: We’re buying close to 10 percent every day. U.S. natural gas production is around 70 billion cubic feet per day and we’re taking 6 billion ourselves. That’s gonna grow with our other two trains coming online. So that’s going to be at 7.5 billion. But today, we buy 6 billion cubic feet of natural gas per day that’s delivered to two single points — Corpus Christi and Sabine Pass. We buy that gas from over 70 producers on 25 different pipelines.

 

 

Houston Chronicle – April 1, 2020

As pollution abates and skies clear, coronavirus shutdown gives glimpse of life with less fossil fuel

Whether it’s blue skies over Beijing, satellite imagery showing emissions dropping in Milan or air monitors in Houston recording less ozone than normal, mankind’s sudden hunkering down in response to the coronavirus pandemic has resulted in visibly cleaner air with remarkable speed. …

“I’ve been looking at the satellite imagery, and it’s been dramatic,” said Daniel Cohan, an environmental engineering professor at Rice University. “We have satellites observing nitrogen dioxide (a major contributor of smog) every day, and those showed an incredibly steep fall off over the Hubei province and the Wuhan region [where the coronavirus outbreak began]. You can see it in northern Italy, and even over New York and Los Angeles.” …

On Twitter, people marveled at the change in conditions, with one user writing, “clear water in Venice, blue sky in Beijing… I wish we could take care of Earth a bit better and pollute less after this coronavirus quarantine is over!”

 

Utilities

 

Utility Dive – April 1, 2020

El Paso Electric acquisition nears final approval as FERC dismisses concerns about JPMorgan link

The $4.3 billion acquisition of El Paso Electric by a fund advised by J.P. Morgan’s investment management arm has all regulatory approvals to proceed, provided that the parties address the Federal Energy Regulatory Commission’s concerns that the merger could reduce competitive electric supply in Texas.

The acquisition by Infrastructure Investments Fund (IIF), a $12 billion private investment vehicle, has attracted scrutiny from several U.S. senators and consumer advocacy group Public Citizen over charges that the fund is fundamentally controlled by J.P. Morgan and that this relationship could lead to conflicts of interest with ratepayers of the regulated utility.

On Monday, FERC conditionally approved the acquisition and rejected Public Citizen’s challenge. The advocacy group plans to appeal the decision, but any legal challenge will likely fail to affect the merger because it will take years to be resolved, Public Citizen Energy Program Director Tyson Slocum told Utility Dive

 

 

Dallas Morning News – April 1, 2020

3 men sue Atmos Energy two years after South Dallas natural gas explosion*

Three men are suing Atmos Energy after they were injured two years ago in a natural-gas explosion that destroyed a South Dallas duplex.

The explosion early April 2, 2018, blew out the side of the building in the 3700 block of Spring Avenue near Fair Park.

Kelley McFarland, Wayne Landrum and Willie Rocker Jr. had been asleep in their respective homes when the explosion occurred, the lawsuit says. They suffered a variety of injuries, with one of the men sustaining third-degree burns.

In addition to Atmos, the lawsuit names Noble Energy, the state of Texas, and the owners and operators of the duplex as defendants, as well as various businesses connected to the owners. The duplex’s manager is a defendant as well.

 

 

Power Engineering – April 1, 2020

EIA quarterly: Texas coal-fired power generators lead in coal delivered

The EIA’s latest Quarterly Coal Distribution Report showed that domestic coal distribution nationally was down compared in 2019’s fourth quarter compared to the same period of 2018. Some 141 million short tons was moved during those three months, 8.5 percent less than the same time in the previous year.

Texas was the leading coal-destination state, receiving about 16.5 million short tons in shipments. Statewide power generators consume about 1,500 trillion British thermal units (BTU) in coal power annually, according to the EIA.

 

 

S&P Global Platts – April 1, 2020

Factbox: Power demand, prices begin to slip as coronavirus stay-home orders spread

As impacts of the coronavirus spread, regional transmission operators and independent system operators are seeing new and evolving energy usage patterns pegged to the increasing number of Americans isolated at home. However, such demand changes may be difficult to forecast given the unprecedented nature of the growing pandemic.

Power demand has started to drop across the US as cities, counties and states issue stay-home orders to stop the spread of the coronavirus, but operators note that the changes so far are not significant given seasonal weather variances that also impact load.

ERCOT North Hub on-peak July-August has fallen nearly $30 since the beginning of March, from $137.25/MWh to $107.79 as concerns rise that demand will remain low in the months to come due to coronavirus orders.

 

Alternatives & Renewables

 

Politico – April 1, 2020

Solar sets sights on federal aid

The solar industry is pushing for accommodations in any new packages lawmakers may develop to stem the economic catastrophe sparked by the outbreak of Covid-19, Pro’s Eric Wolff reports this morning. The industry has seen a wave of cancellations in residential rooftop projects and disruptions in supply chains from Asia, as well as a potential glut of red ink in the financial markets.

“If we don’t do something … we’re headed for a depression, pure and simple. Right now we’re in it,” said John Berger, CEO of the Texas-based Sunnova Energy, a residential solar installer. “I’m looking at more about families, how do we protect workers, how do we stop what really will be a second Great Depression.”

 

Regulatory

 

Houston Chronicle – April 1, 2020

Pandemic revives hope of federal aid for Texas highways, ports, rural internet*

Lawmakers have been talking about striking a deal to rebuild the nation’s infrastructure for years. It might take a pandemic to finally get them to do it, and Texas officials are already working on their wish lists, with ports, highways, high-speed internet and more potentially on the line.

There’s growing talk of tackling infrastructure as the next step in Congress to stave off economic collapse from the coronavirus outbreak, following the $2 trillion stimulus package that passed last month. …

“Getting the infrastructure bill done makes a lot of sense,” said U.S. Rep. Lizzie Fletcher, a Houston Democrat on the House Transportation and Infrastructure Committee. “It will be a really important driver to get our country up and running and back to work once we’re on the other side of COVID-19.”

 

________________________

 

The Texas Energy Report NewsClips – April 1, 2020

Click on each headline to read more of the story at the source.
Asterisk * following headline indicates news content may be limited or unavailable at the source because it’s password protected.

 

Lead Stories

 

Reuters/Yahoo! News – March 31, 2020

U.S. aims to lease space in emergency oil stockpile, after buying plan canceled – sources

The Trump administration plans to lease out space for energy companies to store oil in the nation’s Strategic Petroleum Reserve, after a previous effort to buy millions of barrels for the emergency stockpile was canceled over a lack of funding, according to two people briefed on the matter.

The new plan could help the United States deal with a growing glut of crude oil that risks overwhelming commercial storage tanks and sending world energy prices deeper into a tailspin as the coronavirus pandemic slashes demand for fuel. It could be announced as soon as Wednesday, the sources said.

The plan is a change of tack from the initial scheme, which would have had the Department of Energy (DOE) purchase crude from domestic drilers using federal funds.

 

 

Financial Post – March 31, 2020

Traders scramble to unload cheap crude cargoes as glut grows

Oil traders across the globe are offering cargoes far in advance as rapidly vanishing demand drives key physical crude prices to multi-decade lows, with some U.S. oil valued at roughly $10 a barrel.

The oil market is caught between a collapse in demand due to the coronavirus pandemic and a price war between Saudi Arabia and Russia. Both factors are expected to flood markets with oil.

Refineries worldwide have started to shut units, with some closing outright, while major operators like India’s IOC have declared force majeure on crude purchases as they struggle with the sudden stoppage in demand. Key benchmarks in Canada and Mexico traded at less than $10 per barrel on Monday, less than the cost of production.

 

 

Wall Street Journal – March 31, 2020

The Oil Glut Is Getting Critical*

Some companies in the business of transporting crude are seeing a bonanza. The rate for a very large crude carrier traveling between the Middle East and Asia is approaching $200,000 a day, doubling in less than a week. Between last Monday and this Monday’s close, shares of tanker-owner Frontline Ltd rallied by 65% and those of Nordic American Tankers Ltd 93%, Euronav NV by 46% and Teekay Tankers Ltd by 49%.

Normally this would mean a bottom has been reached for two reasons. First, financially-motivated buyers will demand as much physical crude as they can store. Second, this usually means the price is so low that high-cost producers can’t even cover their lifting costs and stop pumping.

But these aren’t normal times. The gap has opened so quickly that producers can’t shut down in time and two of the largest are ramping up on purpose. What is more, analysts at Citigroup point out that inventories have never been filled at more than 4.7 million barrels a day in any given month—a universe away from the 20 million barrels of excess supply being daily. In the U.S., pipeline operators are anxious that customers will leave them stuck with crude that nobody actually wants at the other end.

 

 

Houston Chronicle – March 31, 2020

$20 per barrel oil sends energy companies to restructuring specialists in droves*

Bankruptcy attorneys and restructuring experts are quickly becoming the most popular people in the oil patch.

Engery companies are lining up to seek survival advice as oil prices linger around $20 per barrel and the coronavirus pandemic ravages the economy. …

Matthew Cavenaugh, an attorney who specializes in restructuring work for energy companies at Houston office of the law firm Jackson Walker, has stayed busy in recent weeks fielding phone calls from shell-shocked clients facing meetings with banks and investors.

“They’re trying to determine if they need to update their presentations or throw them in the trash and start completely new ones,” Cavenaugh said.

 

 

Midland Reporter Telegram – March 31, 2020

Texas industry associations, producers form methane coalition

Seven of the state’s oil and gas associations, along with almost 40 oil and gas companies responsible for about 80 percent of the state’s oil output, have formed a coalition to address flaring and methane emissions.

The Texas Methane and Flaring Coalition will work to improve data quality for better accuracy in reporting vented and flared volumes, explain why and when flaring is necessary, identify, assess and recommend opportunities and best practices to minimize emissions and flaring and evaluate existing studies and summarize their findings.

A website has been launched to provide resources and information for everyone from industry to legislators and regulators to the general public.

 

Oil & Gas

 

CNBC – April 1, 2020

Oil skids as oversupply fears pile up with US inventories growth

Global crude oil prices slid further on Wednesday, following their biggest-ever quarterly and monthly losses, as a bigger-than-expected rise in U.S. inventories and a widening rift within OPEC heightened oversupply fears.

Oil prices are near their lowest since 2002 amid the global coronavirus crisis that has brought a worldwide economic slowdown and slashed oil demand.

Crude futures ended the quarter down nearly 70% after record losses in March.

As of 0643 GMT, Brent crude was down by $1.02, or 3.9%, at $25.33 a barrel. U.S. West Texas Intermediate crude was down 35 cents, or 1.7%, at $20.13 a barrel, after giving up an earlier gain which analysts said was driven by position building at the start of a the new quarter.

U.S. crude inventories rose by 10.5 million barrels last week, far exceeding forecasts for a 4 million barrel build-up, data from industry group the American Petroleum Institute showed.

 

 

Texas Tribune – March 31, 2020

Gov. Greg Abbott tells Texans to stay home except for essential activity in April

Gov. Greg Abbott on Tuesday told Texans to stay at home for the next month unless they are taking part in essential services and activities, announcing a heightened statewide standard to stem the spread of the new coronavirus. He also announced that schools would remain closed until at least May 4.

During a news conference at the Texas Capitol, Abbott declined to call his latest executive order a shelter-in-place or stay-at-home order, arguing such labels leave the wrong impression and that he wants Texans to know, for example, they can still go to the grocery store. But in an interview afterward, he said “it’s a fact” that the executive order nonetheless brings Texas up to speed with states that have issued orders with those labels.

 

 

The Texas Energy Report – March 31, 2020

Rick Perry Calls For Temporary Ban On US Refining Of Foreign Oil*

US on verge of losing independent operators, which would bring us back to 1974…and Perry suggests Treasury Dept. buy oil futures

Former US Energy Secretary Rick Perry says “we’re on the verge of a massive collapse” in the oil and gas industry, and he suggests a 60-to-90-day US moratorium on.refining foreign crude.

Speaking on Fox News, Mr. Perry defined a flood of cheap oil at the hands of Saudi Arabia and Russia as a national security to the US, saying “if we were to lose those independent operators” — which he called the “real buffer of the industry — we could see such a collapse, and “we worked awfully hard during the last three or four years to build up into the number one oil and gas producing industry in the world.

 

 

Argus – March 31, 2020

US stripper wells among first to face shutdown: Rystad

Small US onshore oil wells that produce as little as 10 b/d of output face the prospect of shut-ins from the current crude price drop, but any large-scale closures are still unlikely, consultancy Rystad Energy said today.

These low-volume wells, commonly known as stripper wells, account for about 1.2mn b/d, or a little over 10pc, of total US onshore output of about 10.5mn b/d last year.

At $20/bl WTI about 75pc of these marginal stripper wells are still able to cover their cash cost, according to Rystad, but the remaining 25pc, or about 300,000 b/d, are not. Given their size and output, these wells will be the first candidates for shut-in. If crude prices fall further, more will face closures as they are not able to cover their costs. Nymex WTI settled at $20.09/bl yesterday, at its lowest since February 2002.

 

 

American Banker – March 31, 2020

High anxiety among energy lenders as oil prices plummet

Every 12 or 18 months, Texas banks overseen by the state’s banking commissioner undergo examinations in which they are required to disclose problem loans in the their energy portfolios.

Now, with oil prices in free fall as nationwide stay-at-home orders have sharply curtailed demand for fuel, the Texas Department of Banking is asking banks it oversees to start submitting reports on problem oil and gas loans as frequently as every quarter. Banks with particularly heavy exposure to the oil and gas sectors — roughly 15% of the state’s 224 state-chartered banks — will be monitored even more closely.

With the value of the collateral — the oil and the gas in the ground — declining so quickly, the concern among regulators is that defaults could start mounting long before banks undergo regularly scheduled exams.

 

 

S&P Global Platts – March 31, 2020

NGPL expansion in Texas that will serve LNG exports can begin construction: FERC

Kinder Morgan’s Natural Gas Pipeline Company of America can start construction of its Gulf Coast Southbound project in Texas, the Federal Energy Regulatory Commission said Tuesday.

The approval was the latest sign that regulators are allowing gas infrastructure to move forward over fierce objections of local opponents as the coronavirus pandemic threatens worker safety. During a teleconference with reporters March 19, the commission’s chairman said FERC’s work would not be slowed by efforts to control the spread of the coronavirus.

 

 

Bloomberg News/Yahoo! News – March 31, 2020

U.S. LNG Behemoth Tests Slump in Sign It May Curb Production

One of the world’s biggest liquefied natural gas exporters is signaling it may throttle back production.

Cheniere Energy Inc. has tendered to buy six shipments for delivery to Europe later this year, a rare step for a company that’s fundamentally a seller of the fuel. The company could be testing the size of the current glut as it weighs output cuts, or even seeking cargoes for its customers that could be cheaper than producing and shipping its own from the U.S. Gulf Coast, according to a Bloomberg survey of traders.

Four of the six cargoes were awarded at a discount of about 20 to 30 cents to the European benchmark Dutch Title Transfer Facility, according to traders with knowledge of the information. The benchmark contract for May traded at about $2.24 per million British thermal units on Tuesday on ICE.

 

 

March 31, 2020

Wall Street Journal: Pain in the Oil Patch*

Start with Continental Resources founder Harold Hamm’s suggestion of antidumping duties on foreign oil. This would raise gasoline prices without benefitting shale producers. The U.S. imports heavy crude because many refineries can’t process lighter shale that is often exported to countries like Canada and India that can. Tariffs could also boomerang if foreign producers retaliate by further increasing production.

A better response is diplomacy to convince Saudi Crown Prince Mohammed bin Salman to stop his game of chicken with Russia, which is also undermining national oil producer Aramco and his strategy to modernize the Kingdom’s economy. Secretary of State Mike Pompeo has tried but so far failed.

An especially bad idea would have the Texas Railroad Commission impose production quotas, which the state last did in the 1970s. But this would punish the most efficient producers and prop up the weaklings. Quotas would be hard to enforce and violate the property rights of producers, leaseholders and mineral-rights owners. Texas can’t control global oil prices in any case, and state quotas would encourage higher production in other regions like the Bakken. Quotas would also signal to Saudi Arabia and Russia they are winning the price war. …

A better idea is to let producers that were solvent before the virus borrow against good collateral from the Federal Reserve’s new liquidity vehicles that are open to all comers.

 

 

Dallas Morning News – March 31, 2020

Two Dallas-Fort Worth oil and gas independents make deep capital spending cuts*

Fort Worth-based Range Resources Corp. is cutting $90 million from its capital budget this year.

Range’s capital spending will fall from $520 million to $430 million, the company said Tuesday. It spent $728 million last year to drill and complete wells, buy land and build natural gas-gathering systems. …

The Plano-based independent Denbury is cutting its capital budget nearly in half, axing $80 million from its planned spending this year.

Denbury said Tuesday that it now plans to spend $95 million to $105 million in 2020 — a 44% reduction. It’s also deferring a development project expected to get underway this year.

 

 

Houston Chronicle – March 31, 2020

Schlumberger executives take pay cuts as North American workforce is slashed

Schlumberger executives are taking pay cuts while the oil-field services company lays off and furloughs workers in the U.S. and elsewhere in North America.

Citing an “extraordinary business environment” as the coronavirus pandemic and record-low oil prices ravage the industry, Schlumberger said Tuesday that executives and senior managers are voluntarily taking a 20 percent pay cut beginning Wednesday.

The company also is accelerating the restructuring of its North America land-based operations, which includes a combination of layoffs and furloughs by business line and location. The changes are expected to take place over a couple of months.

 

 

Houston Chronicle – March 31, 2020

Several BP offshore workers test positive for coronavirus*

British oil major BP is adjusting the company’s offshore procedures after several workers who had previously been aboard a production platform in the Gulf of Mexico tested positive for the coronavirus.

Citing health privacy laws, BP did not provide details about the incident or medical conditions of the affected workers but confirmed that they tested positive for COVID-19, a deadly virus that causes a flu-like illness.

BP owns and operates four offshore oil production platforms in the Gulf of Mexico off the coast of Louisiana. It’s not clear which of the platforms the incident happened on but the company has adjusted is safety procedures in response to the incident.

 

 

The Oklahoman – March 31, 2020

Devon Energy cuts its capital expenditure plan again as pandemic continues

Devon Energy is cutting another $300 million from its capital expenditures plans for 2020.

Officials announced Monday the revised budget for the year now stands at about $1 billion, a reduction of nearly 45% compared to its original plan.

To get there, the company will defer activities it had planned in its Eagle Ford Shale operational area.

 

 

Houston Chronicle – March 31, 2020

Flint Hills Resources pulls plug on some crude oil purchases

Kansas pipeline and refinery operator Flint Hills Resources on Tuesday said it is invoking contract clauses to get out of April crude oil purchase commitments as the coronavirus pandemic continues to wipe out demand for gasoline and other products.

The oil would have been delivered to its two refineries in Corpus Christi.

“At this time, there is nowhere to move or store product,” company spokesman Jake Reint said in a statement. “Consequently, after exhausting every alternative, we were forced to declare force majeure on April crude oil purchases for a portion of our crude supply. We continue to work to minimize the extent of this disruption.”

 

 

NPR – March 31, 2020

Builder Of Controversial Keystone XL Pipeline Says It’s Moving Forward

After a decade of protests and political reversals in the U.S., the Canadian company behind the controversial Keystone XL oil pipeline says it has made a final decision to build the long-delayed project. Once completed, it would deliver more than 830,000 barrels per day of crude oil from Alberta’s oil sands, or “tar sands,” region to the United States.

TC Energy, formerly known as TransCanada, says in a statement the project will invest $8 billion into the North American economy and provide “thousands of well-paying jobs during construction.”

 

 

Texas Observer – March 11, 2020

In Big Spring, a Rural Community Braces for Another Oil Bust

Sometimes Big Spring is a boomtown. Sometimes it’s a bust. And usually, the defining factor is one simple number: the price of a barrel of crude.

The community of 28,000, two hours west of Abilene, sits at the edge of the world’s most productive oilfield. It’s home to hundreds of hydraulic fracturing rigs. Billboards advertising jobs for oilfield truck drivers and mechanics dot Interstate 20. The Alon refinery at the eastern edge of town lights up the sky with flares from its towering spires.

The oil industry can be a nasty business—one that pollutes the environment, contributes to traffic fatalities, and drives up housing costs—but it’s the biggest business in town. In Howard County, the industry provides 2,800 jobs and has a total annual economic output of $4.5 billion. Big Spring’s fortune hinges on a stable market, however; with crude prices nosediving, a sign that oilfield workers may soon flee the area, Howard County Judge Kathryn Wiseman is worried.

 

Utilities

 

McAllen Monitor – March 31, 2020

RGV: Stay-at-home not pushing up demand on grid

Shelter-at-home restrictions for Rio Grande Valley residents is currently not affecting power companies, although officials say it is likely residential bills may be a little bit higher when they arrive next month.

AEP Texas and Magic Valley Electric Cooperative, along with the statewide power grid called ERCOT, are not experiencing any undue demands on the grid, spokespersons said Monday.

“As far as I know off the top of my head, no,” said Eladio Jaimez, a spokesperson for AEP Texas. “Nothing’s been out of the ordinary. We haven’t really had any problems or issues when it comes to the grid.”

 

 

Reform Austin – March 31, 2020

Utility Shutoffs Stopped During Pandemic, but Companies Reap Benefits

Thanks to record unemployment brought about by the COVID-19 outbreak, thousands of Texans are struggling to pay their bills as they wait for relief efforts to roll in. In the meantime, the state has issued a moratorium on utility shutoffs for at least six months.

The lack of disconnects is a welcome bit of news, but it’s possible to look at this as a huge benefit for the utility companies, rather than the consumers.

Last Thursday, the Texas Public Utility Commission (PUC) voted unanimously to cease all disconnection for water and power due to the outbreak of the coronavirus, which has already infected thousands and killed at least thirty in the state. However, though the prospect of not having to weather the crisis without water and power is certainly welcome, the action does not necessarily get users off the hook.

 

 

Rivard Report – March 31, 2020

Rick Casey: CPS Energy & The New Deal Has Been a Good Deal for San Antonio

CPS Energy is not only a business, but a governmental agency. Structuring it as a business and giving it business-oriented leadership does not make its overwhelming concern the bottom line. Its owners, through their elected leaders, have other concerns. They don’t want it to be a social agency, but they do very much want it to recognize its important role in our community.

That can mean helping its owners/customers reduce their energy use at a time when that means cutting back on the use of climate-altering fossil fuels. It can mean taking a leading role in developing alternative energy sources whose pay-off may not help the next quarterly report. And it certainly includes strong efforts to avoid exacerbating the devastating impact of a pandemic.

CPS Energy is a hybrid designed to provide an essential service with reliability and efficiency, which means it must be run like a business. But it is also designed to serve the broader interests of its owners who are here, not on Wall Street.

 

 

Wall Street Journal – March 31, 2020

Murray Energy Pushed to Brink of Liquidation*

Coal supplier Murray Energy Corp. said its business has taken a severe hit from “historically bad” coal markets and the coronavirus pandemic, pushing the bankrupt company close to liquidation.

To stay afloat, the nation’s largest private coal company sought permission Monday from the U.S. Bankruptcy Court in Columbus, Ohio, to stop paying roughly $6 million a month in retiree medical costs.

Murray said in court papers that unless it can suspend those health care obligations, it “may be faced with no choice” but to liquidate, likely costing roughly 4,900 employees their jobs.

 

 

S&P Global Platts – March 31, 2020

Power industry response to COVID-19 aided by lessons learned from grid security drills

Coordination with the natural gas and telecommunications sectors as well as supply chain challenges continue to be areas the electricity industry needs to improve upon to better withstand threats to the grid, but a number of practices honed during grid security exercises have aided the power industry’s response to the current coronavirus pandemic, officials with the North American Electric Reliability Corp. told reporters Tuesday.

The organization Tuesday released a report on lessons learned from its fifth grid security exercise, dubbed GridEx V. The biennial event led by NERC’s Electricity Information Sharing and Analysis Center (E-ISAC) functions as a regular stress test for the bulk power system as industry and government agencies work together to thwart simulated attacks to the grid and then self-assess their emergency response and recovery plans.

 

Alternatives & Renewables

 

Electrek – March 27, 2020

EGEB: Green energy CEO: More than 300,000 jobs are not ‘ridiculous’

Tri Global Energy is the leading wind developer in Texas and one of the biggest wind developers in the US. It has successfully developed more than 3,500MW of projects that are currently in financing, construction, or operation. It currently develops wind and solar projects in Texas, Nebraska, Illinois, Indiana, and Virginia. And Sunfinity Renewable Energy is a provider of residential, commercial, and utility solar energy.

John Billingsley is the chairman and CEO of both of those companies, and he is strongly urging lawmakers to ensure green energy is included in the next phase of stimulus spending. (Green energy was not in this week’s Senate’s stimulus bill, and the entire House of Representatives is currently flying to Washington, DC, because one representative, Thomas Massie (R-KY), said he won’t vote for the bill on the phone. I’m guessing he’s not going to win Capitol Hill’s popularity contest today.)

 

Regulatory

 

Fort Worth Star Telegram – March 27, 2020

Bud Kennedy: Texas knew a pandemic was coming. We had a plan. But then the Legislature botched it.*

“Right now, we could have been releasing the state stockpile” of masks, said Dr. Donald K. Murphey of Austin, a pediatric infectious disease specialist in Fort Worth for 22 years.

“We’d be ready.”

Instead, the Texas House chose to ignore experts, save money. and risk lives.

The ordeal of Senate Bill 538 is a perfect example of Texas government gone wrong.

It was killed from both the right and left by an unholy coalition of two of the most potent forces in Austin: big metropolitan county officials leery of state control, and the anti-vaccine, small-government Tea Party faction.

Tea Party libertarians opposed the bill because it gave state health officials power to jail sick people or put them in custody under house arrest.

But the masks and other protective equipment also had a price: $3 million-$5 million.

 

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The Texas Energy Report NewsClips – March 31, 2020

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Lead Stories

 

Midland Reporter Telegram – March 30, 2020

Parsley, Pioneer ask RRC for market demand hearing

Two oil and gas producers with a major presence in the Permian Basin – Parsley Energy and Pioneer Natural Resources – on Monday asked the Railroad Commission to hold an emergency market demand hearing.

In a letter to Railroad Commission Chair Wayne Christian and Commissioners Christi Craddick and Ryan Sitton, the two companies asked the agency to determine the reasonable market demand for oil and whether wasteful production is either occurring or is reasonably imminent. If waste is occurring, they asked the commissioners to take action to prevent such waste.

hey requested a hearing no later than April 13 with any resulting action to take effect in May.

“It’s critical; we need leadership from Texas,” Matt Gallagher, president and chief executive officer of Parsley, told the Reporter-Telegram in a phone interview as the request was being submitted to the commission. “We need to reset the table on a global basis on the supply side and all of us working together.”

Related: Will Capping Oil Production Help Texas Companies? Experts Say No.

 

 

Financial Post – March 30, 2020

Some American Oil Is Going for Less Than $10 a Barrel

Bakken crude in Guernsey, Wyoming, sank to a record-low $3.18 a barrel Monday, according to data compiled by Bloomberg, while Western Canadian Select in Hardisty, Alberta, was worth just $4.18.

Even oil in West Texas is as cheap as it’s ever been. West Texas Intermediate in Midland was $10.68, just above its all-time low from 1998. And it’s lower-quality counterpart, West Texas Sour, slid to a record $7.18, the lowest in data going back to 1988.

West Texas Intermediate Light, also known as WTL, traded at around $7.50 a barrel below the WTI Midland benchmark on Monday, traders said, the equivalent of about $3 a barrel outright. Including transportation costs from the wellhead, that would mean the very light crude is worth near-zero, if not negative, when it comes out of the ground.

Even oil that makes it to a dock isn’t immune from the price plunge, as refineries around the world slow down. U.S. oil for export from Corpus Christi — the end point of several new Permian pipelines and a major exporting hub — traded at $15 a barrel below July Brent, according to traders.

 

 

Washington Post – March 30, 2020

The Energy 202: Struggling U.S. oil companies hope for more economic help in next coronavirus stimulus package*

The struggling U.S. oil industry got no special bailout in the huge coronavirus stimulus package signed by President Trump on Friday. But the political fight over money to help the oil sector is far from over.

Lawmakers decided to kick the can down the road on a fraught political battle over refilling an emergency oil reserve in the effort to pass a much-needed stimulus package designed to send $2 trillion into the pocketbooks of people and businesses.

But the push to buy oil to replenish the nation’s Strategic Petroleum Reserve could come up again as Congress is expected to take up another stimulus package next month in response to the deadly pandemic. “That’s when you can slow down the legislative process and not throw together a trillion-dollar bill in a week,” said Liam Donovan, an energy lobbyist at the Washington-based firm Bracewell.

 

 

Business Standard – March 30, 2020

Saudi Aramco plans to sell pipeline stake amid a slump in crude prices

Saudi Aramco, the world’s largest oil producer, is weighing the sale of a stake in its pipeline unit to raise money amid a slump in crude prices, according to people familiar with the matter.

Aramco may need to raise cash this year as it confronts a historic rout in oil prices and a burgeoning list of spending obligations.

The company has reaffirmed its commitment to pay out $75 billion in dividends this year and also needs to make the first installment for its $70 billion acquisition of a stake in chemicals producer Saudi Basic Industries Corp.

 

Bond Buyer – March 23, 2020

Covid-19-driven border restrictions a blow to Texas economy

The 28 bridges and border crossing points between Texas and Mexico will remain open to essential traffic and trade, but the partial closure will deliver another economic blow to the Lone Star State as it reckons with a collapsing oil market.

“It’s a new reality,” said Noe Hinojosa Jr., whose firm Estrada Hinojosa & Co. advises most of the municipal bond credits on the border. “We’re living in historic times. The municipal bond market is shut down. I’ve never seen anything like this in my life.”

Most of the Rio Grande bridges were financed with toll revenue bonds by local governments in collaboration with the federal government of Mexico.

President Trump on Friday announced that the U.S. and Mexico had agreed to limit border crossings to essential business and commercial traffic to slow the spread of the coronavirus that causes COVID-19. That followed a similar agreement for the Canadian border. The order brought confusion to Texas border towns, where relatives on both sides of the river frequently cross and where Mexican students often commute to U.S. schools.

“Essential travel would be medical and educational travel, and emergency response,” Laredo Mayor Pete Saenz said. “Tourism and recreational travel would not be considered essential.”

Yvette Limon, director of the bridge system for the city, said Monday the impact of the closings has not yet shown up in toll collections.

 

Oil & Gas

 

Reuters/CNBC – March 31, 2020

Oil rebounds from 18-year lows after US, Russia agree to talks

Oil recovered ground on Tuesday after U.S. President Donald Trump and Russian President Vladimir Putin agreed to talks to stabilize energy markets, with benchmarks climbing off 18-year lows hit as the coronavirus outbreak cut fuel demand worldwide.

Brent crude was up by 43 cents, or 1.9%, at $23.19 a barrel by 0406 GMT, after closing on Monday at $22.76, its lowest finish since November 2002.

U.S. crude was up by $1.16, or 5.8%, at $21.26 a barrel, after settling in the earlier session at $20.09, lowest since February 2002. …

Trump and Putin agreed during a phone call to have their top energy officials discuss stabilizing oil markets, the Kremlin said on Monday.

 

 

Jakarta Post – March 30, 2020

Trump, Putin discuss oil price plunge, coronavirus

President Donald Trump and his Russian counterpart Vladimir Putin discussed plunging oil prices and the coronavirus pandemic Monday, as Trump said Moscow is pressing for an end to US sanctions.

The two “expressed serious concern regarding the scope of the spread of the coronavirus” and “discussed closer cooperation,” according to a Kremlin statement on what it described as the “lengthy” phone call.

The White House said in a separate statement Trump and Putin had “agreed to work closely together through the G20” against the virus and the economic shock resulting from travel bans and social distancing.

 

 

CNBC – March 30, 2020

Goldman on how the ‘largest economic shock of our lifetimes’ will permanently alter energy markets

The coronavirus pandemic will likely be a “game-changer” for energy markets, according to analysts at Goldman Sachs, with carbon-based industries such as oil thought to be sitting “in the cross-hairs.” ….

“Not only is this the largest economic shock of our lifetimes, but carbon-based industries like oil sit in the cross-hairs as they have historically served as the cornerstone of social interactions and globalization, the prevention of which are the main defense against the virus,” they added. ….

“Now the question is: can the U.S. and OPEC save this market?” analysts at Goldman asked.

“The demand shock has become so large that they can’t do it alone, a fact they have acknowledged, stating that a balanced market would require a coordinated global production cut — a policy which appears impossible at this point, too late to stop the current surplus and far below other initiatives on the agenda right now.”

 

 

Rigzone – March 30, 2020

Moody’s Projects $50-Plus Oil in 2021

The credit ratings agency Moody’s Investor Service reported that it is assuming a West Texas Intermediate (WTI) crude oil price ranging from $40 to $45 per barrel for 2020. However, it added that it expects per-barrel prices to return to $50 to $55 territory in 2021.

The 2021 projection includes a $5 per barrel differential between the WTI and Brent benchmarks.

“The sharp reduction in demand for oil products worldwide and the supply shock resulting from disagreement among oil-producing countries in the face of the coronavirus crisis has led to depressed and extremely volatile oil prices,” Steven Wood, managing director of Moody’s Corporate Finance Group, commented in a written statement emailed to Rigzone.

 

 

CNBC – March 30, 2020

Oil demand could decline by 20 million barrels a day in April, says oil expert Dan Yergin

The oil market is facing a “double crisis” with a collapse in the OPEC+ alliance affecting supply and the slowdown in the global economy crushing demand, oil guru Dan Yergin said this week.

“The breakdown of OPEC+ is only part of the picture,” the vice chairman of IHS Markit told CNBC’s “Capital Connection” on Monday. “The big thing is the coronavirus and the showdown of much of the world economy.”

Infections around the world have now crossed 700,000, according to data compiled by the Johns Hopkins University. Nearly 34,000 people have died from COVID-19.

 

 

Wall Street Journal – March 30, 2020

Sanchez Energy Bankruptcy Lenders Strike Deal to Take Over Company*

Sanchez Energy Corp. ’s top lenders have agreed to take a majority stake in the bankrupt oil-and-gas driller after collapsing oil prices wiped away their chances of being fully repaid, people familiar with the matter said.

The Houston company’s top-ranking lenders reached a tentative deal to take majority control after Sanchez acknowledged it couldn’t repay $200 million in bankruptcy loans that have kept it afloat during its chapter 11 proceedings, these people said.

The agreement, which is still being finalized, illustrates the pressure on American oil drillers as U.S. crude prices hit their lowest level since 2002. Bankruptcy loans, which enjoy top payment priority in corporate restructurings, are almost always repaid in full and in cash.

 

 

Wall Street Journal – March 30, 2020

Oil-Field Servicer CARBO Ceramics Files for Bankruptcy

Oil-field-services company CARBO Ceramics Inc. filed for bankruptcy protection after reaching a deal with its senior lenders on a debt-for-equity swap.

The Houston-based company, which provides ceramic technology used by shale drillers that rely on hydraulic fracturing, filed for chapter 11 protection with a deal that hands control of the company to senior lenders owed $65 million, Wilks Brothers LLC and Equify Financial LLC.

CARBO is the latest victim of the continuing drama unfolding in the oil patch where benchmark U.S. crude, which briefly dipped below $20 a barrel on Monday, has fallen to its lowest level in years.

 

 

The National – March 30, 2020

BP’s new boss tells staff jobs are safe for at least three months

BP has promised its employees their jobs are safe over the next three months, while the oil major considers ways to cut costs with crude prices plunging.

Chief executive Bernard Looney said the company would take “calm, deliberate action” to manage its capital costs in response to oil’s historic crash. The measures “will not include include making any BP staff redundant” over the next three months, he said in a LinkedIn post.

An unprecedented destruction in demand because of the coronavirus pandemic and a surge of supply have pushed US crude prices below $20 a barrel, with the outlook becoming increasingly grim. Oil companies has pledged billions of dollars of spending cuts to weather the crisis.

 

 

Dallas Morning News – March 30, 2020

Energy Transfer to take over LNG export project in Louisiana after Shell bails out*

Dallas-based Energy Transfer will take over development of a multibillion-dollar liquefied natural gas export terminal in Lake Charles, La., after Royal Dutch Shell pulled out of the joint venture.

The pipeline company said Monday that it’s considering ways to move the project forward, including finding new partners or reducing the terminal’s size. The project would convert and expand an existing import facility into an export terminal to ship natural gas extracted from U.S. shale patches to global customers. ….

Energy Transfer and Shell agreed in March 2019 to share the cost of developing the southwest Louisiana terminal, which would connect to Energy Transfer’s national pipeline system. The two companies were set to receive engineering and construction bids in a few months.

Also on Shell: Shell trims Q1 production guidance as pandemic starts to hit earnings

 

 

Houston Chronicle – March 30, 2020

Drilling Down: Independents keep Permian Basin alive

…Chevron was the only oil major to file drilling permits in the Permian Basin, with plans to drill three horizontal wells in Culberson County. But nine independent oil companies filed a combined 90 drilling permits in the region. The nine companies have made budget cuts of their own but are maintaining the majority of activity the West Texas shale play.

Houston oil company Birch Resources led the pack with 16 drilling permits for a series of horizontal oil wells on its Rosie The Elephant lease in Martin County. The wells target the Spraberry field at total depths ranging from 8,100 to 8,700 feet. Irving oil company Pioneer Natural Resources plans to drill 14 horizontal wells split between Midland and Upton counties while Midland oil company Concho Resources plans to drill 12 spread out between Ector, Martin and Reeves counties.

 

 

Argus Media – March 27, 2020

Magellan anticipates 25pc drop in 2Q fuel demand

Magellan Midstream Partners has planned for a 25pc decline in gasoline and aviation fuel demand in the second quarter across its midcontinent and US Gulf coast fuel distribution system, the company said today.

The outlook included a 5pc decline in diesel demand compared to the same period of 2019. But there were many uncertainties in predicting fuel demand as communities try to mitigate the coronavirus pandemic.

 

 

The Telegraph – March 26, 2020

Judge orders review of pipeline

Fargo, ND — A federal judge on Wednesday ordered the U.S. Army Corps of Engineers to conduct a full environmental review of the Dakota Access pipeline, nearly three years after it began carrying oil.

U.S. District Judge James Boasberg wrote that the easement approval for the pipeline remains “highly controversial” under federal environmental law, and a more extensive review is necessary than the environmental assessment that was done.

The pipeline was the subject of months of protests, sometimes violent, during its construction in late 2016 and early 2017 near the Standing Rock Sioux Reservation that straddles the North Dakota-South Dakota border. The Standing Rock tribe continued to press litigation against the pipeline even after it began carrying oil from North Dakota across several states to a shipping point in Illinois in June 2017.

 

 

Kallanish Energy – March 27, 2020

Court backs ACE review of Bayou Bridge Pipeline*

A federal judge in Louisiana has ruled that the environmental review of the Bayou Bridge Pipeline by the U.S. Army Corps of Engineers (ACE) was sufficient, Kallanish Energy reports.

The decision backs the federal government and Texas-based Energy Transfer, the company that developed the 163-mile crude oil pipeline that went into service in March 2019.

The suit had been filed in 2018 by the Sierra Club, the Atchafalaya Basinkeepers, the Gulf Restoration Network, the Waterkeeper Alliance and the Louisiana Crawfish Producers Association-West with representation by Earthjustice. The defendant was the U.S. Army Corps of Engineers that gave the company approval to build the pipeline without a full Environmental Impact Statement.

 

 

Corpus Christi Caller Times – March 24, 2020

Why Corpus Christi’s port hasn’t turned away incoming vessels amid COVID-19 pandemic

No vessels have sailed into the Port of Corpus Christi with sick crew members during the coronavirus pandemic, a port emergency official said Tuesday.

Corpus Christi’s port has operated continuously in the weeks since the virus began spreading in the United States and throughout Texas, said Danielle Hale, the port’s emergency management manager.

Port personnel have been working remotely and cleaning efforts at port facilities have significantly stepped up in that time to beat back the virus, Hale said, each ship on its way to the port is required to be vetted by the Coast Guard, U.S. Customs and Border Protection and port personnel before it’s allowed entry.

 

 

NPR – March 14, 2020

Karnes City continues evolving as Trump steps in to help oil industry facing its own Coronavirus Crisis

In South Texas, Rudy Martinez immediately experienced the effects of the past week’s collapse in crude oil prices.

“I actually have a little man camp and these guys are on the way out because they lost contracts,” says Martinez, who has eight rooms he rents to out-of-town oilfield workers in Karnes City, Texas. “The workers get their per-diem and I charge them $100 a person [per week]. Actually I’d like to charge them a little more than that, but now that it’s tapered off, it’s hard to charge them that because they can’t pay it,” he says.

Back when the oil business was really booming in Karnes City, Martinez says he could charge up to $2000 a week per person.

This is one small example of what declining oil prices mean for the rural communities that depend on the oil business. And there’s a lot at stake for the U.S., the world’s largest producer of crude oil.

 

Utilities

 

Seeking Alpha – March 30, 2020

El Paso Electric sale wins conditional FERC approval

El Paso Electric’s (EE +0.8%) sale to an investment fund advised by J.P. Morgan reportedly was conditionally approved by the Federal Energy Regulatory Commission.

FERC was among the last regulatory approvals needed for the deal to close, which was approved earlier this month by New Mexico regulators.

 

 

San Antonio Express News – March 30, 2020

CPS Energy chooses bidder for former HQ and other downtown properties*

CPS Energy has selected a buyer for several of its properties, including the utility’s former headquarters campus downtown.

The San Antonio utility’s board of trustees gave the green light Monday for president and CEO Paula Gold-Williams or her designee to start negotiations.

It includes CPS’ main office building at 145 Navarro St., a building and parking garage at 146 Navarro St., a parking lot near the Mexican Consulate and an interest in the Tower Life Building parking garage.

 

 

S&P Global Platts – March 30, 2020

US ‘far too reliant’ on Chinese lithium: American Battery CEO

The coronavirus pandemic and its subsequent impact on the global lithium supply chain emphasizes the US’ damaging overreliance on lithium from China, American Battery Metals CEO Doug Cole said Monday.

“If coronavirus has shown us anything, it’s that we are far too reliant on China and other countries for key minerals like lithium, cobalt and nickel,” Cole said in a statement. “The United States is rich in these key metals, and we must quickly increase domestic investment to bring these resources into the supply chain.”

The US is only mining and producing about 1% of the world’s lithium despite having access to large domestic lithium resources, Cole added.

 

 

Forbes – March 30, 2020

Roger Conrad: Electricity Demand In The Time Of COVID-19

So far at least, the US power industry is absorbing the blow of reduced demand, just as it’s done in previous crises.

So far, the hardest hit power grid is New York, with load down 7 and prices off by 10 percent. That’s expected, given New York City is the current epicenter of the US health crisis.

Next is New England, with 5 percent lower demand and 8 percent reduced wholesale prices for the week from March 19-25. BNEF says the numbers could go higher following advisories and orders issued March 24 for some 70 percent of the region’s population to stay at home. …

The wholesale price of power from natural gas, coal and many nuclear plants was already sliding before COVID-19, due to renewables adoption and low natural gas prices. But here too, big producers like Exelon Corp (EXC) and Vistra Energy (VST) have employed aggressive price hedging near term, with regulated utilities and retail businesses protecting long-term health, respectively.

 

 

Power Engineering – March 30, 2020

Entergy’s new 980-MW Lakes Charles gas-fired plant operational three months ahead of schedule

Entergy Corp. has put its newest combined cycle gas turbine power plant into operation Louisiana.

The 980-MW Lake Charles Power Station began commercial operation this past weekend. The $872 million project provides cleaner emitting electricity as Entergy phases out its coal-fired, oil and older natural gas power portfolio.

Phillip May, CEO of Entergy Louisiana, noted that Lakes Charles Power Station was completed well ahead of its previously scheduled June start of operations. The power plant is in Westlake, La.

 

Alternatives & Renewables

 

PV Magazine – March 27, 2020

Texas installer sees coronavirus concerns driving interest in residential storage

“Today, more than any time, we’re seeing that the world is a volatile place. Whether it’s the economy, the grid or our public health, all of these things are more fragile than we thought two months ago. Today, more than any time, people have a sense of what they can take back, in terms of providing some predictability to their future.”

And while that quote by Bret Biggart, CEO of Freedom Solar, a Texas-based residential and commercial solar contracting firm may seem to echo much of the doom and gloom surrounding the solar industry in the coming months, the truth is that Biggart believes Freedom Solar is in a unique position to weather the upcoming storm.

 

Regulatory

 

Transport Topics – March 30, 2020

Trump to Cut Back Obama-Era Emissions, Fuel Economy Requirements

The Trump administration will dramatically relax automobile emissions and fuel economy standards so that only modest efficiency gains are required through 2026, according to people familiar with the matter.

In a rule to be announced as early as March 31, the administration will require automakers to boost the fuel efficiency of new vehicles each year by a 1.5% fleet-average starting in 2021, said three people, who asked not to be identified discussing the measure ahead of its release. The required improvements are far more modest than requirements for an estimated 5% annual gains under rules charted during the Obama administration.

 

 

Houston Chronicle – March 30, 2020

Hotze, pastors ask Texas Supreme Court to rule Harris County stay-at-home order unconstitutional*

A hardline conservative power broker and three area pastors filed a petition with the Texas Supreme Court Monday arguing that Harris County Judge Lina Hidalgo’s stay-at-home order violates the Constitution by ordering the closure of churches and failing to define gun shops as “essential” businesses.

The emergency petition for a writ of mandamus, filed by anti-LGBTQ Republican activist Steven Hotze and pastors Juan Bustamante, George Garcia and David Valdez, contends Hidalgo’s order undercuts the First Amendment by limiting religious and worship services to video or teleconference calls. Pastors also may minister to congregants individually.

 

___________________________

 

The Texas Energy Report NewsClips – March 30, 2020

Click on each headline to read more of the story at the source.
Asterisk * following headline indicates news content may be limited or unavailable at the source because it’s password protected.

 

Lead Stories

 

Wall Street Journal – March 30, 2020

U.S. Stock Futures Falter as Oil Trades at 18-Year Low*

U.S. stock futures wobbled and oil dropped sharply Monday as investors grappled with the mounting economic toll after U.S. government officials signaled that measures to contain the coronavirus pandemic may remain in place for an extended time.

Futures tied to the S&P 500 index wavered between gains and losses, suggesting that U.S. shares could be headed for another volatile trading session at the start of the week. U.S. crude-oil futures dropped to their lowest level in over 18 years, weighing on the shares of oil-and-gas producers and pushing European and Asian stocks lower. ….

U.S. crude-oil prices came under renewed pressure as the restrictions on business activity in most economies-—combined with the threat of elevated production levels from Saudi Arabia and Russia—raised the prospect of a longer downturn in fuel markets.

West Texas Intermediate, the main U.S. crude gauge, fell 4.3% to $20.59 a barrel after earlier reaching levels last seen in February 2002. Brent crude, the global oil benchmark, slumped 4.7%, extending its plunge this year to almost 60%.

 

 

Claims Journal – March 27, 2020

Coronavirus Is Delaying Vital Safety Work Across Oil and Gas Across N. America, Europe

Restrictions on the numbers of contractors on rigs, pipelines and production sites are forcing companies to delay work that’s been planned for years. For refiners, last-minute changes are being made to scale back so-called turnarounds, allowing the most urgent work required by regulators to proceed while other projects have to wait.

The backlog is becoming evident across the industry: Norway’s Equinor ASA delayed maintenance at five offshore oil and gas platforms, as well as a liquefied natural gas plant. Canadian oil sands producers also pushed back their plans. Work on the main crude pipeline running from the North Sea has been put off, and Phillips 66 has postponed three major projects.

“It would be very hard to conduct a turnaround exercising social distancing,” said Fiona Rutherford, a chemical engineer and independent oil consultant, who worked on refinery maintenance projects at Exxon Mobil Corp.

 

 

Houston Chronicle – March 29, 2020

Pipeline operators may seek legal protection as pandemic causes oil demand to plummet*

Pipeline operators with maxed out storage tanks are asking some Texas oil companies to stop production as the ongoing price war between Russia and Saudi Arabia has exacerbated a global supply as the coronavirus pandemic has dramatically cut demand. …

“If producers do not cooperate and refiners are not buying, pipeline operators can apply force majeure clauses,” said Anas Al-Hajji, an energy market expert based in Dallas. Companies typically invoke force majeure clauses for natural disasters but they can also be applied to a broad range of unforeseen circumstances that prevent them from fulfilling a contract.

Port of Corpus Christi CEO Sean Strawbridge said the South Texas waterway is using a federal critical infrastructure designation to continue construction work on storage tanks that can hold between 12 million and 15 million barrels.

Following social distancing and other safety precautions, storage tank and pipeline operators such as Buckeye Partners, Moda Midstream, Epic Midstream and Flint Hills Resources will have their expanded facilities ready over the next two or three months, Strawbridge said.

 

 

Reuters – March 30, 2020

U.S. natgas storage to hit record as coronavirus cuts demand, LNG exports

U.S. natural gas stockpiles will hit an all-time high in 2020 as drillers keep producing record amounts of fuel even though demand is expected to slump as governments take steps to slow the spread of coronavirus….

Analysts polled by Reuters project U.S. gas storage will reach a record 4.078 trillion cubic feet (tcf) at the end of the summer (April-October) injection season as the pandemic cuts demand before producers can reduce output. That is still well short of U.S. capacity of 4.268 tcf in the Lower 48 states, according to the most recent federal data in 2018.

However, the slump in demand headed into the seasonally less active summer means prices are set to drop further.

 

 

The Hill – March 27, 2020

Court OKs Trump repeal of Obama public lands fracking rule

A federal judge on Friday upheld the Trump administration’s decision to repeal an Obama-era rule that established standards for hydraulic fracking on federal land.

California and several environmental groups sued over the repeal, claiming it was unlawful. California particularly claimed that the federal government was in violation of the Administrative Procedure Act and the National Environmental Policy Act.

However, Judge Haywood S. Gilliam Jr., an Obama appointee, sided with the Trump administration, writing: “The record does not compel the conclusion that [the Bureau of Land Management] arbitrarily ignored foregone benefits or arbitrarily overvalued the costs associated with the 2015 Rule, as California Plaintiffs urge.”

 

Oil & Gas

 

Reuters – March 26, 2020

Saudi struggles to find buyers for extra crude as demand dives -sources

Saudi Arabia is struggling to find customers for its extra oil as demand plummets due to the coronavirus and freight rates surge, industry sources said, undermining the kingdom’s bid to seize market share from rivals by expanding production.

Royal Dutch Shell (RDSa.L) and U.S. refiners were taking less Saudi crude, Finland’s Neste was not taking any in April and Indian refiners had sought delayed deliveries, the sources said. Polish refiners were also easing up on purchases, they added.

Unipec, the trading arm of Asia’s largest refiner Sinopec, has also decided against lifting more Saudi crude in April after freight rates surged, sources said.

 

 

Wall Street Journal – March 27, 2020

BP Agrees to Draft Climate Change Shareholder Resolution*

BP PLC said it has agreed to draft a shareholder resolution to be voted on next year that would enshrine its pledge to reach carbon neutrality by 2050, as investors urge major oil companies to diversify their portfolios to cleaner energy.

The British energy company said the resolution would address BP’s overall greenhouse-gas emissions from its operations to the products it buys and sells and lay out how it would boost investment in clean energy.

“Listening and engaging with stakeholders has been an essential part of defining our net-zero ambition and aims,” Chief Executive Bernard Looney said in prepared remarks.

 

 

World Oil – March 29, 2020

Scores of drilling rigs idled as downturn gains momentum

North America, which has been roiled by contractions in the past, may see a sharper, more abrupt cut in drilling activity before the end of the second quarter, Schlumberger Ltd., the world’s biggest oilfield service company, said this week.

Halliburton Co., the king of fracking and the No. 3 overall service provider, is planning for almost two thirds of all rigs on the continent to shut down by the fourth quarter.

 

 

Midland Reporter Telegram – March 27, 2020

Pioneer CEO says supermajors prefer all the independents to go bankrupt

Pioneer Natural Resources CEO Scott Sheffield said Thursday that the current price downturn reminds him of 1986 and opposition to a settlement with the Saudis from companies like ExxonMobil threaten the future existence of independent companies.

Speaking to CNBC, Sheffield said it will take a long time to balance the market and that Exxon is an example of the oil industry heavyweights that want to see “all the independents go bankrupt” and then “pick up the scraps.” When asked about the conflict between the “big supermajors” and the “mid and small companies, Sheffield added, “What happens? As you know, there’s about 74 public independents, there’s only gonna be about 10 left at the end of 2021 that have decent balance sheets. The rest become ghosts, or zombies. … Essentially, we’re going to have about 65 public independents that are going to have to debt-to-cash flow or debt-to-EBITDA at about 5 to 1. And you haven’t asked me about consolidation. Consolidation won’t happen because too many companies have too much debt.”

 

 

Beaumont Enterprise – March 29, 2020

Port Neches plant blast leaves fissures in community relations

It was another catastrophe, this time a Thanksgiving Eve plant explosion, that brought the Klieg lights back to Southeast Texas. Folks here had seen it before. Drawn to the towering plume, federal and state agencies jumped in to help contain the blaze while regulators and national media scrambled to find out what happened and why. Televised briefings became a part of daily life. Expressions of support poured in. Flashback to Tropical Depression Imelda two months earlier and Tropical Storm Harvey two years before that.

Soon enough, attention shifted elsewhere. Those who were most affected by the TPC Group blast began the process of getting their damaged homes and lives back in order. In February, TPC Group began introducing new policies that limited settlement offers, staggered payments to blast victims and put more restrictions on the way residents could manage their repairs.

The local law firm leading most of the lawsuits against TPC organized a town hall to discuss the changes. John Thomas, a lawyer with the firm, Brent Coon and Associates, sensed a lack of enthusiasm in this quintessentially pro-industry community.

 

 

Austin American Statesman – March 29, 2020

Abbott adds road travelers from Louisiana to coronavirus quarantine*

Significantly expanding a mandatory quarantine order for travelers from coronavirus hot spots, Texas Gov. Greg Abbott on Sunday required those leaving Louisiana by road to enter quarantine for 14 days while in Texas.

Abbott’s latest emergency order also established mandatory quarantines for air travelers from Miami, Atlanta, Detroit, Chicago and any airport in California and Washington state.

The governor said he expanded a quarantine order announced Thursday to reduce the chance of “importing COVID-19 into the state of Texas.”

 

 

Houston Chronicle – March 26, 2020

Coronavirus concerns prompt Tenaris to postpone stockholders meeting*

Concerns about the ongoing coronavirus pandemic and related travel restrictions have prompted oilfield pipe manufacturer Tenaris to postpone the company’s annual stockholders meeting.

Tenaris originally planned to hold its annual stockholder meeting in Luxembourg on April 30 but in a Wednesday afternoon statement, the company said uncertainty about the future spread of the virus prompted postponing the meeting until June 2.

The company’s board of director plans to issue stockholder meeting proposals on April 29. How much the company will in dividends is expected to be at the top of the list.

 

 

Midland Reporter Telegram – March 28, 2020

Matt Gallagher, Parsley Energy: State, federal leaders should aid U.S. oil industry

First, companies themselves should reduce production. At Parsley, we have announced a 40 percent reduction to our 2020 capital program. Many other companies have announced similar cuts. Second, our states should look to tools within their powers to moderate supply while easing pressure on the workforce specifically during these early days of the COVID-19 outbreak.

The state of Texas, as the nation’s top producing state, should take additional action to protect the oil and natural gas industry and its workers. Our industry employs hundreds of thousands of people and is responsible for funding our state’s rainy-day fund and other local services. One tool the state has at its disposal is the idea of curbing production known as proration. The Texas Railroad Commission has used this in the past and it should be evaluated, along with any other tools available to our state’s regulatory and governing bodies.

Finally, and most impactful, the federal government should increase diplomatic pressure on the countries flooding the market.

 

 

Oil Price – March 27, 2020

Lourcy Sams: The Cheapest Way For Trump To Save U.S. Oil

A variable import fee on United States imported oil or products with a floor price of $50.00 will set the U. S. price and hence the world price at $50.00. This would provide a stabilizing effect on the U. S. oil industry. Capital budgets could be set at reliable numbers with confidence. Bank debt would be secured and reliable. Jobs could be saved within predictable cash flow. In short, a critical oil industry would be stabilized.

The United States needs energy security and a stable growing domestic industry is needed to provide energy security. The U. S. military presence in the Middle East is to provide a stable flow of oil and to provide energy security. Recent innovations by the U. S. oil industry have shown we can go a long way toward energy independence and energy security. The price war has as much to do about market share and eliminating the U. S. competition than any other factor.

Similar: Dan Doyle, Reliance Well Services: An Oilman’s Plea To President Trump

 

 

Midland Reporter Telegram – March 28, 2020

Energy economist: Production cuts won’t work

Crashing crude oil prices have given rise to calls for action by both federal and state agencies to support prices.

“Some of my colleagues have called for a return to the oil import quotas of the Eisenhower days,” energy economist Ed Hirs said in a phone interview. …. Moves such as reducing Texas output or placing quotas on imported oil won’t prompt refineries to buy oil they’re not already buying, he said.

That’s why he opposed lifting the ban on exporting domestic crude. He said that keeping the ban in place would have been leverage to encourage refineries to reconfigure their facilities to process the lighter crudes coming out of the nation’s shale plays rather than continuing to rely on the heavier crudes coming from the Middle East and Latin America.

“Producers don’t have a domestic market. (That’s why) we’ve exported 3 million barrels a day over the last six months,” he said. “No refiner is going to buy light crude if they can’t process it. They’ll buy the crude they can run in their refineries. But the producers were so nearsighted, so deep in the leaves, they can’t see the trees or the forest.”

 

 

Yahoo! News – March 29, 2020

Irina Slav: Russia’s Plan To Bankrupt U.S. Shale Could Send Oil To $60

As soon as U.S. shale leaves the market, prices will rebound and could reach $60 a barrel, Rosneft’s Igor Sechin said recently. As fate would have it, in what many would have until recently considered an impossible scenario, a lot of U.S. shale might do just that. Breakeven prices for U.S. shale basins range between $39 and $48 a barrel, according to data compiled by Reuters. Meanwhile, West Texas Intermediate (WIT) is trading below $25 a barrel and has been for over a week now.

The SCOOP/STACK play in Oklahoma has the highest average breakeven price at $48 a barrel. Surprisingly, the Permian is not the lowest-cost play but the second-lowest, at $40. The lowest-cost basin, on average, is the Delaware Basin, also in Texas.

On the face of it, these averages give no cause for optimism to an industry hit hard and fast by a perfect storm of radically lower demand and a sharp increase in supply. However, it’s worth noting the figures above are averages.

 

 

Butane Propane News – March 27, 2020

API report provides early indication of impact of coronavirus

The American Petroleum Institute (API) in its February 2020 Monthly Statistical Report (MSR), released March 19, provides an early indication of the impact of the coronavirus pandemic on energy markets.

Data from the report reflect the onset of the virus with downturns in demand for diesel (down 9.9% year-over-year) and jet fuel (down 5.2% year-over-year), but a slight increase in gasoline (up 0.3% year-over-year), suggesting many consumers chose to drive instead of fly in February.

 

 

Des Moines Register – March 27, 2020

State regulators will allow Dakota Access pipeline owners to double oil flowing through Iowa

State regulators on Friday gave the owners of the controversial Dakota Access pipeline approval to double the amount of oil passing through Iowa.

The Iowa Utilities Board issued an order Friday allowing Dakota Access to boost the amount of oil that flows through the state to 1.1 million barrels per day from 550,000. The board amended an existing permit to allow for the expansion. The state agency, which requested additional information about the safety of the expansion in January, said the project would not “significantly increase the risk of a spill, or the amount of oil that would be spilled if an incident occurred.”

Texas-based Energy Transfer, which owns the pipeline, wants to build additional pump stations in North and South Dakota, Iowa and Illinois. The $3.8 billion pipeline has been moving oil from the Dakotas to Illinois for nearly three years.

 

 

Pittsburgh Post-Gazette – March 23, 2020

With oil price collapse, Pa. industry ‘already on its knees’ faces a new crisis

“This is monumentally bad,” said Dan Weaver, executive director of the Pennsylvania Independent Oil & Gas Association. “The industry will not look the same coming out of this as they did going in. It just depends on how long it lasts.”

Pennsylvania’s traditional oil industry was already precarious. Prices never fully recovered from a low point in early 2016. In the meantime, one of the biggest expenses — wastewater management — has only gotten more costly.

Mr. Cline said that in 2010, there were 34 waste treatment facilities in Pennsylvania that could take the produced water, or brine, that gets pumped to the surface along with oil. Now, there are about seven facilities, and that changes depending on the day.

 

Utilities

 

Houston Chronicle – March 28, 2020

Power customers stung by coronavirus may get some help*

The Public Utility Commission is expected to establish a emergency fund to help pay the residential electricity bills of Texas residents struggling during the coronavirus pandemic.

DeAnn Walker, chairman of the commission, recommended this week that the commission should immediately provide financial help for strapped Texans who buy electricity in a deregulated market, including Houston and Dallas. She made the suggestion after Texas Gov. Greg Abbott declared a state of disaster March 13 in response to the growing threat of the coronavirus.

The cost of the program would be paid by all types of ratepayers who would be assessed a special charge of 0.065 cents per kilowatt hour, about 78 cents a month for residential customers who use 1,200 kilowatt hours of electricity each month.

 

 

Power Magazine – March 26, 2020

COVID-19 Threatens Outages Scheduled at 97% of U.S. Nuclear Plants in 2020

Challenged by the COVID-19 pandemic, the U.S. nuclear industry has asked the Trump administration to ensure nuclear workers, suppliers, and vendors will have access to nuclear plants and personal protective equipment (PPE) during the 2020 spring and fall refueling outage seasons and beyond. All but two of the nation’s nuclear plants had scheduled planned outages this year, work that the generators consider crucial to keep the lights on.

In a March 20 letter to Energy Secretary Dan Brouillette, Nuclear Energy Institute (NEI) President and CEO Maria Korsnick noted nuclear reactors have a “unique requirement” to load a fresh batch of fuel once every 18 to 24 months. The event necessitates a shut down for two to four weeks during which intense work occurs, including critical maintenance.

 

Alternatives & Renewables

 

PC Magazine – March 26, 2020

Texas retail choice design bests 13 other states in driving solar power

NRG Energy signed 1,300 MW of solar power purchase agreements (PPAs) in Texas last summer, thanks to Texas retail competition policies that create favorable conditions, says Travis Kavulla, NRG Energy’s vice president of regulatory affairs. Yet those conditions are missing in the 13 other states that have retail competition, “where utility incumbents still dominate,” he said. (Those other states are shown in the map above.)

Texas, where NRG Energy is a competitive retail electricity provider, gives all retail providers “a significant incentive” to reduce the impact of price swings in the wholesale power market by entering long-term supply arrangements such as PPAs, said Kavulla.

 

Regulatory

 

The Hill – March 27, 2020

EPA relaxes rules regarding gasoline sales amid coronavirus outbreak

The Environmental Protection Agency (EPA) said Friday that it will extend the amount of time that winter gasoline can be sold this year as producers have been facing lower demand due to the coronavirus.

It will allow companies to sell the winter-grade gasoline through May 20, whereas companies would have previously been required to stop selling it by May 1 to protect air quality.

“Due to the steep fall-off in gasoline demand as a result of the COVID-19 pandemic, gasoline storage capacity is limited and more time is needed to transition the distribution system in order to come into compliance for the summer driving season,” the EPA said in a statement.

 

 

Grand Forks Herald – March 29, 2020

ND oil regulators relax well requirements to avoid forcing well closures during price plunge

North Dakota oil regulators are relaxing requirements to give operators flexibility to determine whether to complete wells or keep them producing at a time when the collapse in oil prices makes some wells uneconomical to operate.

At the direction of the North Dakota Industrial Commission, the Department of Mineral Resources is to immediately reinstate guidelines that “promote the prevention of waste of the state’s natural resources of oil and gas during the current economic climate.”

 

Colorado Sun – March 23, 2020

Colorado scrutinizes oil and gas tax breaks as severance taxes drop and the state budget gets tight

This year, an oil and gas tax break is expected to grow so large — and gas prices drop so low — that many of Colorado’s oil wells would owe the state $0 in severance taxes.

Consider it the $308 million elephant in the room as Colorado lawmakers reassess the state’s crumbling fiscal picture amid the new coronavirus outbreak.

That’s how much Colorado gave back to the oil and gas industry in 2018 through one of the state’s largest tax breaks, the ad valorem tax credit. It’s only expected to grow in the coming years, depleting the state’s coffers at the time it needs money the most.

__________

 

The Texas Energy Report NewsClips – Sunday March 29, 2020

Click on each headline to read more of the story at the source.
Asterisk * following headline indicates news content may be limited or unavailable at the source because it’s password protected.

 

Lead Stories

 

Houston Chronicle – March 27, 2020

Pipeline operators ask oil companies to stop production as storage fills up*

Pipeline operators with full storage tanks are asking some Texas oil companies to stop production as the ongoing price war between Russia and Saudi Arabia has exacerbated a global supply while the pandemic has dramatically cut global demand.

In a Saturday morning tweet, Texas Railroad Commissioner Ryan Sitton, one of three officials elected to oversee the state agency that regulates the oil and gas industry, reported that some oil companies are getting letters from shippers asking for production cuts because they are out of storage. …

The storage problem, Sitton said, appears to be most impacting pipeline companies with contracts to buy crude oil directly from producers in the field. Those pipeline companies, he said, move that purchased oil to storage tanks for future sale.

 

 

World Oil – March 28, 2020

‘Rocks Don’t Go Bankrupt:’ Experts Say Shale Will Rise Again

The American shale industry shocked the world with its rebound after the 2014-2016 bust, setting records for output that pushed the U.S. to the top spot among oil-producing countries. A handful of experts is saying that will happen again.

The comeback trail would be steep and long. The spread of coronavirus is crushing demand while Saudi Arabia and Russia are creating a glut. Everybody agrees U.S. production will take a bigger hit than last time, when it dipped before soaring. As many as 70% of the 6,000 shale drillers may go bankrupt, and one-third of shale-patch workers are expected to lose their jobs. Wall Street, which financed the last boom, has cut off the cash spigot.

Oil rigs stand in the Permian Basin area of Odessa, Texas, U.S., on Saturday, Jan. 19, 2019. In the Permian, America’s busiest oil patch, a producer needs to blast as much as 60,000 barrels of water into a well every day, along with sand and chemicals, to complete the fracking that cracks open the tight, oil-bearing rock about a mile underground.

 

 

Dallas Morning News – March 27, 2020

Pioneer Natural Resources CEO: Trump needs to step in or ‘he’ll lose the energy states’ in November

Pioneer Natural Resources founder and CEO Scott Sheffield isn’t mincing words about a two-pronged threat pressuring independent oil and gas producers.

The Irving-based company is teaming with other independents to force U.S. intervention in the Russia-Saudi Arabia standoff that’s threatening to drive crude oil prices below $20 a barrel, Sheffield said in an interview Thursday with CNBC.

Those same independents also are being squeezed by U.S. oil majors that would rather see them go out of business, he said. That’s why small and mid-sized producers want President Donald Trump to put “significant pressure” on Saudi Arabia to halt the price war and reduce production.

 

 

Washington Post – March 28, 2020

Saudi forces destroy missile fired over capital Riyadh*

Saudi Arabia’s Air Defense Forces intercepted and destroyed a ballistic missile over the capital around midnight, state media said early Sunday.

Residents of Riyadh reported on social media hearing loud explosions in the middle of the night. Minutes later, state media carried a statement by Saudi Arabia’s military saying it had destroyed a missile over the city. Saudi state TV reported that American Patriot missile defense systems were used in the interception.

There were no immediate reports of injuries. Another missile was also intercepted and destroyed over the southern Saudi city of Jizan, which borders Yemen, according to Saudi-owned media outlets.

 

Oil & Gas

 

Midland Reporter Telegram – March 27, 2020

Rig count plunges by 23 in the Permian Basin

More than half the week’s losses came in the Permian Basin, which lost 23 rigs for a count of 382. The US rig count dropped 44 to 728.

It was the largest single-week drop since the bottom of last oil downturn, according to Houston Chronicle. Last year, the rig count dropped by more than 25 percent. A year ago this week, there were 1,006 operating oil and gas rigs in the U.S. Texas saw 29 rigs laid down during the week, bringing its rig count to 368. New Mexico, the only other producing state with a triple-digit rig count, lost three rigs to 109.

 

 

Bloomberg News – March 27, 2020

Oil pain spreads beyond Permian to small towns across America*

The oil market turmoil sparked by Saudi Arabia and Russia is threatening U.S. jobs even in Cut Bank, Montana, and Magnolia, Arkansas — relatively obscure communities in the world of energy.

In such places, mom-and-pop outfits run so-called stripper wells, which generate no more than 15 barrels a day. After crude’s crash in 2014, they were forced to reduce jobs and shrink costs just to keep afloat. Now, as prices plunge to 18-year lows, they’re doing it again, but this time there’s little left to cut, according to Darlene Wallace, who heads Columbus Oil Co. in Oklahoma, the operator of 21 wells.

“Most of us in 2015 cut back severely, and have continued to in the last five years,” said Wallace, who is also the chairman of the National Stripper Well Association, by telephone. “Many of us have been in the business and have seen more than one shock like this. But none of us dreamed it would fall so far. We now have lots of hard decisions to make.”

While America’s shale boom over the past few years decreased the importance of such stripper wells, they still account for 6%, or about 850,000 barrels a day, of U.S. output, according to data provider Enverus. Now, as vaunted fields in regions such as Texas and big drillers like Exxon Mobil Corp. are rocked by oil’s rout, these smaller private operators are facing an uncertain future.

 

 

Washington Post – March 28, 2020

Russian oil giant Rosneft pulls out of Venezuela amid U.S. squeeze on Maduro*

Russia’s state-controlled oil giant Rosneft announced Saturday that it had stopped operations in Venezuela and sold its assets to a company wholly owned by the Russian government, in a shake-up of a key economic lifeline for embattled Venezuelan President Nicolás ­Maduro.

Rosneft, Russia’s largest oil producer, had taken over an increasing share of Venezuela’s oil industry and reaped huge profits from exporting its crude, propping up the Maduro regime in the process.

But it was unclear whether the move would alter the Russian relationship with Maduro, or whether it amounted to an attempt to dodge U.S. sanctions and assuage the fears of Rosneft’s foreign investors.

 

 

S&P Global Platts – March 28, 2020

US Gulf Coast spot ethylene fall to all-time lows

US Gulf Coast spot ethylene prices hit new lows Friday due to reduced demand amid the coronavirus pandemic, sources said.

Spot Mont Belvieu ethylene prices were assessed at 9.625 cents/lb, the lowest price since S&P Global Platts began publishing the assessment in July 2004.

April ethylene traded at 9.625 cents/lb MtB-Nova with the front-month March talked flat to April by sources.

Mont Belvieu prices have fallen more than 56% since the year-to-date high of 22 cents/lb seen on January 13.

 

 

Austin American Statesman – March 28, 2020

As Texas economy sputters, will rainy day fund rescue state government?*

Now, with another sharp drop in oil prices — combined with the far-reaching effects of the coronavirus — wreaking havoc on the state’s economy, will Gov. Greg Abbott see fit to dip into the $8.5 billion dollar fund?

He’s not saying.

Comptroller Glenn Hegar, who provides state leaders with revenue projections, is already sounding alarm bells, saying he expects rainy day fund spending to be necessary to keep up core government work.

Unemployment numbers mount; restaurants and retail stores are shuttered; and oil prices remain in the cellar, down by two-thirds since January. With sales and other consumption taxes making up the lion’s share of state general revenues, a $3 billion budget surplus projected by Hegar last year has evaporated.

 

 

Houston Chronicle – March 27, 2020

Apache makes deeper cuts while its Permian Basin rig count goes to zero*

Apache reported Friday that the company has cut $1.3 billion from this year’s capital spending budget, reducing the company’s annual dividend by $340 million and cutting $150 million in other expenses. The company previously announced a $700 million capital spending cut.

The further reductions come two weeks after Apache announced that the company would reduce its Permian Basin rig count to zero and a week after laying off 85 employees at its Midland office. Standard & Poor’s reduced Apache’s credit rating from BBB to BB+ on Thursday.

 

 

Washington Post – March 27, 2020

Midland, Tex., was already reeling from a collapsing oil market. Then came coronavirus.*

Mayor Patrick Payton struggles to sleep these days, and on a recent evening, his blood pressure was so high when he arrived home from a day at City Hall that all he could do was lie down and stare at the ceiling, trying to find even a fleeting moment of peace, a sense that it was all going to be okay.

Instead, he just felt sick. “You feel nauseous all the time,” he said. “But I am certain every mayor is going through this.”

Payton, 52, is a man who normally radiates positivity, a former pastor who leans heavily on his faith. When he ran for the job last fall, part of his platform was about encouraging the people of this remote west Texas oil town, the heart of the state’s energy-production region, to think more highly of themselves and their city, to value what they did aboveground as much as the work they did below.

 

 

Houston Chronicle – March 28, 2020

Houston Methodist first in the nation to try coronavirus blood transfusion therapy*

Houston Methodist Hospital Saturday night infused the blood of a patient who has recovered from COVID-19 into a critically ill patient, the first hospital in the nation to try the experimental therapy.

A Houston individual who has been in good health for more than two weeks since being diagnosed donated the blood plasma for what’s known as convalescent serum therapy. The concept dates back to the Spanish flu pandemic of 1918.

“Convalescent serum therapy could be a vital treatment route because unfortunately there is relatively little to offer many patients except supportive care, and the ongoing clinical trials are going to take a while,” Dr. Eric Salazar, a physician scientist with Methodist’s Research Institute, said in a statement. “We don’t have that much time,” Salazar said.

 

 

San Antonio Express News – March 27, 2020

Coronavirus risk spurs San Antonio oilman’s release from jail*

The spread of the novel coronavirus led a federal judge this week to order convicted San Antonio oilman Brian Alfaro’s release from jail.

Alfaro, found guilty last month on seven counts of mail fraud, suffers from multiple sclerosis — a disease that makes him more susceptible to the effects of COVID-19, his lawyer said in a court filing.

U.S. District Judge Fred Biery on Wednesday ordered Alfaro’s release from custody and directed him to remain in home confinement until further notice. Alfaro owns a roughly $3 million Shavano Park estate.

 

 

Midland Reporter Telegram – March 23, 2020

Kirk Edwards: Trump should put tariff on oil imported from Saudi Arabia

I ask President Trump to immediately place a $40 per barrel tariff on Saudi oil coming into the United States. I ask the president to quit defending Saudi Arabia with our troops and aircraft carriers and start defending your most critical domestic industry. The one that keeps this country moving with affordable gasoline and electricity. The $40 tariff is the difference in price American energy producers were getting just two months ago versus the $20 per barrel we are getting this week. That tariff would generate nearly $1.25 billion per month to the federal government.

The government can then direct that revenue back to the oil producing states like Texas, Louisiana, New Mexico and Oklahoma in an effort to help those states that are being massively impaired by the current dumping of Saudi Arabia. Filling the strategic petroleum reserve with $20 oil does nothing for the American energy producer. We need jobs and we need a price we can economically drill for, and $20 per barrel certainly isn’t it.

 

 

Texas Monthly – March 23, 2020

Michael Hardy: How Hurricane Harvey Prepared Houston for the Coronavirus

Hurricane Harvey — we got through it — together.

We’re going to need that same spirit to get through the COVID-19 pandemic. As public life shuts down, we’re being thrown back on our own resources. Just as with Harvey, the government’s response has been slow, haphazard, and unreliable. It’s up to us to save ourselves—and our neighbors. Fortunately, we’ve been here before. Few American cities outside of Puerto Rico have been tested as thoroughly as Houston over the past decade. Harvey was simply the last and largest of three consecutive “five-hundred-year” floods we endured in 2015, 2016, and 2017. Hunkering down has become a way of life for us.

As bad as this outbreak is—and it’s very, very bad—everyday life, for the moment, isn’t as challenging for most Houstonians as it was during Harvey. We haven’t lost electricity or water, and there’s no reason to think we will. People are self-isolating in their own homes, surrounded by their creature comforts. Even if we have to shelter in place, as San Francisco is doing, the vast majority of us are going to be okay. All things being equal, I’d rather be stuck at home for three months with air-conditioning at this time of year than be marooned for a week without it

 

 

Hellenic Shipping News – March 24, 2020

For crude, it’s Texas, Russia and OPEC now

One needs to look at the objectives of the two countries, Russia and Saudi Arabia, involved in the ongoing ‘war of nerves.’ Russia definitely wanted to hit the US shale industry. And although publicly Saudis were just vying for higher prices to balance their budget yet, some say, this war is also for the dominance of the oil markets and to engineer structural changes in the market.

In order to step back from their respective positions, both countries would need face-saving measures. For President Trump to handle all the variables in the equation may not be easy, if not impossible.

For the US President to succeed, from the Russian perspective, the US output should also be part of it. Russia had underlined it in clear terms, Kremlin was not ready to give more room for the US producers to gain market share while they continue to slash output to balance the markets.

 

 

KLTV – March 19, 2020

OSHA levies $48K fine in connection with Henderson County oil site fire

A federal agency has fined a Chandler-based business $48,580 in connection with an oil site fire which injured two workers.

The fire happened Friday, Sept. 6, at a Block T Petroleum site off FM 317 in Henderson County.

Two employees of the rig company “Pioneer” were injured in the fire. Their injuries were not considered life-threatening.

 

 

Associated Press – March 23, 2020

Coronavirus rekindles oil spill memories along Gulf Coast

Visitors fled the coast and the seafood industry all but closed temporarily after a BP well blew out and began spewing oil in April 2010, killing 11 rig workers. The sight of oily pelicans, tar-covered beaches and the stench of petroleum in the water gave the coast an apocalyptic feel.

Days of uncertainty turned into months of worry and red ink for businesses and residents.

It was only late last year that Bobby Williams, who runs a 46-foot-long (14-meter-long) charter fishing boat in Gulfport, Mississippi, received his final payment from a BP oil spill claim. He was hoping for a good 2020 until the coronavirus upended everything last week.

Now, with health officials and government leaders telling people to stay home and avoid groups to prevent catching or spreading the virus, it seems the only time the phone rings is when someone else is calling to cancel a fishing trip.

 

 

Bloomberg News/Yahoo! News – March 18, 2020

Some Oil in Canada Has Already Tumbled Below $10 a Barrel

As global oil benchmarks crash below $25 a barrel, some crude from Canada is already trading below $10 for the first time ever.

Heavy Canadian crude, which typically trades at a discount to U.S. West Texas Intermediate oil, is tumbling after the country’s oil-sands producers were forced to delay maintenance, pushing more supply into the market at the worst possible time.

Concerns about flying workers in from out of town as the coronavirus continues to spread led Syncrude Canada Ltd. to delay coker maintenance at its upgrader and Suncor Energy Inc. to push back planned work scheduled for May.

 

 

Yahoo! News – March 22, 2020

Liam Denning: America Should Avoid Foreign Oil Entanglements

Dealing a blow to frackers by opening the taps into a demand void offers Riyadh and Moscow a chance to check shale’s disruption on the supply side and win back market share. But besides the immediate costs, it also carries a big risk. Painful as restructuring will be, the U.S. exploration and production industry won’t die altogether. The likelier outcome is that it consolidates, alleviating debt burdens and cutting costs.

The end result will likely be a less-fragmented industry that won’t grow production by one or two million barrels a day every year — but is more resilient and will still grow whenever oil prices rise above, say, $60 a barrel. So Saudi Arabia and Russia would stand to gain from U.S. supply curbs not just because it would underpin prices today. It might also keep the industry’s least-efficient producers alive just enough to prevent a stronger sector emerging.

 

Oil Price – March 19, 2020

Simon Watkins: The Inevitable Outcome Of The Oil Price War

In purely basic oil economics terms, Russia has a budget breakeven price of US$40 per barrel of Brent this year: Saudi’s is US$84. Russia can produce over 11 million barrels per day (mbpd) of oil without figuratively breaking sweat; Saudi’s average from 1973 to right now is just over 8 mbpd. Russia’s major oil producer, Rosneft, has been begging President Putin to allow it to produce and sell more oil since the OPEC+ arrangement was first agreed in December 2016; Saudi’s major oil producer, Aramco, only suffers value-destruction in such a scenario. This includes for those people who were sufficiently trusting of MbS to buy shares in Aramco’s recent IPO. Russia can cope with oil prices as low as US$25 per barrel from a budget and foreign asset reserves perspective for up to 10 years; Saudi can manage 2 years at most. …

So Russia, with Saudi Arabia either in the oil price war or better still bankrupt, benefits either way. The long-term goal of Russia is to control directly or indirectly all of the key players in the Shia crescent of power in the Middle East, including most immediately Lebanon, Syria, Iraq, Iran, and Yemen (via Iran). All of these countries have vast oil and gas reserves and/or useful coastlines for Russian military and commercial needs (Mediterranean access or access to the Arabian Sea). To do this, Russia’s core foreign policy strategy is to create chaos and then project Russian solutions and therefore power into that chaos. In this respect, again, MbS is being very ‘useful’ to the Russians.

 

 

 

Reuters – March 18, 2020

Majors look to store jet fuel at sea as air travel drastically curbed

Major oil companies including BP and Shell are preparing to take the rare step of storing jet fuel at sea as the coronavirus outbreak disrupts airline activity globally, while refiners are shifting to diesel because of the poor margins associated with jet fuel production.

Jet fuel demand has cratered as airlines suspend flights due to the coronavirus pandemic, which globally has infected more than 204,000 people and killed 8,700, prompting travel restrictions from governments around the world, including the United States. Market participants and refiners have had to scramble to adjust to incredibly low prices.

Storing jet fuel at sea, however, is something of a last resort. The product is sensitive to contamination and degrades more quickly than other refined fuels and especially crude oil, so after a few months, it no longer can be used for aviation, according to analysts.

 

 

 

 

Houston Chronicle – March 15, 2020

Houston activist fights industry in backyard and beyond*

Bryan Parras grew up with the oil and gas industry in his backyard.

He spent his childhood in Gulfgate and Harrisburg, working-class and Hispanic neighborhoods south of the Houston Ship Channel, where railcars, tanker trucks and ships move chemicals in and out of refineries and other facilities day and night. “It’s not just the chemical pollution,” Parras said. “It’s the noise and lights. Your entire body is being overwhelmed.”

For many in those southeast Houston neighborhoods, as it does for 80,000 workers across the city, the oil and gas industry’s blue-collar jobs and good wages provide a path to relative prosperity. But that’s not the path Parras took. At 42, he has spent about half his life fighting the industry that contributes a large portion to Houston’s $490 billion economy.

 

Utilities

 

S&P Global Platts – March 27, 2020

Summer heat comes early for ERCOT as prices spike to $80s/MWh

Electric Reliability Council of Texas wholesale spot power prices have jumped higher than the five-year March average high as parts of the state hit 90-degree weather more than a month early.

Hub prices across the ERCOT footprint have climbed between 22% and 39% week on week as temperatures started to spike March 23 across the state into the upper 80s and low 90s degrees Fahrenheit, in contrast to the 50s and 60s just a few days earlier. Many areas expected near-record high temperatures.

The sudden spike in temperatures has pushed up power demand across the state. ERCOT peakload has averaged 52,542 MW so far in March, 11.4% above the five-year March peakload average of 47,175 MW, according to ERCOT data.

 

 

S&P Global Platts – March 18, 2020

Pipelines, utilities guard against coronavirus but keep gas flowing

North American natural gas transportation and distribution companies are taking measures to reduce the spread of COVID-19 and limit their employees’ exposure to the coronavirus that causes the disease, but companies said they do not expect it to affect the operation of their pipelines and utilities.

“There have been no impacts to our operations,” Enbridge Inc. spokesperson Michael Barnes said in a March 16 email. “Early on, Enbridge took proactive steps to deal with COVID-19. We have enacted our robust continuity plans that cover a number of situations. The resilience, planning and preparation of many people across our organization means we can manage through this health crisis.”

 

 

Dallas Innovates – March 27, 2020

Vistra Energy donates $2M to nonprofits, social service agencies

All across North Texas, businesses and organizations are providing resources and funding to help small businesses and organizations impacted by the COVID-19 crisis.

Irving-based Vistra Energy is donating $2 million to nonprofits and social service agencies to provide direct relief for people with critical needs due to the COVID-19 pandemic in communities the company serves.

“All of us at Vistra are heartbroken to hear how lives have been upended by this pandemic disaster,” Curt Morgan, president and CEO of Vistra, said in a statement. “Many of our neighbors were already dealing with difficult financial circumstances, now made much worse by COVID-19. We want to make sure as many people as possible have access to the things they need most.”

 

Alternatives & Renewables

 

Wall Street Journal – March 25, 2020

Sleeping in Self-Driving Cars? It’s No Pipe Dream.*

Have you seen the video of the guy sound asleep at the wheel of his auto-piloted Tesla Model S? Mile after mile, with his head back, mouth open like he’s having his teeth cleaned. I envy him.

I’ve never been able to sleep in a moving motor vehicle—far as I can tell, no one really does. “It depends on your definition of sleep,” wrote Dr. Robert Pascuzzi, Chair of Neurology at Indiana University School of Medicine. “Not all sleep is the same and if you can’t get slow-wave sleep then it’s basically sleep deprivation.”

And yet, at a time when most jet travel is grounded, our fly-catching friend in the video suggests a fascinating possibility: Vehicle autonomy could give rise to a class of high-speed, long-distance, overnight personal transportation. Such vehicles/services could provide an alternative to continental, internodal air travel, either commercial or civil—what the Germans would call Schlaffenwagens.

 

Regulatory

 

Dallas Morning News – March 28, 2020

Timetable for Dallas-to-Houston bullet train uncertain after company lays off 28 employees amid coronavirus outbreak*

The timetable for the highly anticipated bullet train between Dallas and Houston is uncertain after Texas Central — the company building the project — laid off 28 employees Friday because of the coronavirus outbreak.

Texas Central CEO Carlos Aguilar said in a news release that the project is facing delays because of the toll inflicted by the pandemic in Italy, Spain and Japan, nations where the company has partners.

“Unfortunately, like many other companies and organizations around the world, we have been forced to make hard decisions in an effort to make the best use of our current funding,” Aguilar said in a prepared statement. “Our core team of experts and planners remain actively engaged and prepared to move this project forward when we have our permits and the financial markets have stabilized.”

 

 

Houston Chronicle – March 14, 2020

Allyn West, One Breath Partnership: Hurricane Harvey led to stronger policies. Chemical fires — ITC, KMCO, Exxon Mobil, TPC, Watson — should too*

Dr. Brett Perkison, a physician with a practice in the Clear Lake and Pasadena area, cautions that it’s difficult to attribute the development of cancer and most other chronic diseases to the short-term releases that happen during chemical disasters like ITC. But, he said, the air pollutants that are released then can exacerbate an existing pulmonary disease, like asthma. And, at high enough levels, the pollutants can cause a type of lung disease called irritant asthma. Even six months after the ITC fires had been extinguished, he said, one patient was still reporting “breathing difficulty that began when he inhaled smoke that was released by the ITC fires.” And he was in his own home. ….

Just as the devastation of Hurricane Harvey led to a before and an after for our region, I want to believe that our year of disasters will, too. We have seen images that we shouldn’t see. After Harvey, we decided that we couldn’t go through it again. We wouldn’t. And it has led to stronger policies and a much more sober understanding of the risks we face. It has changed our region physically and emotionally.

 

________________________________

 

The Texas Energy Report NewsClips – March 27, 2020

Click on each headline to read more of the story at the source.
Asterisk * following headline indicates news content may be limited or unavailable at the source because it’s password protected.

 

Lead Stories

 

The Hill – March 26, 2020

EPA suspends enforcement of environmental laws amid coronavirus

The Environmental Protection Agency (EPA) issued a sweeping suspension of its enforcement of environmental laws Thursday, telling companies they would not need to meet environmental standards during the coronavirus outbreak.

The temporary policy, for which EPA has set no end date, would allow any number of industries to skirt environmental laws, with the agency saying it will not “seek penalties for noncompliance with routine monitoring and reporting obligations.”

Cynthia Giles, who headed EPA’s Office of Enforcement during the Obama administration, called it a moratorium on enforcing the nation’s environmental laws and an abdication of EPA’s duty.

 

 

Texas Tribune – March 26, 2020

Texas regulators vote to ban residential utility shut-offs during pandemic while buoying companies

The Texas Public Utility Commission voted Thursday to ban utilities from cutting off power and water services to Texans who have lost jobs and income during the COVID-19 crisis for at least the next six months.

But while it provides immediate relief to Texans worried about keeping their lights on and taps running as they face layoffs and blunted incomes, the order that the three-member commission approved unanimously does not provide direct assistance to utility customers, who will still be on the hook for their bills.

 

 

Science 2.0 – March 26, 2020

Fast Charging Stations Damage Tesla Car Batteries After Just 25 Charging Cycles

A new paper shows that a selling feature of electric cars, fast-charging stations along highways, actually subject batteries to high temperatures and high resistance that can cause them to crack, leak, and lose their storage capacity.

What is needed is a method for charging at lower temperatures and therefore less risk of catastrophic damage and loss of storage capacity. A recent experiment did just that. Scientists charged one set of discharged Panasonic NCR 18650B cylindrical lithium-ion batteries, found in Tesla cars, using the same industry fast-charging method as fast chargers found along freeways. They also charged a set using a new fast-charging algorithm based on the battery’s internal resistance, which interferes with the flow of electrons.

 

 

Wall Street Journal – March 26, 2020

WHEN WILL THE CRISIS EASE? Eran Bendavid, Jay Bhattacharya, Stanford U.: Current estimates about the Covid-19 fatality rate may be too high by orders of magnitude*

If it’s true that the novel coronavirus would kill millions without shelter-in-place orders and quarantines, then the extraordinary measures being carried out in cities and states around the country are surely justified. But there’s little evidence to confirm that premise—and projections of the death toll could plausibly be orders of magnitude too high.

Fear of Covid-19 is based on its high estimated case fatality rate—2% to 4% of people with confirmed Covid-19 have died, according to the World Health Organization and others. So if 100 million Americans ultimately get the disease, two million to four million could die. We believe that estimate is deeply flawed. The true fatality rate is the portion of those infected who die, not the deaths from identified positive cases. …

A universal quarantine may not be worth the costs it imposes on the economy, community and individual mental and physical health. We should undertake immediate steps to evaluate the empirical basis of the current lockdowns.

Note: Imperial College scientist who predicted 500K coronavirus deaths in UK adjusts to 20K or fewer

And: Coronavirus could kill 81,000 in U.S., subside in June -Washington University analysis

 

Oil & Gas

 

Reuters/CNBC – March 27, 2020

Oil gains as governments pledge support amid coronavirus chaos

Oil prices rose on Friday as governments around the world pledged a huge injection of funds and other measures to limit the economic fallout from the coronavirus pandemic, despite fears the outbreak will destroy demand for oil.

Brent crude was up 22 cents, or 0.8%, at $26.56 a barrel by 0415 GMT. U.S. crude was up 42 cents, or 1.9%, at $23.02.

Both of the benchmarks are down nearly two-thirds this year and the slump in economic activity and fuel demand has forced massive retrenchment in investment by oil and other energy companies. Oil requirements around the world may drop by 20% as 3 billion people are in lockdown, the head of the International Energy Agency said as he called on major producers like Saudi Arabia to help stabilize oil markets.

 

 

Houston Chronicle – March 26, 2020

Drilling rig operators make budget cuts ahead of rig count plummet*

Three of the largest drilling rig operators in Texas are making budget cuts and bracing for the worst as a global glut of crude oil and falling demand due to the coronavirus pandemic are expected to cause the U.S. rig count to plummet.

Although exact figures have yet to be released, Helmerich & Payne, the top drilling rig operator in Texas, has pledged to cut its capital spending budget on top of already existing plans to cut operating costs by $200 million.

Nabors Industries, the second most-active drilling rig operator in Texas, is cutting $75 million dollars from its capital spending budget, suspending dividends to stockholders, cutting salaries for its CEO and chief financial officer by 20 percent and cutting salaries of all employees who make more than $100,000 by 10 percent.

 

 

S&P Global Platts – March 26, 2020

Rig Data Provider Enverus: US oil, gas rig count drops by 47 to 766 on week amid extreme activity cutbacks

The US oil and natural gas rig count dropped by 47 to 766 on the week, according to rig data provider Enverus, as exploration and production operators continued to steeply reduce capital budgets and activity for 2020 owing to both low oil demand and plunging crude prices due to the coronavirus pandemic.

The drop was the largest single-week hit since the final week of December 2015, when the rig count fell 77 to 691 while oil prices were in the mid-$30s/b and falling.

 

 

KVIA (El Paso) – March 26, 2020

Upgraded magnitude 5.0 earthquake shakes west Texas – including El Paso area

An upgraded magnitude 5.0 earthquake shook the Big Bend area of western Texas on Thursday morning, and was also widely felt throughout the El Paso area, according to the U.S. Geological Survey.

It was centered in far eastern Culbertson County, which is two counties east of El Paso County, and happened at 9:16 a.m. The epicenter location was about 150 miles from El Paso. ….

Thursday’s quakes may be the result of fracking activity in the nearby Permian Basin, according to scientists. Geologists told the Associated Press that thousands of earthquakes recorded in recent years have been linked to the underground injection of wastewater from oil and gas production.

 

 

E&E News – March 24, 2020

Coronavirus cases are surging. Oil prices have plunged. And America’s self-proclaimed energy capital is grappling with job losses and shuttered businesses.

It’s uncharted territory, even for a city where the ups and downs of crude can influence whether a skyscraper gets built or a restaurant survives.

“We’re not going to go back to exactly where we were before,” said Stephen Klineberg, founding director of the Kinder Institute for Urban Research at Rice University in Houston.

 

 

Dallas Morning News – March 26, 2020

Texas gas prices dip to lowest levels in four years as concerns about pandemic take hold

Average gas prices have dropped to their lowest levels in four years as coronavirus measures and concerns take their toll on road travel, with Dallas prices down 77 cents per gallon less than a year ago.

The statewide gas price average this week dropped to $1.80 a gallon for regular unleaded fuel, AAA Texas reported Thursday. That’s 11 cents less per gallon compared to a week ago, 62 cents less than the same date a year ago and 27 cents less than the national average of $2.07 a gallon.

“Demand for both crude oil and retail gasoline continues to decrease as fewer drivers are out on the road,” said AAA Texas spokesman Daniel Armbruster. Official measures and public concerns about coronavirus are the driving factor, he said, as well as debate among producers about future production.

 

 

KTAB (Abilene) – March 26, 2020

West Texas’s Scurry County orders residents to ‘Shelter in Place’

Scurry County, with support from the City of Snyder, has officially ordered all residents to “shelter in place.”

During a commissioner’s court meeting Thursday, Scurry County introduced the order, which will go into effect at 11:59 p.m. Friday.

Individuals performing essential activities, such as buying food or medical supplies or caring for a person or pet in another household, will still be allowed to leave their homes under the order.

 

 

World Oil – March 25, 2020

Equinor halts U.S. land activities as part of $3B cost-reduction plan

Equinor presented an updated outlook for 2020 and an approximately $3 billion action plan to strengthen the financial resilience in a market impacted by the COVID-19 and low commodity prices. Equinor says the company can be organic cash flow neutral before capital distribution in 2020 with an average oil price around $25/bbl for the remaining part of the year.

The main elements of the action plan are:

  • Reducing organic capex for 2020 from $10-11 billion to approximately $8.5 billion, a reduction of around 20%.
  • Reducing exploration activity for 2020 from approximately $1.4 billion to approximately $1 billion.
  • Reducing operating costs for 2020 by approximately $700 million compared to original estimates.

 

 

NPR – March 26, 2020

Judge Orders Environmental Review Of Controversial Dakota Access Pipeline

Nearly three years after crude oil started to flow through the controversial Dakota Access Pipeline, a federal judge has ordered the U.S. Army Corps of Engineers to conduct a full environmental review.

It’s a major victory for the Native American tribes and environmental groups who have been fighting against the project for years.

U.S. District Judge James Boasberg has not decided whether oil can still flow in the meantime. But his opinion Wednesday requests that the two sides submit briefings next month for and against keeping the oil moving, potentially opening the door for the judge to shut it down.

 

 

World Oil – March 25, 2020

Texas RRC Chairman Wayne Christian: We must stabilize worldwide oil markets

Never in my life have I seen such uncertainty in the world. What am I supposed to do? How long will it last? What will happen next? As COVID-19 wreaks havoc on our healthcare system and economy, there are no easy answers. American businesses and workers are justifiably worried about its impact on public health and the economy, and their own health and personal finances. As a result, people are suffering.

Over the last month, our stock market has gone from record highs to multi-year lows at an unprecedented pace. Stocks have dropped faster in recent weeks than they did during the Great Depression. In the energy sector, reduced demand and a poorly-timed feud between Saudi Arabia and Russia has driven oil prices to 20-year lows.

 

 

CNBC – March 26, 2020

US indicts Venezuela’s Maduro on criminal drug charges, offers $15 million for arrest

The Trump administration announced Thursday indictments against Venezuela’s Nicolas Maduro and members of his inner circle for effectively converting Venezuela’s state into a “narco-terrorism” enterprise.

“Today’s announcement is focused on rooting out the extensive corruption within the Venezuelan government – a system constructed and controlled to enrich those at the highest levels of the government. The United States will not allow these corrupt Venezuelan officials to use the U.S. banking system to move their illicit proceeds from South America nor further their criminal schemes,” wrote U.S. Attorney General William Barr in a Department of Justice release.

 

 

Yahoo News! – March 12, 2020

Alaska Braces For Collateral Damage From Menacing Oil Price War

U.S. states that are highly dependent on oil to fund their budgets are bracing for the impact of price war launched this week on the other side of the globe.

Alaska, which gets about 70% of its operating income from the oil and gas industry, suspended most out-of-state travel and froze hiring as budget officials run models to figure out how much they may need to cut spending in a prolonged period of low prices. The state budget assumes $59-per barrel in the coming fiscal year based on an oil price futures curve. But crude plummeted by about 25% on Monday alone and is hovering around $31.

“They certainly don’t have a lot of economic diversity,” said Nick Samuels, a senior credit officer at Moody’s Investors Service.

 

 

The Hill – March 16, 2020

J. Winston Porter: Banning fracking, bad idea

Think about the millions of jobs that fracking has created, along with revenues for governments at all levels and money going to property owners who have received royalty payments for oil and gas production. The economic and environmental benefits from fracking have been enormous.

In short, fracking is a state of the art technology which has enabled America to be the world’s largest producer of oil and natural gas. Fracking is safe and cost effective, and it has dramatically reduced carbon emissions – all in 15 to 20 years. Banning of fracking would be counter effective.

 

 

Texas Observer – March 13, 2020

Justin Miller: The oil and gas sector was already having problems, but the fear and uncertainty around a global pandemic could end the Texas energy boom.

The twin threats of a global pandemic and a global supply glut threaten to topple the financial house of cards that the Texas oil boom sits atop.

The country’s energy sector had been on the ropes for several weeks amid a downturn in demand caused by the coronavirus outbreak in China. The Saudi Arabia-Russia price war pushed it over the edge as stock prices fell off a cliff. Now, as coronavirus continues to spread across Europe and the United States—stoking fear and uncertainty along the way—no one knows just how bad things could get. …

Most frack-happy companies couldn’t turn a profit when oil prices were above $50 per barrel, so if the cost of crude stays low, experts warn that there may be a scourge of bankruptcies and layoffs of oil and gas companies in the coming weeks and months. Making matters even worse, much of that debt is coming due in the near term.

 

Utilities

 

KVII (Amarillo) – March 26, 2020

Xcel Energy plans to drop fuel costs, lowering bills for Texas Panhandle, South Plains

The cost of electricity for thousands of customers in the Texas Panhandle and South Plains will drop April 1 when Xcel Energy lowers its monthly fuel cost factor to reflect historically low natural gas prices and the increased use of low-cost wind energy.

Fuel costs across all customer classes are being reduced. For Texas residential customers using 1,000 kilowatt-hours a month, the total bill will decrease by $4.35, or 4.3%. The lower fuel costs are being implemented on an interim basis pending final approval by the Public Utility Commission of Texas.

 

 

Reuters – March 26, 2020

Grid operators turn control centers into campsites to keep coronavirus at bay

After a fortnight living in a mobile home compound built in just three days by his employer, Italian gas company Snam (SRG.MI), Guido Debattisti is returning home.

The 37-year-old is part of a team of engineers sealed off during two-week shifts to make sure gas taps stay open – and buildings warm – during a coronavirus epidemic that has killed more than 7,000 Italians and is sweeping Europe.

So far, the hastily-assembled plan at Snam’s control center in Milan, which remotely operates 33,000 kilometers (21,000 miles) of gas pipes across Italy, is working.

“The team working in the dispatching center – made up of six people for each shift, as well as two colleagues connected remotely via Skype video-conferences – has succeeded in carrying out all activities related to grid control,” Debattisti told Reuters, before heading back to his home in nearby Pavia.

 

 

Quartz – March 26, 2020

Will your electricity bill go up if you’re working from home?

Last week, Austin Energy sent about 33,000 Austin, Texas, residents emails warning them that they’ve used significantly more electricity in recent days, reported the Austin American-Statesman. Data provided by the utility shows a 12% citywide increase in residential electricity use of March 7 compared with the week before. …

“I think a reasonable upper estimate is that household energy use is no more than $0.50 per hour, so staying home for even 10 extra hours is less than $5 [per day],” estimates Severin Borenstein, an energy economist and director of the University of California Energy Institute. …

What doesn’t necessarily lead to higher energy usage are electronics and lighting. Nordman gives the example of how a space heater may use 800 watts or even 1500 watts, whereas a notebook computer may use 20 watts.

 

Alternatives & Renewables

 

Oil & Gas 360 – March 9, 2020

Silverpeak acquires 180-MW Texas solar project from Tri Global Energy

Tri Global Energy, a leading developer of renewable energy, announced an agreement to sell the 180-MW Flatland Solar project to Silverpeak, an alternative investment firm focused on real estate, energy and credit. Tri Global Energy will maintain its role as lead developer through project financing and construction. This is the second project Silverpeak and Tri Global have partnered on.

Flatland Solar is Tri Global Energy’s first solar project in development in Texas. Located in Scurry County, nearly 100 miles south of Lubbock, Flatland Solar is set for a 950-acre secured site, expected to break ground later this year. Nearly 690,000 solar panels will be installed as part of the construction process with expansion possible during later phases. The energy generated from Flatland Solar will be delivered to the ERCOT grid.

 

Regulatory

 

JD Supra – March 25, 2020

TCEQ Guidance on Enforcement Discretion Requests for Operational Noncompliance Tied to COVID-19

The Texas Commission on Environmental Quality (TCEQ), through its Office of Compliance and Enforcement (OCE), issued a statement on March 18, 2020, detailing its procedures for enforcement discretion requests for potential noncompliance arising from the onset of COVID-19. TCEQ encourages companies and other regulated entities to take all available actions necessary to ensure compliance with environmental regulations and permit requirements to protect the health and safety of Texans and the environment. It also recognizes that because of COVID-19 some facilities are operating with a smaller workforce than may be necessary to maintain normal operations and ensure compliance with applicable regulations.

In light of this situation, TCEQ acknowledges that there may be some instances in which noncompliance is unavoidable. When a regulated entity finds noncompliance directly associated to COVID-19, the entity can request enforcement discretion by emailing both OCE Deputy Director Ramiro Garcia and the OCE. TCEQ is monitoring the OCE mailbox daily and has established a goal of responding to each request within 48 hours.

 

 

S&P Global Platts – March 26, 2020

US DOE still seeking funding for SPR crude fill after Congress nixes plan

The Trump administration will continue to urge Congress to appropriate $3 billion to fill the Strategic Petroleum Reserve with US crudes after lawmakers removed the plan from a coronavirus relief package, the Department of Energy said Thursday.

DOE formally withdrew a solicitation to buy 30 million barrels of medium and heavy crudes a day after Republican leaders of the Senate agreed to take the measure out of stimulus legislation as part of a deal with Democrats to break an impasse. The solicitation was the first step in seeking 77 million barrels to fill the stockpile, but those plans are now on hold.

 

 

Austin American Statesman – March 26, 2020

In face of the coronavirus, Texas Democrats will hold virtual convention*

Bowing to the new reality, the Texas Democratic Party announced Thursday that its state convention, scheduled for June 4-6 at the Henry B. González Convention Center in San Antonio, will now be an online event.

“Our virtual experience will be fun, exciting and keep everybody safe during this difficult time,” said Texas Democratic Party Chairman Gilberto Hinojosa, who said the spread of COVID-19 required a move that he said will be matched by innovation.

The party has not settled on whether the event will take place on the same dates as originally scheduled. Abhi Rahman, state party spokesman, said that city of San Antonio officials — who, along with Bexar County leaders, issued a stay-at-home order this week — told them that the convention was a no-go even as the party was arriving at the same conclusion.

 

__________________________

 

The Texas Energy Report NewsClips – March 26, 2020

Click on each headline to read more of the story at the source.
Asterisk * following headline indicates news content may be limited or unavailable at the source because it’s password protected.

 

Lead Stories

 

Houston Chronicle – March 25, 2020

Dallas Fed indicator of Texas oil and gas industry plunges, shows deep energy recession*

The U.S. energy sector is slashing capital spending and jobs as business activity plunged and the outlook has turned “extremely pessimistic” amid the coronavirus pandemic (Reuters)

The Texas oil and gas industry is in a deep recession, one indicator from the Federal Reserve Bank of Dallas shows.

The business activity index, a measure of the industry based on surveys of energy executives, has fallen to a historic low, plummeting from -4.2 in the fourth quarter of 2019 to -50.9 in the first quarter of 2020.

It’s the lowest reading in the survey’s four-year history and “indicative of significant contraction,” Dallas Fed analysts write. It’s the fourth consecutive quarter indicating negative growth for the industry.

 

 

Rigzone – March 25, 2020

Houston Firm Building Gulf Coast Oil Export Operation

The Houston-based refined products company SGR Energy reported Wednesday that it is building a major crude export operation in Calhoun County on the Texas Gulf Coast.

SGR stated that its oil storage and terminaling infrastructure at the Calhoun Port Authority in Point Comfort, Texas, can now load 300,000 barrels of oil onto vessels per month but that its expansion will double that volume next year.

“The port currently offers docks for barge-to-ship operations,” SGR President and CEO Tommy San Miguel told Rigzone. “SGR is looking at running a pipeline from our existing terminal in Victoria to Point Comfort as well as acquiring or leasing storage in Point Comfort to tie the proposed pipeline into.”

 

 

Beaumont Enterprise – March 25, 2020

Emergency fund set up to help Texans pay electricity bills

The Public Utility Commission is expected to establish an emergency fund to help pay the electricity bills of Texans struggling during the coronavirus pandemic.

DeAnn Walker, chairman of the commission, recommended in a memo Tuesday that the regulators should immediately provide help for financially distressed Texans who buy electricity in the deregulated market, an area that includes Houston and Dallas. The cost of the program would be paid through a special charge assessed to ratepayers.

The assistance would reduce bad debt exposure, which could lead to industry upheaval and bankruptcies, according to Walker’s memo. The commissioners are expected to consider establishing the program during a meeting Thursday.

 

 

Beaumont Enterprise – March 25, 2020

Southeast Texas ports keep moving in pandemic

Labor leaders say regional ports are still on track to see a growth in tonnage numbers despite changes and precautions the Southeast Texas shipping industry has experienced during the coronavirus pandemic.

Since local authorities started enforcing infection prevention policies two weeks ago, the Coast Guard has issued five Captain of the Port orders for the Sabine-Neches Waterway. Those orders either require crew to stay aboard their vessel or hold the vessel outside the port for varying periods of time, said Capt. Jackie Twomey, commanding officer of the U.S. Coast Guard Marine Safety Unit Port Arthur. The latest of those orders was issued earlier this week.

 

Forbes – March 24, 2020

Biden’s Shifting Energy Position Has Oil And Gas Sector On Edge

Whether Biden supports a ban on fracking or not, his platform already goes well beyond President Obama’s efforts, including a promise to ban all new oil and gas permitting on federal lands and waters. That alone could spook voters who have come to view the oil and gas boom as beneficial to their community.

Politicians, of course, take positions on the campaign trail all the time, especially in a contested primary, that they quickly discard once elected. But voters can only judge a candidate by what they say and, so far, Biden has been outspoken in his opposition to the country’s role as the world’s top producer of oil and gas.

 

Oil & Gas

 

Reuters/CNBC – March 26, 2020

Oil prices mixed as demand shrinks, but stimulus hopes support

Oil prices were mixed on Thursday following three days of gains, with the prospect of rapidly dwindling demand due to coronavirus travel bans and lockdowns offsetting hopes a U.S. $2 trillion emergency stimulus will shore up economic activity.

West Texas Intermediate (WTI) crude futures slipped 4 cents, or 0.2%, to $24.45 as of 0018 GMT, while Brent crude futures rose 12 cents, or 0.4%, to $27.51.

“With lockdowns in many countries, expectations of oil demand contracting by more than 10 million barrels per day (bpd) are rising. Such demand loss will increase the supply glut,” Australia and New Zealand Banking Group analysts said in a note.

 

 

The Texas Energy Report – March 26, 2020

Energy Help Hopes Dim As US Senate Stimulus Bill Goes to House*

The US Senate has sent its $2 trillion emergency stimulus bill to the House, which is expected to pass it on Friday, but O&G and renewables were among those who didn’t get what they might have wanted.

The largest relief package in US history, as viewed upon its release late Wednesday night, includes $500 billion in loans and assistance for larger companies, as well as states and cities, but companies cannot buy back stock, there is cash for citizens and increased unemployment benefits for four months, retailers, restaurants and airlines get assistance (but there are no new airline emissions requirements as were once thought) as well as Amtrak and other transportation and small businesses, along with a huge cash infusion to hospitals and health care.

There is even mortgage relief, emergency aid for farmers and state and local governments and an employee retention tax credit.

But a $3 billion provision from the original bill to buy oil for the nation’s Strategic Petroleum Reserve was cut by negotiators.

 

 

Houston Chronicle – March 25, 2020

Virus spread could burn out by mid-May under stay-at-home order*

The person-to-person spread of the coronavirus in the Houston region would peak in two weeks and burn out by mid-May if the stay-at-home order invoked Tuesday is continued until then, according to modeling by local scientists.

The modeling, which informed Harris County Judge Lina Hidalgo’s order, considered the effect on the spread of COVID-19, the illness caused by the virus, if she’d taken the stringent intervention immediately or waited a week or two weeks to act. Spread would increase exponentially had she waited, it found.

“From our modeling, it was clear that waiting is not a good thing,” said Eric Boerwinkle, dean of the University of Texas School of Public Health, who conducted the study with a biostatistician at that Houston institution. “The numbers are sobering, but the message is clear: early intervention is better than late intervention and more stringent intervention is better than less stringent.”

 

 

Wall Street Journal – March 25, 2020

Investors Are Warming to Natural Gas*

Traders are backing off their bearish bets on natural-gas prices, stock buyers are flocking to the beaten-down shares of Appalachian producers and analysts are forecasting short supplies of the fuel next year unless those companies get back to drilling.

All this comes with natural gas fetching its lowest price in a quarter-century and a global pandemic crushing demand from power plants and factories. It is also spring, when heating demand from U.S. households typically falls off a cliff.

Natural-gas futures for April delivery added 0.4% to close at $1.659 per million British thermal units on Wednesday. They hit a 25-year low of $1.602 on Monday.

But for the first time in years, the outlook is good, thanks to the oil-price war and the standstill to which the coronavirus has brought hundreds of millions of people, who now have little need for transportation fuels.

 

 

S&P Global Platts – March 25, 2020

US Gulf Coast reforming margins hit 13-month low, crushing naphtha demand

Reforming margins in the US Gulf Coast are at the lowest in over a year amid a saturated gasoline market as stay-at-home orders crush demand.

The spread between USGC pipeline unleaded 87 gasoline and heavy naphtha has registered at 7 cents/gal over the past four trading days, its lowest level in over a year. The spread was last lower on February 25, 2019, at 6 cents/gal. The spread between finished gasoline and heavy naphtha has averaged 16.4 cents/gal over the past 10 days, 52% lower than the previous 10-day average of 34.3 cents/gal.

 

 

Houston Chronicle – March 25, 2020

Report: One in five oilfield servce jobs could be cut worldwide*

One out of 5 oil-field services jobs could disappear this year as decades-low prices and the coronavirus pandemic hammers the industry, according to a report from Norwegian research firm Rystad Energy.

The oil-field services sector, including drilling rig operators to equipment manufacturers and hydraulic fracturing crews to offshore workers employs more than 5 million people worldwide. Rystad estimates that the current crude oil price downturn could cost the sector 1 million jobs worldwide.

Out of those projected job cuts, nearly two-thirds are attributed to crumbling oil prices while the remaining one-third are attributed to measures being taken by contractors to slow spread of the coronavirus at worksites.

 

 

Bloomberg News/Business Standard – March 25, 2020

Oil’s 60% crash due to coronavirus outbreak is tip of an iceberg

Having collapsed by about 60 per cent this year, Brent and West Texas Intermediate crude have stabilised at around $25 a barrel, but the price rout is far deeper for actual cargoes, which are changing hands at large and widening discounts to the global benchmarks. The discounts mean that in the physical market, some crude streams are trading at $15, $10 and even as little as $8 a barrel.

“The physical market is in pain, and there is more pain to come,” said Torbjorn Tornqvist, the co-founder of Gunvor Group, a large trading house. “We will see the full weight of the oversupply in a couple of weeks.” ….

Examples abound from Africa to West Asia to Latin America. Nigeria, the biggest oil producer in Africa, is selling its flagship Qua Iboe crude at a discount of $3.10 a barrel below the Dated Brent benchmark, the largest in at least two decades. Colombia is selling its Vasconia crude at a discount $7.75 a barrel to Brent, a 4 1/2-year low. “The physical oil market looks horrific,” said Kit Haines, an analyst at consultant Energy Aspects.

 

 

New York Times – March 25, 2020

China has begun buying U.S. liquefied petroleum gas (LPG) again after a hiatus of nearly 20 months as Beijing waived punitive tariffs to boost imports of U.S. goods as part of the Sino-U.S. Phase 1 trade deal, industry sources said.

Importers have rushed to apply for waivers for the 25% tariff to buy the fuel, a by-product from U.S. shale gas production, after Beijing started granting exemptions this month for nearly 700 U.S. goods.

About a dozen firms – including China Gas Holdings, a piped gas distributor and LPG trader, and Oriental Energy, a manufacturer using LPG to make petrochemicals – have been granted the tariff waivers, according to two veteran LPG traders, an investment officer and analysts at IHS Markit.

 

 

Houston Chronicle – March 25, 2020

Oxy enacts pay cuts amid deeper budget cuts*

Houston exploration and production company Occidental Petroleum is enacting across pay cuts after making a second round of budget cuts as crude oil prices remain stuck at record lows.

Occidental plans to cut $2.5 billion from the its capital budget and $600 million from its operating budget. After the cuts, the company plans to spend between $2.7 billion and $2.9 billion on drilling and completion projects, a 47 percent reduction from its original budget of $5.2 billion to $5.4 billion.

 

 

Dallas Morning News – March 25, 2020

Trump declares ‘major disaster’ in Texas because of coronavirus*

Two days after Gov. Greg Abbott requested it, President Donald Trump on Wednesday declared that a major disaster exists in Texas because of an outbreak of the novel coronavirus.

Trump ordered federal monetary assistance to supplement state and local recovery efforts in areas affected by COVID-19 beginning on Jan. 20 “and continuing,” said a White House release.

The money will help the state and Texas’ local governments and nonprofits take “emergency protective measures, including direct federal assistance, for all areas” affected by the disease, it said. As Abbott requested, the declaration also freed up federal funds for crisis counseling.

 

 

San Antonio Business Journal – March 25, 2020

NuStar to make major spending cuts as broad economic crisis looms

San Antonio pipeline operator NuStar Energy LP is the latest energy company to announce major spending cuts to protect itself from a low price oil market.

NuStar (NYSE: NS) plans to reduce projected spending this year by about $100 million and possibly more, spokesman Chris Cho said. Though it expects to find additional cuts, the company’s 1,400 employees need not worry, Cho said. More than 500 of those employees work at NuStar’s headquarters and its San Antonio-based terminals.

“We have a no-layoff policy at NuStar, as we believe that our employees will be the ones who will help us get through this difficult time,” he said.

 

 

Houston Chronicle – March 26, 2020

Coronavirus concerns prompt Tenaris to postpone stockholders meeting*

Concerns about the ongoing coronavirus pandemic and related travel restrictions have prompted oilfield pipe manufacturer Tenaris to postpone the company’s annual stockholders meeting.

Tenaris originally planned to hold its annual stockholder meeting in Luxembourg on April 30 but in a Wednesday afternoon statement, the company said uncertainty about the future spread of the virus prompted postponing the meeting until June 2.

The company’s board of director plans to issue stockholder meeting proposals on April 29. How much the company will in dividends is expected to be at the top of the list.

 

 

S&P Global Platts – March 25, 2020

Formosa Plastics restarts Texas PVC plant post-turnaround

Formosa Plastics USA has restarted its 798,000 mt/year PVC plant in Texas after planned work, while Shintech has launched a turnaround at its 1.4 million mt/year PVC complex, also in Texas, according to sources familiar with the companies’ operations.

Formosa’s Point Comfort plant was expected to reach normal rates by early April, a source close to the company said.

 

 

Houston Chronicle – March 24, 2020

Update: Chevron cuts billions from its budget with oil stuck in the $20s

California oil major Chevron is cutting more than $8 billion from its 2020 budget as the oil industry continues to feel intense pressure of a price war, a global supply glut and lower demand from the coronavrius pandemic.

Chevron said it is cutting $4 billion in capital spending, suspending stock buybacks valued at $3.25 billion and reducing operating costs by $1 billion.

The company also is selling assets. Chevron made $500 million in the sale of its stake in the Malampaya field in the Philippines this quarter. The company expects to close the sale of its stake in a project in Azerbaijan and related pipeline in April.

 

 

Wall Street Journal – March 24, 2020

Chevron CFO Turns to Crisis-Era Playbook Amid Coronavirus, Oil-Price Rout*

Chevron Corp. ’s chief financial officer is resorting to a tested playbook that involves slashing capital expenditures and reducing costs to respond to a sharp decline in oil prices and lower petroleum demand.

“It’s obviously more extreme than we expected,” Chevron CFO Pierre Breber said in an interview.

The San Ramon, Calif.-based oil giant Tuesday said it would cut $4 billion in capital expenditures amid lower oil consumption caused by the coronavirus pandemic and the continuing oil price-war between Russia and Saudi Arabia. Oil prices have fallen more than half since the beginning of the year to around $30 a barrel.

 

 

Associated Press/KTBS – March 25, 2020

Judge orders environmental review of Dakota Access pipeline

A federal judge on Wednesday ordered the U.S. Army Corps of Engineers to conduct a full environmental review of the Dakota Access pipeline, nearly three years after it began carrying oil despite protests by people who gathered in North Dakota for more than a year.

U.S. District Judge James Boasberg wrote that the easement approval for the pipeline remains “highly controversial” under federal environmental law, and a more extensive review is necessary than the environmental assessment that was done. ….

Officials with the Corps and Energy Transfer, which owns the pipeline, did not immediately respond to phone messages left by The Associated Press. Craig Stevens, spokesman for the GAIN Coalition, a group that supports large infrastructure projects, said the decision could jeopardize the nation’s economic and energy security.

 

 

Bloomberg News – March 12, 2020

Saudi Tankers Aimed at U.S. Gulf Could Push Out Canada Oil

As if pipeline bottlenecks, mandatory output curbs and growing hostility to the oil sands weren’t enough, Canada’s energy industry now faces new competition from cheap Saudi crude headed to the U.S. Gulf Coast.

Saudi Arabia has booked at least eight supertankers to load this month and next from the kingdom’s main oil ports, with most of the bookings destined for the Texas and Louisiana coast. The tankers were contracted as the Saudis slashed their official selling price to the U.S. by $7 a barrel, the biggest drop in data going back 20 years.

Canadian oil exports to the Gulf Coast, the world’s biggest refining market, have more than tripled since 2014, when new pipeline capacity was added. Heavy crude from the oil sands has steadily displaced declining imports from other countries, including Mexico and Venezuela. Now, the Saudis are muscling up.

 

 

New York Post – March 14, 2020

Why so many billionaires are fleeing to Teton County, Wyoming

John Truett made millions as an oil and gas CEO, but since moving to Teton County, Wyoming — a town inhabited by an increasing number of wealthy transplants like himself — his biggest passion has been becoming a “normal person.”

When he visits the downtown bars, “I don’t tell people that I live in a gated community. They accept me as a local,” he tells author Justin Farrell in his new book, “Billionaire Wilderness: The Ultra-Wealthy and the Remaking of the American West” (Princeton University Press), out now. Money, he insisted, hasn’t changed him.

“Yeah, I’ve got the airplanes, a motorcycle, and I love driving my Beemer through the mountains . . . [but] I go down and drink beer with the guys that run the lifts, and I’m as much as a ‘lifty’ as they are.” Truett is just one of the hundreds of CEOs, investors and moguls — some of the “most powerful and well-known figures in business and politics” — who have made Teton County their home.

 

Utilities

 

Austin American Statesman – March 25, 2020

Austin’s coronavirus stay-home order could swell utility bills*

With Austinites now under a mandatory stay-at-home order because of the coronavirus pandemic, Austin Energy said customers can expect to see higher energy bills if residents do not work diligently to cut back on their at-home electricity usage.

About 33,000 Austin residents received emails last week warning that they’ve used significantly more electricity in recent days, which will likely mean a higher bill at the end of the month, utility spokesperson Jennifer Herber said.

Austin Energy sends about 300,000 standard energy use emails each week to customers. However, 6,600 additional emails have been delivered so far this week to customers who used way above their weekly average.

 

 

Houston Chronicle – March 25, 2020

Community lockdowns change how electricity is sold in Texas*

Electricity sellers are re-evaluating how to sell power face-to-face as some have already stopped door-to-door sales as the coronavirus pandemic grows and state and local governments impose stay-at-home policies to slow its spread.

About one-quarter of electricity plans in Texas is sold door-to-door by power company representatives, said Robbie Wright, co-founder of the retail electric provider Bounce Energy and now CEO of Houston public relations firm Integrate Agency. The physical interaction is typically close, as with other door-to-door sales of kitchen gear, magazines and vacuum cleaners.

Electricity also is sold face-to-face at tables set up in parking lots of grocery stores. Other sellers have permanent storefronts at general merchandise stores to attract shoppers who come in for school supplies and automotive parts but who can be persuaded by roving sales agents to stop and talk about electricity plans.

 

KBTX (Bryan-College Station) – March 25, 2020

Local utility companies delay disconnections during shelter-in-place order

Utility companies in the BCS area are responding to the COVID-19 crisis by suspending disconnections due to non-payment.

Atmos Energy announced this week it has temporarily suspended natural gas disconnections for customers who cannot pay their utility bill. Atmos will continue to maintain and operate critical gas infrastructure during the pandemic.

Bryan Texas Utilities (BTU) also says they are delaying disconnections in response to COVID-19. BTU will continue to disconnect services upon customer request only until the shelter-in-place order is lifted and normal business operations have resumed.

 

Alternatives & Renewables

 

Beaumont Enterprise – March 23, 2020

Sunnova: Solar should be part of federal aid package

Sunnova, the Houston-based residential seller of solar-power systems, called on Congress to include the solar industry in plans to help the energy industry during the coronavirus pandemic.

The company criticized the Senate’s proposed spending package that would provide billions of dollars in loans for the oil and gas industry but ignores the solar energy industry, which has become one of the fastest growing sources of power in the United States. Solar accounted for 40 percent of new electric generation capacity last year, according to industry trade group Solar Energy Industries Association.

 

Regulatory

 

Associated Press/US News – March 25, 2020

North Dakota Reviving Waivers That Extend Idle Well Duration

North Dakota regulators are planning to revive a policy amid the coronavirus pandemic that allows oil producers to receive waivers so that a well can remain inactive for more than a year.

The state Oil and Gas Division will sort out details after state regulators on Tuesday directed them to resurrect the policy that was in place from 2015 to 2017, the Bismarck Tribune reported. If a well has not generated any oil for one year, North Dakota usually requires companies to permanently plug it or otherwise resume the operation.

 

_______________________________

 

The Texas Energy Report NewsClips – March 25, 2020

Click on each headline to read more of the story at the source.
Asterisk * following headline indicates news content may be limited or unavailable at the source because it’s password protected.

 

Lead Stories

 

Wall Street Journal – March 25, 2020

White House Reaches Deal With Lawmakers on $2 Trillion Coronavirus Stimulus Bill*

Lawmakers and the Trump administration reached an agreement on an estimated $2 trillion stimulus package aimed at shielding the U.S. economy from the worst consequences of the coronavirus pandemic.

The legislation, which congressional officials were set to continue to write throughout the early morning Wednesday, will provide direct financial checks to many Americans, drastically expand unemployment insurance, offer hundreds in billions in loans to both small and large businesses, and provide health care providers with additional resources as the virus spreads. …

Mr. McConnell said the Senate would move to vote on the massive bill later on Wednesday, setting up a rapid approval of legislation that dwarfs the annual discretionary budget Congress spends much of the year crafting and approving. House Speaker Nancy Pelosi (D., Calif.) said Tuesday she hoped to quickly approve the eventual Senate agreement, though objections from lawmakers could slow the process in that chamber.

Related: Deal in Congress axes funding to fill SPR with US crudes

 

 

Reuters – March 23, 2020

Despite OPEC+ deal collapse, Saudi oil exports yet to rise-sources

Top oil exporter Saudi Arabia has yet to boost crude shipments significantly, two industry sources who track the flows said, suggesting a lack of demand despite a deep slide in prices as major producers battle for market share.

The kingdom plans to ship more than 10 million barrels per day (bpd) from May following the collapse of a supply-cut pact by the Organization of the Petroleum Exporting Countries and other producers led by Russia, known as OPEC+.

So far, exports in March are running significantly below that rate, the sources said, showing little change from February.

 

 

Forbes – March 24, 2020

Christopher Helman: Texas Business Leaders Chafe At Coronavirus Lockdowns — ‘We’ve Got To Figure Out How To Live With This Thing’

Dan Patrick, the lieutenant governor of Texas, said Monday that “lots of grandparents” in the Lone Star state would be willing to risk death from coronavirus if it meant preserving the vitality of the U.S. economy for the benefit of their grandchildren. Patrick, 69, told Tucker Carlson on Fox News that America should “get back to work, get back to living, and be smart about it.”

Bud Brigham is an Austin, Texas-based oil and gas tycoon whose companies in the past decade have sold oilfields in North Dakota and Texas for more than $7 billion. One of his current oil ventures, publicly traded Brigham Minerals, has lost half its market value in recent weeks. With industry leaders anticipating a 70% drop in U.S. drilling over the coming months, it might have further to fall. “I’ve not seen this kind of contagion where the reaction is so extreme,” says Brigham, whose hometown of Austin has 86 coronavirus cases.

“And I do wonder, are we overreacting? Is the cure worse than the ailment?” Though most of his office-based employees are now working from home, Brigham intends to keep his operations going as long as he can; in an interview last Friday he said the west Texas mines operated by his Atlas Sand where still going “full throttle,” even though demand for sand (used in oil well fracking) is set to dry up.

 

 

Wired – March 24, 2020

Utilities and grid operators are well-prepared to handle the pandemic, but a second wave of the virus later this year could be disastrous.

A recent study by the University of Chicago’s Energy Policy Institute found that electricity demand in Italy has plunged by 18 percent following the severe increase in coronavirus cases in the country. …

An open question among coronavirus researchers is whether there will be a second wave of the pandemic later this year. During the Spanish flu pandemic in the early 20th century, the second wave turned out to be deadlier than the first. If the coronavirus remerges later this year, it could be a serious threat to reliable electricity in the US, says John MacWilliams, a former associate deputy secretary of the Department of Energy and a senior fellow at Columbia University’s Center on Global Energy Policy.

“If this crisis extends into the fall, we’re going to hit hurricane season,” MacWilliams says. “Utilities are doing a very good job right now, but if we get unlucky and have an active hurricane season, they’re going to get very stressed because the number of workers that are available to repair damage and restore power will become more limited.”

 

 

Forbes – March 24, 2020

Jude Clemente: The U.S. Is Becoming The World’s Largest Oil And Natural Gas Exporter

We are slated to become the largest oil and the largest liquefied natural gas (LNG) exporter in just a few years. The federal numbers are out, and U.S. oil and natural gas exports boomed once again last year to record heights. In fact, last year the “U.S. Posts First Month in 70 Years as a Net Petroleum Exporter.” For context, our oil demand remains very high but flat (19-20 million b/d), while our gas demand has been rising fast, up 33% since 2008 to ~86 Bcf/d in 2019. With Mexico taking the bulk, U.S. oil product exports have been steadily mounting, rising an annual 150 million barrels over the past decade.

But, the more interesting story is the explosion of crude exports – a game that we have only been playing since 2015, when a rule change allowed our crude shipments to go beyond just Canada. With 2019 U.S. crude production increasing ~1.3 million b/d to reach over 12.2 million b/d, crude exports soared 45% to reach 3 million b/d, with Canada leading at 15% and South Korea at 14%. Our shipments reached 45 different locations.

 

Oil & Gas

 

Reuters/CNBC – March 25, 2020

Oil extends gains as optimism over US stimulus lifts global markets

Oil prices extended gains for a third session on Wednesday, rising alongside broader financial markets as the United States is expected to approve a massive aid package to stem the economic impact of the coronavirus pandemic.

U.S. crude rose to a high of $25.24 a barrel early in the session and was at $24.86 a barrel, up 85 cents, or 3.5%, at 0732 GMT.

Brent crude was trading up 65 cents, or 2.4%, at $27.80 a barrel after earlier rising to a high of $28.29.

ING revised down on Wednesday its Brent crude price forecast for the second quarter to $20 a barrel from $33, because of the demand shock caused by the coronavirus outbreak and the expected supply surge from Saudi Arabia and Russia in April. “Demand continues to deteriorate as more countries impose shutdowns and stricter travel restrictions,” the bank’s analysts said in a note.

 

 

Wall Street Journal – March 25, 2020

Coronavirus Complicates Kremlin Plan To Boost Oil Output*

The deepening coronavirus crisis is upending the Kremlin’s plan to ramp up oil production in its price war with Saudi Arabia—and prompting a backlash among the leaders of some of Russia’s largest energy companies, people familiar with the matter said.

After Russia’s abrupt exit from its four-year oil-market collaboration with OPEC earlier this month, Moscow said it was planning to open up its taps, upping the ante in its market-share battle with the Saudis. The spat has contributed to a 43% drop in crude prices since the beginning of the month.

At the same time, the coronavirus crisis has led to unprecedented oil-demand destruction around the globe.

At a Monday meeting of top domestic oil companies convened by energy minister Alexander Novak, most participants argued against a production increase starting in April, the people said.

 

 

Texas Tribune – March 24, 2020

Texas unemployment rate headed toward double digits, comptroller warns

After a low unemployment rate of 3.5% in January, Comptroller Glenn Hegar said Tuesday the unemployment rate in Texas is on track to more than double that as the new coronavirus spreads.

“It’s up to probably 9%,” Hegar said, speaking on air to the Texas Standard. “And I have no doubt that people are going to start forecasting it’s going to be slightly in the low double digits.”

A spokesman for the comptroller’s office later clarified that the unemployment rate is not currently at 9%, but that is where economic research firms have moved their forecasts.

 

 

Texas Tribune – March 24, 2020

Texas’ largest counties are issuing stay-at-home orders as coronavirus spreads

Harris County Judge Lina Hidalgo on Tuesday morning ordered Harris County residents — all 4.5 million of them — to stay in their homes as much as possible as the state grapples with the rapid spread of the novel coronavirus. Further north, Fort Worth Mayor Betsy Price and Tarrant County Judge Glen Whitley issued a similar directive later in the morning. Collin County and El Paso County officials later did the same.

San Antonio Mayor Ron Nirenberg and Bexar County Judge Nelson Wolff on Monday evening issued a “Stay Home, Work Safe” order effective from 11:59 p.m. Tuesday through 11:59 p.m. April 9. The move came one day after Dallas County issued a similar order. And the Austin City Council and Travis County teamed up Tuesday to issue a similar stay-at-home decree.

 

 

World Oil – March 24, 2020

Shale service leaders warn of a bigger crash this time around

Two of the world’s biggest oilfield service companies are warning of a bigger shale crash than the one that hit the U.S. and Canada just five years ago.

While the decline in North American drilling rigs could approach the lows seen in 2016, the drop could be much faster this time around, Schlumberger Ltd. told analysts and investors Tuesday on a webcast hosted by Scotia Howard Weil. And as the most financially troubled oilfield service providers seek to stay afloat, there’s not much help this time around, Halliburton Co. said on the same webcast.

Investors cheered plans by both companies to significantly slash spending. Halliburton soared as much as 33% for a history-beating advance, while Schlumberger climbed 11%.

 

 

Barron’s – March 24, 2020

Why Natural Gas Prices Could Double by Next Winter

Goldman Sachs analyst Samantha Dart sees prices doubling by next winter, which could make natural gas stocks a more attractive investment than oil producers.

Natural gas prices had fallen to multiyear lows even before the coronavirus hit the U.S. economy. Prices have sunk even further since as demand has dried up. Exports of liquefied natural gas, a major growth driver for the industry, have been falling, and other industrial uses will be hurt by the weak economy. Natural gas futures were trading up about 2%, to $1.64 per million British thermal units, on Tuesday, after falling to their lowest level since 1995 on Monday.

 

 

Hart Energy – March 18, 2020

Shale Producer Gulfport Energy Reportedly Hires Restructuring Adviser

Natural gas explorer and producer Gulfport Energy Corp. hired an investment bank to help it tackle its roughly $2 billion debt pile following a collapse in energy prices, people familiar with the matter said March 18.

The move makes Gulfport the latest energy company to seek debt restructuring advice amid an oil price war between Saudi Arabia and Russia, and the coronavirus pandemic. Reuters reported on March 16 that shale pioneer Chesapeake Energy Corp. also tapped debt restructuring bankers and lawyers.

Gulfport has retained Perella Weinberg Partners LP, and its energy advisory arm Tudor, Pickering, Holt & Co., to help study options to improve its finances, four sources familiar with the matter said, adding no debt restructuring move is imminent.

 

 

S&P Global Platts – March 24, 2020

Phillips 66 cuts refinery rates, capital spending and defers pipeline projects to manage coronavirus demand destruction

Phillips 66 has cut its capital spending for 2020 across all its businesses by $700 million, to $3.1 billion, as it looks to get ahead of demand destruction for petroleum and chemicals resulting from mandated stay-at-home measures impacting refining and midstream operations, the company said Tuesday.

In refining, the company has cut back to minimum rates at its 13 refineries in the US and abroad, and is now expecting first-quarter refinery utilization rates to be in the low to mid-80% range compared to the 90% originally forecast.

“We’re seeing around the U.S. about 20% demand destruction; and in some markets, particularly the West Coast, where they’ve been isolating longer, about 30%. So a lot of demand destruction,” Brian Mandell, Phillip 66’s head of commercial operations, sai on a special conference call with analysts and investors.

 

 

Wall Street Journal – March 24, 2020

Occidental Petroleum Cuts Pay for Staff, Executives*

Occidental Petroleum Corp. OXY 10.63% is cutting salaries for its U.S. employees by up to 30% in a bid to slash expenses, according to an internal email reviewed by The Wall Street Journal.

The Houston company is facing plunging oil prices, high debt from an ill-timed acquisition and falling demand due to a halt in economic activity because of the new coronavirus.

Chief Executive Vicki Hollub’s salary will be cut by 81% and the oil-and-chemical company’s top executives’ pay will be cut by an average of 68%, according to the email.

 

 

Houston Chronicle – March 24, 2020

Layoffs, pay cuts loom as Schlumberger plans to cut up to 30 percent from budget*

Schlumberger, the largest oilfield service company in the world, plans to cut up to 30 percent from its budget as crumbling oil prices and the coronavirus pandemic weigh on the industry.

The company also expects to layoff workers and reduce compensation as part of restructuring efforts in North America, CEO Olivier Le Peuch said at the Scotia Howard Weil Energy Conference in New Orleans.

The magnitude of the budget cuts depends on changes to customers’ plans, Le Peuch said. A full 30 percent cut would leave the company with a $1.2 billion capital budget for the year. The company spent $1.7 billion on capital projects in 2019.

 

 

Houston Chronicle – March 24, 2020

NexTier Oilfield Solutions cuts budget by more than half*

Houston oilfield service company NexTier Oilfield Solutions is cutting its budget by more than half as work continues to evaporate amid record low crude prices.

In a Monday afternoon statement, NexTier announced that the company is cutting up to $110 million from its capital expenditure budget. The hydraulic fracturing company originally planned to spend $210 million this year but now believes it will spend between $100 and $120 million.

 

 

San Antonio Business Journal – March 24, 2020

South Texas Drilling Permit Roundup: ConocoPhillips still making moves in Eagle Ford*

Major energy producer ConocoPhillips may be taking its chances on 11 new oil and gas wells in the Eagle Ford Shale even as oil prices fall well below $30 per barrel.

Operating as Burlington Resources Oil & Gas Co. LP, ConocoPhillips (NYSE: COP) submitted applications with the Railroad Commission of Texas last week for permission to drill 11 new wells in DeWitt County’s Eagleville Field. The future well sites are spread across two leases the company holds in DeWitt, one near the border with Karnes County and another 15 miles northwest of the more centrally located town of Cuero.

The applications were filed March 18 and 19, a two-day period when oil prices swung between $20 and $25 per barrel, causing many major producers to cut spending as drilling becomes less profitable. ConocoPhillips is one of those companies. On March 18, it told investors that it was reducing projected spending by 10% in part by drilling fewer wells in the continental United States. The Houston-based company expects to produce 20,000 fewer barrels per day than it promised investors earlier this year.

 

 

Rigzone – March 24, 2020

Proration Not A Remedy TXOGA Members Want

Proration is not a remedy Texas Oil & Gas Association (TXOGA) members are seeking as it would disadvantage Texas, its producers, mineral owners and taxing entities.

That’s according to TXOGA President Todd Staples, who made the statement in a comment sent to Rigzone late Monday.

“Our industry has proven nimble and innovative during challenging times and we remain confident we can do so now,” Staples said in the statement.

“Recent suggestions that Texas should impose mandatory limits on the production of oil and gas in the state in an effort to stabilize the current market turmoil will likely result in other producers replacing curtailed Texas volumes,” he added.

 

 

Financial Times – March 22, 2020

A tenth of oil production may become uneconomic

At least 10 per cent of global oil production could become uneconomic if crude prices hold at 17-year lows, piling pressure on energy companies to lower production or “shut-in” projects as they battle to survive. Should Brent crude remain around the $25 a barrel level, revenue from 10m barrels a day of global supply will not cover the cost of production and payments to governments, according to a report from consultancy WoodMackenzie.

“If prices don’t rebound, the taps will inevitably be turned off or strategically choked back in some areas,” analysts at the group said. “The industry’s ability to keep higher-cost barrels flowing will be severely tested.”

After oil prices crashed in 2014, production largely continued to flow as turning off the taps incurs additional costs and reservoir productivity losses. “Operators usually try every other tool in the box first,” said WoodMackenzie.

“But, the current trifecta of oversupply, demand evaporation and global behemoths fighting for market share, may require immediate and dramatic action.” “Production shut-ins [the implementation of a production cap that is set lower than the available output of a specific site] may be substantial,” they added.

 

 

Houston Chronicle – March 23, 2020

Houston recession forecast shows economy losing tens of thousands of jobs due to COVID-19, oil price war*

The employment forecast by Bill Gilmer, economist and director of the Institute for Regional Forecasting at the University of Houston’s Bauer College of Business, estimates that Houston could lose as many as a net 44,000 jobs by the end of 2020, a dramatic swing from Gilmer’s forecast late last year that Houston would add nearly 60,000 jobs this year.

In comparison, Houston shed a net 3,200 jobs in 2015, the worst year of the last oil bust, and 109,000 jobs in 2009.

The 44,000 figure, which Gilmer described as his worst-case scenario, assumes a severe outbreak of COVID-19, the disease caused by the new strain of coronavirus, and the oil price war between Russia and Saudi Arabia keeping crude supplies plentiful and around $40 per barrel for several quarters.

 

 

Wall Street Journal – March 24, 2020

The Oil Crash Is Hitting This Investment Hard*

The plunge in crude-oil prices is sending shock waves through closed-end funds tracking the energy sector, highlighting how the market turmoil is hitting products popular with ordinary investors seeking to boost returns during the long bull market.

Shares of the Goldman Sachs MLP and Energy Renaissance Fund have fallen 73% this month, while shares of both the Kayne Anderson MLP/Midstream Investment Co. and the Kayne Anderson Midstream/Energy Fund Inc. have fallen around 70%. Shares of the Tortoise Energy Infrastructure Corp. and the Tortoise Midstream Energy Fund Inc. have lost 79% and 89% of their value, respectively.

A closed-end fund is similar to a mutual fund, but its shares trade on an exchange. A professional manager oversees the fund’s holdings, deciding what to buy and sell. Unlike mutual funds, closed-end funds issue a fixed number of shares, after which capital rarely flows in or out of the fund. Also unlike mutual funds, they tend to use leverage to juice their payouts—borrowing at short-term interest rates and investing the proceeds in longer-term securities that pay higher returns.

 

 

Politico – March 24, 2020

Oil execs to Trump: Whose side are you on?

“There is no sugar-coating it, U.S. oilfield activity will collapse with oil prices well below $30,” on the WTI benchmark, said analyst Praveen Narra of Raymond James in a market update published on March 23. “The pace of rig count declines is likely to occur at a pace we have not seen before.” …

In POLITICO interviews, half a dozen industry officials who have talked with White House officials in recent days described Trump as slow to comprehend the twin body blows a global pandemic and a price war between Saudi Arabia and Russia would have on an industry he has long supported. Oil prices at $20 a barrel threaten to rain destruction on an industry that has donated $1.8 million to Trump’s reelection campaign and employs hundreds of thousands of people in states key to any hope to beat his eventual Democratic rival for the presidency.

 

 

Reuters – March 24, 2020

From Asia to America, fuel prices pummeled by coronavirus fallout

Prices and profit margins for motor and aviation fuels globally are under severe pressure from a plunge in demand as countries enforce lockdowns and airlines ground planes, forcing more refineries to reduce output.

U.S. ultra-low sulfur diesel was the latest product refined from crude oil to take a hit in its cash market last week, after refiners boosted production in a bid to escape the poorer margins for other products harder hit by coronavirus fallout.

Refining margins for gasoline and jet fuel have tanked because of decreased demand for transportation fuels, as the disease outbreak has forced businesses to close and governments to push residents to avoid travel and public places.

 

 

Reuters/WHTC – March 24, 2020

U.S. drilling lease sales draw few bids during oil market meltdown

Oil and gas lease sales offered by the Trump administration in three Western states on Tuesday drew few bids as a crash in energy prices tamped down interest among drillers.

The Bureau of Land Management (BLM) received bids on just 40% of the 193,584 acres (78,300 hectares) offered for leasing via online auctions in Wyoming, Nevada and Montana, bringing in total high bids of about $3.3 million, according to results on online marketplace EnergyNet.

Wyoming, which held the largest sale of 105 parcels covering 118,292 acres (47,871 hectares), accounted for 99% of the bid total.

 

 

San Antonio Express News – March 13, 2020

Michael Taylor: Online platform makes investing in oil and gas easier for the little guy*

I am not yet … an investor in oil and gas. I say this with some wistful regret. I want to fit in as a real Texan.

I have recently discovered a possible way to correct this. But I should start with a few reasons why I haven’t yet invested in oil and gas.

Oil and gas investments are famously opaque and high-cost opportunities, meaning if you buy into some heavily-promoted deal, it’s hard to avoid just funding a dry hole while paying many layers of fees to the operator or promoter, who makes money whether they are successful or not. The proverbial “heads you win, tails I lose” kind of situation.

Having laid out some caveats — which hold true no matter what — I am intrigued by a Houston-based online platform called Energy Funders, designed for the little guy (like me) to invest in oil and gas opportunities.

 

Utilities

 

Utility Dive – March 23, 2020

Utilities beginning to see the load impacts of COVID-19 as economic shutdown widens

In the United States, grid operators say it is too soon to get a firm handle on the impacts of coronavirus shutdowns, but some are already seeing usage declines. Propelling those declines, S&P Global is predicting a global recession this year, and estimates the United States economy will see a 6% seasonally adjusted second quarter contraction before beginning to recover in the second half of the year.

“In the near term, utilities will likely see some reduced sales volumes as major sporting events, concerts and businesses scale back drastically, compounded even further by social distancing requirements being mandated or recommended by federal and local governments across North America,” S&P said in a March 19 report.

 

 

E&E News – March 23, 2020

“We’re on day three or four of this, but we’ve already seen impacts,” Adam Jordan, director of power analytics at Genscape, an energy research company that tracks electricity markets, said in an interview.

Jordan and his team are among the analysts, traders and economists monitoring the effects of an economic slowdown fueled by the virus and how it ripples through the nation’s electric industry.

For now, speculation about a prolonged drop in power demand and prices is just that. But if demand weakens further and the economic slump lingers into summer or beyond, it could force companies to dial back on grid investments, delay new power plant projects and put more pressure on aging power plants already struggling to compete in markets flush with supply. A plunge in electricity demand also could affect greenhouse gas emissions. According to EPA, more than a quarter of U.S. emissions come from the electricity sector.

 

 

Utility Dive – March 19, 2020

Rob Gramlich, Frank Lacey: Who’s the buyer? How better state assignment of procurement roles can improve retail and wholesale markets

Recent controversy over wholesale markets throughout the Mid-Atlantic and Northeast presents an opportunity to fix a problem that has been festering since the beginning of electricity restructuring — no clear assignment of responsibility for buying power. …

Currently, 14 states have adopted retail choice for electricity supply, which allows industrial, commercial and residential customers to buy electricity products from competitive suppliers as opposed to limiting their options to the singular product provided by vertically integrated utilities. However, 13 of the 14 states require the incumbent utility to offer a generic default electricity product that is competitively advantaged across a dozen market attributes.

Only Texas has removed the incumbent utility from the competitive electricity market. Texas also has much higher creditworthiness standards for retail suppliers compared to the three other states we analyzed: Maryland, New Jersey and Pennsylvania. With these two features in place, retail suppliers have both the ability and incentive to procure power and hedge in wholesale markets on behalf of the customers they serve.

 

Alternatives & Renewables

 

Washington Post – March 22, 2020

As they race to boost the economy, lawmakers encounter push for a greener stimulus*

As Congress and the White House struggle to adopt legislation to limit the economic carnage from the coronavirus pandemic, lawmakers have been urged to reshape the economy toward lower carbon emissions that scientists say are critical if the world is going to effectively combat climate change.

Environmental groups, climate scientists, solar and wind and battery industries, and others are saying that this moment, catastrophic as it appears to be for the economy, could offer a chance to incentivize fundamental shifts through a combination of direct spending, new tax credits for renewable energy, electric vehicles or appliances, and tough conditions for reviving fossil fuel firms or fuel-gobbling airlines.

“During this emergency, specific attention should be paid to the emergent, yet vulnerable, clean energy industry,” Michael Brune, executive director of the Sierra Club, wrote in a letter Thursday to top U.S. lawmakers. “The clean energy industry faces the same stresses as the travel, restaurant, sports, and entertainment industries, with a new reality of forced closures and layoffs.”

 

Regulatory

 

The Hill – March 24, 2020

Bipartisan lawmakers urge assistance for oil and gas workers

A bipartisan group of lawmakers wrote to congressional leadership asking for assistance for oil and gas industry workers as oil prices have plunged amid the coronavirus pandemic and international disputes.

“We write to ask you to help address the unique challenges facing the people who work in the U.S. oil and gas sector,” said the letter, which was signed by seven Democrats and two Republicans.

“We know from previous economic aid efforts that any COVID-19 relief package must protect all hard-working Americans. The effects of COVID-19 will be felt across the economy,” it continued.

 

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The Texas Energy Report NewsClips – March 24, 2020

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Lead Stories

 

Reuters/CNBC – March 24, 2020

Oil prices rise over $1 as US ramps up economic support measures

Oil prices rose around 4% on Tuesday on hopes that the United States will soon reach a deal on a $2 trillion coronavirus aid package that could blunt the economic impact of the outbreak and in turn support oil demand.

Brent crude oil futures for May delivery rose by $1.05 a barrel, or 3.9%, to $28.08 a barrel by 0732 GMT while West Texas Intermediate (WTI) crude futures gained $1.20 cents, or 5.1%, to $24.56.

“Oil is clawing its way higher, mainly on the back of the weaker dollar that stemmed from the Fed’s unprecedented measures,” said Edward Moya, senior market analyst at broker OANDA.

 

 

Oil & Gas 360 – March 23, 2020

Permian operators slash 2020 plans as oil market craters

Oil & Gas 360 Publishers Note: This blog from Erin Faulkner at Enverus is an excellent summary of the top operators in the Permian and their financial updates. Enverus has over 1,700 employees and has customers in over 50 countries. They are experts at data analysis.

The economic implications of the novel coronavirus and the oil price war initiated between Saudi Arabia and Russia have sent oil markets on a downward spiral.

WTI settled at $20.37/bbl on March 18, dropping 24% on the day and 56% in the last two weeks. Shale operators across the U.S. have acted swiftly to adjust 2020 plans and protect balance sheets. In the Permian, everyone is cutting back.

 

 

Houston Chronicle – March 23, 2020

Hidalgo to order ‘stay-at-home,’ not ‘shelter-in-place,’ for Harris County on Tuesday morning*

Note: Galveston County officials plan a “shelter-in-place” order also to be announced Tuesday morning to continue through midnight April 3rd

Harris County Judge Lina Hidalgo on Tuesday morning is expected to order most residents to stay home except for groceries and errands, or if they work in essential industries, in order to slow the spread of the novel coronavirus, county officials with direct knowledge of the plan said.

The directive, which would take effect at 11:59 p.m. Tuesday and apply to unincorporated Harris County as well the city of Houston and other municipalities, would restrict businesses deemed non-essential through April 3.

County officials on Monday evening were working to complete a list of exempt businesses, which will include markets, pharmacies and other stores necessary for daily life to function. …

Hidalgo plans to announce the order at a news conference at 8:15 a.m. Tuesday. Houston Mayor Sylvester Turner declined comment Monday evening, though a spokeswoman said he would attend the announcement.

 

 

Bloomberg News – March 23, 2020

‘Can’t Even Give It Away’: Gasoline at $1 Is Warning for Economy*

While cheap fuel usually spurs gas-guzzling Americans to hit the highways, the latest downturn in prices portends dark times ahead.

“You almost can’t even give it away,” said Paul Bingham, head transportation economist at IHS Markit Ltd. “The price elasticity has totally changed. It’s full-on demand destruction.” Nationwide, pump prices are headed for depths not seen since the Great Recession. Retail gasoline is expected to average $1.99 a gallon in the next 72 hours and fall as low as $1.49 by mid-April, the lowest level in 16 years, according to Patrick DeHaan, head of petroleum analysis at Gasbuddy.

Illinois could be next to see sub-$1 fuel, with Chicago wholesale gasoline selling at a record-low 20 cents Monday morning, Bloomberg data show. Gas stations in Ohio and Wisconsin are also possibilities if prices keeps falling, DeHaan said.

 

 

The Hill – March 23, 2020

GOP blames environmental efforts, but Democrats see public health problems with stimulus

Senate Republicans and Democrats identified different sticking points Monday as they failed to reach agreement on a coronavirus-spurred stimulus package, with GOP lawmakers repeatedly arguing environmental efforts should not be included in the bill.

But Democrats argued in various floor speeches that the hold up on the bill was largely over their concerns it fails to address the public health crisis by sufficiently bolstering the health care system and neglects some of the most vulnerable segments of society.

“We’re here trying to fight for the man and woman on the street in our hometowns, and yet they’re fighting for the Green New Deal,” Sen. John Barrasso (R-Wyo.) said on the Senate floor Monday.

 

Oil & Gas

 

Austin American Statesman – March 23, 2020

Coronavirus shelter-in-place order will be issued Tuesday for Travis, Williamson counties*

Travis and Williamson counties will issue dual orders Tuesday for all residents to shelter in place, furthering restrictions on movement and social interaction as local cases of the coronavirus continue to climb.

Travis County Judge Sarah Eckhardt said both counties and a number of other larger jurisdictions will issue similar orders Tuesday that will take effect at midnight.

“We are trying to strike the right balance between significantly reducing circulation in Travis County with our business community,” Eckhardt said during a media briefing Monday evening, adding that officials were targeting activity, not business sectors.

 

 

Houston Chronicle – March 23, 2020

Creditors give Tellurian an 18-month life line*

Creditors are giving Houston liquefied natural gas company Tellurian an 18-month life line in the face of tough market conditions that include the ongoing oil war between Russia and Saudi Arabia and the coronavirus pandemic.

In a Monday morning filing with the U.S. Securities and Exchange Commission, Tellurian reported that Wilmington Trust and other creditors have given the company an extension on $75 million in loans that were due May 23.

Under their new agreement, creditors gave Tellurian until Nov. 23, 2021 to finish paying the loans. Tellurian must make a $3 million payment by April 22 and issue creditors more than 11 million shares of stock.

 

 

Houston Chronicle – March 23, 2020

Six pipeline companies cut $1.9 billion from their 2020 budgets*

Noble Midstream Partners, Rattler Midstream, Targa Resources, EnLink Midstream, Oneok and Pembina Pipeline made the budget cuts over the past two weeks — representing an overall 30 percent cut in planned capital expenditures for new pipeline and storage projects in 2020, researchers reported.

Canadian pipeline operator Pembina made the largest cut of the six companies, slashing nearly $700 million, or 43 percent, from its nearly $1.6 billion budget. The company now plans to spend nearly $900 million this year.

 

 

Houston Chronicle – March 24, 2020

Energy companies slash another $19B as oil price languishes*

Houston offshore oil company Talos Energy also pledged to cut $170 million from its budget while six pipeline companies said they would cut a combined $1.9 billion from their budgets.

Noble Midstream Partners, Rattler Midstream, Targa Resources, EnLink Midstream, Oneok and Pembina Pipeline made the budget cuts over the past two weeks — representing an overall 30 percent cut in planned capital expenditures for new pipeline and storage projects in 2020, according to a report from Houston energy investment banking firm Simmons Energy.

 

 

Austin American Statesman – March 23, 2020

Abbott asks Trump to declare Texas a major disaster*

Gov. Greg Abbott called on President Donald Trump on Monday to issue a major disaster declaration for Texas as the state grapples with a growing number of cases of the coronavirus.

In a letter to Trump, Abbott said supplementary federal assistance is needed to save lives and protect health, property and safety.

“Texas is all-in on our response to COVID-19 and we need Washington’s financial assistance as provided for under the law to support our efforts to limit the spread of this virus,” Abbott said in a statement. “COVID-19-related expenses and obligations are already exceeding $50 million and that will only rise as our efforts continue. Additional federal funding is essential for us to maintain our aggressive course of action to protect our state.”

 

 

Houston Chronicle – March 23, 2020

Drilling Down: Drilling permit activity slows down amid record low oil prices*

Drilling permit activity is slowing across Texas as oil prices crash to near $20 per barrel.

More than 900 exploration and production companies filed an average of 230 drilling permits per week in 2019, Railroad Commission of Texas data shows.

That activity has slowed down this month during the price war between Russia and Saudi Arabia, as well as weakened demand from the coronavirus outbreak. From March 4 to 11, some 64 companies filed for 181 drilling permits. Those numbers fell to 59 companies filing 167 drilling permits one week later.

 

 

San Antonio Express News – March 23, 2020

San Antonio oil and energy companies brace for punishing 2020 as coronavirus pandemic cuts demand*

J.P. Morgan on Friday said it expects refiner Valero Energy Corp., San Antonio’s largest public company, to post a full-year loss in 2020, its first since the Great Recession in 2009.

Pipeline company NuStar Energy is carrying heavy debt as oil producers reduce the amount of crude they’re transporting through its pipelines.Oil-field services company Pioneer Energy, already in Chapter 11 bankruptcy, could find it difficult to recapitalize and reorganize — and reemerge as a viable company.

Oil producer Abraxas Petroleum Co., trading at less than 11 cents a share, also is grappling with significant debt. Analysts say Valero is in the best shape of all the companies.

 

 

Kansas City Star – March 23, 2020

Seven earthquakes rattle Oklahoma in 24 hours, geologists say

In just less than 24 hours, seven earthquakes rattled across Oklahoma, according to data from the United States Geological Survey.

The temblors ranged in intensity from magnitude to 1.6 to 2.5.

The first quake — measuring at magnitude 1.9 — struck at 10:44 a.m. Sunday roughly 2.5 miles south of Perry, the USGS reported. The second quake — magnitude 1.7 — came just over a minute later in roughly the same location.

 

 

Houston Chronicle – March 23, 2020

Diamondback Energy cuts budget again as oil prices continue to sink*

Midland exploration and production company Diamondback Energy is cutting its 2020 drilling budget for a second time this month as crude oil continue to fall to nearly 20-year lows.

In a statement issued late last week, Diamondback has cut $1.2 billion from hits capital budget, meaning that the company now plans to spend between $1.5 billion and $1.9 billion on drilling and completing new wells this — and plans to cut more, if oil prices continue to fall. Diamondback made the announcement at a time when many exploration and production companies are cutting their drilling budgets in response to rapidly falling oil prices.

 

 

S&P Global Platts – March 23, 2020

Shell, Total cut spending, share buybacks in response to oil price slump

European oil majors Shell and Total announced Monday plans to cut capital expenditure by around 20% and suspend their share buybacks as part of a raft of measures to strengthen balance sheets in response to collapsing oil prices and the economic impact of the global coronavirus pandemic.

Shell said it will cut its cash spending by $5 billion from planned levels to $20 billion “or below” in 2020 and reduce its operating costs over the next 12 months compared to 2019 levels.

Total said it will cut more than $3 billion, or over 20%, mostly from its organic capex this year, taking its net investments to less than $15 billion.

 

 

Seeking Alpha/Bloomberg News – March 19, 2020

Oil refineries see reduced staffing on virus scare

A growing list of U.S. refiners are reducing staffing, with at least one cutting run rates, Bloomberg reports, as the coronavirus spreads across the U.S. and people are urged to work from home.

HollyFrontier (NYSE:HFC) says it is limiting onsite staffing to essential personnel and limiting or postponing non-essential projects and contractor work.

Royal Dutch Shell’s (RDS.A, RDS.B) Deer Park and Valero’s (NYSE:VLO) Texas City refineries reportedly are sending home contractors who work day-to-day on site.

 

 

Wall Street Journal – March 22, 2020

Coronavirus and Oil-Price Plunge Buries Shale and Occidental’s Big Bet*

Just weeks ago, Occidental Petroleum Corp. Chief Executive Vicki Hollub sought to reassure investors that her bold bet on U.S. shale oil—a $38 billion deal for rival Anadarko Petroleum Corp.—hadn’t left the company on shaky footing.

An analyst asked on Feb. 28 if Occidental could weather the coronavirus outbreak and pay its beefy dividends as usual. “We’re actually in a good scenario, I think, because we don’t expect this situation to last,” she said.

Soon after, oil prices crashed to around $30 a barrel, the fallout from a price war erupting between Russia and Saudi Arabia that threatened to further flood the world with crude. Ms. Hollub was forced to slash the dividend by 86%, the company’s first such cut in decades and, this weekend, cede major ground to Carl Icahn by ushering the activist investor into the embattled company’s boardroom.

 

Utilities

 

S&P Global Platts – March 23, 2020

COVID-19-related load impacts are being reported by several US grid operators

US power system impacts from the coronavirus pandemic are beginning to emerge, with shifting load patterns, significant load declines in a number of areas and projections that mild weather and business shutdowns will continue to suppress load over the coming weeks. However, some regions have seen little or no impact, and there have been no reported US grid reliability issues so far.

The Midcontinent Independent System Operator has observed some load reductions. While load is weather dependent, MISO’s peak for March month to date is down 18% compared to March 2019 and down 13% month to date compared to the March average since 2014, spokeswoman Allison Bermudez, said in an email.

 

 

Power – March 23, 2020

Utilities Plan to Keep Key Staff Housed at Power Plants

U.S. electric utilities and other energy companies are preparing to have key personnel remain at power plants and operations centers to ensure the facilities remain online during the coronavirus pandemic.

The federal government considers power plants part of the nation’s critical infrastructure. The U.S. Department of Homeland Security (DHS) is responsible for working with power plant operators, as well as owners of gas pipelines and other energy delivery companies, to maintain their operation during emergency situations. The DHS on March 19 issued guidance to government and business officials about activating measures to protect critical staff members from COVID-19.

 

 

Dallas Morning News – March 23, 2020

Consumer advocates pressure Texas to halt utility shutoffs during COVID-19 outbreak*

Advocacy groups are pressuring the state’s utility regulator to suspend water, phone and electricity shutoffs during the COVID-19 coronavirus outbreak as workers face furloughs and layoffs.

After the Texas Supreme Court halted eviction proceedings last week, the Texas Legal Services Center and six other groups petitioned the Texas Public Utility Commission to stop providers from shutting off water, phone and electricity services.

“When we think about the coronavirus, all of the advice tells us that the best prevention is basic handwashing, which you are not able to do without water,” said Karen Miller, executive director of the Texas Legal Services Center. “And everyone is being encouraged to stay home, which is hard without electricity.”

 

 

March 23, 2020

San Antonio Express News: How utilities could broaden aid during the coronavirus pandemic

Create an option during routine billing — online and by mail — for people to donate specifically to help anyone facing financial hardship due to the coronavirus. Something similar to what CPS Energy already does through its Residential Energy Assistance Program, known as REAP. When people pay their bills, they can donate to this program. But unlike REAP — which is for those with incomes at or below 125 percent of the federal poverty guidelines, who are experiencing hardship and who meet other criteria — a coronavirus fund should be for any household that can demonstrate a loss of employment or significant reduction in hours, with priority given to low-income residents.

Another avenue to achieve this without relying on donations, which might prove unreliable, is to add a small monthly coronavirus assistance fee — say, 50 cents each — to CPS Energy and SAWS bills. Some may remember that in 2014, the city of San Antonio tacked on a $1 parks and recreation fee to CPS Energy bills, generating about $6.6 million a year in funding. A coronavirus fee could be created with the understanding that once the economy recovers to a certain threshold, the fee would be dropped and funds would only be used to cover utility balances for those who have lost employment due to the pandemic.

 

 

KRIS (Corpus Christi) – March 23, 2020

Will coronavirus impact power grid?

ERCOT, the organization that maintains Texas’s power grid, addressed two common concerns regarding the novel coronavirus, COVID 19, and it’s potential impacts on the grid.

“We are monitoring any changes to ERCOT’s load; however, it is too early to determine COVID-19’s impact on electric load patterns,” ERCOT Communications Manager Leslie Sopko said in a written statement.

Sopko was addressing concerns that scores of people working from home because of coronavirus fears will create a need for electricity that the power grid can’t handle. It could be a couple of months before ERCOT will announce whether or not that’s the case. “Any changes to the summer peak load forecast will be announced when we release our final summer Seasonal Assessment of Resource Adequacy in early May,” her statement continued.

 

 

Security Boulevard – March 23, 2020

NERC updates may force utility companies into better cybersecurity

Breaches and incidents at utility and other energy-related companies have been rising faster than an electric bill in a Texas summer. In 2019, a power plant in Ukraine was attacked and the power went out in the area for about an hour due to the problems it caused. And in February 2020, a gas pipeline in the US was shut down for two days after a ransomware incident. According to a study done by Allianz, 54% of critical infrastructure providers report attacks that attempted to control systems. ….

Nothing lights a fire under a regulated industry faster than a regulation change that could bring fines or sanctions. Upcoming updates to the cybersecurity portions of North American Reliability Corporation’s (NERC) Critical Infrastructure Protection (CIP) rules have many utilities and other covered companies scrambling to figure out the implications for their cybersecurity programs and to implement any necessary solutions.

 

 

Wall Street Journal – March 23, 2020

PG&E to Plead Guilty to Involuntary Manslaughter Charges in Deadly California Wildfire*

PG&E Corp. PCG 12.47% said it would accept criminal responsibility for starting the deadliest wildfire in California’s history, becoming one of a small number of U.S. corporations to plead guilty to felony charges of involuntary manslaughter.

The indictment by a grand jury and PG&E’s decision to plead guilty put to rest significant questions about the extent of the company’s culpability in starting the Camp Fire in 2018.

PG&E, a utility that supplies electricity and natural gas to 16 million people, or about one in 20 Americans, admitted that its failure to maintain its equipment was criminally negligent and caused the deaths of more than 80 people. However, the indictment doesn’t charge any PG&E employees or executives.

 

Alternatives & Renewables

 

Houston Chronicle – March 23, 2020

Sunnova: Solar should be part of federal aid package*

Sunnova, the Houston-based residential seller of solar-power systems, called on Congress to include the solar industry in plans to help the energy industry during the coronavirus pandemic.

The company criticized the Senate’s proposed spending package that would provide billions of dollars in loans for the oil and gas industry but ignores the solar energy industry, which has become one of the fastest growing sources of power in the United States. Solar accounted for 40 percent of new electric generation capacity last year, according to industry trade group Solar Energy Industries Association.

 

Regulatory

 

The Hill – March 23, 2020

House stimulus includes controversial effort to stem airline pollution

The stimulus package to battle the economic effects of the coronavirus proposed by House Democrats includes provisions to crack down on pollution from the airline industry.

The bill also includes more than $50 billion in relief for the industry, but it would require airlines to go carbon neutral for domestic flights by 2025. It also promotes cleaner jet fuels and would greenlight the government to buy older, less efficient planes from airlines.

Environmentalists have pushed the party not just to crack down on airlines but to offer tax incentives to the renewable energy sector. But Democrats’ efforts to include environmental language have in part stalled similar legislation in the Senate, where a vote on a stimulus package has once again been delayed.

 

 

Wall Street Journal – March 20, 2020

Some U.S. Energy Officials Want Saudis to Ditch OPEC*

A group of Energy Department officials are pushing the Trump administration to forge an oil alliance with Saudi Arabia, a partnership supporters say could join the world’s two largest oil-producing nations and pave the way for the Saudis to leave OPEC, according to people familiar with the situation.

Backers of the plan say it would help stabilize global crude markets, preventing more crashes like the one that has led to prices plunging 60% since January. It also could head off potentially stronger ties between the Saudis and Russia and reaffirm the kingdom’s longstanding alliance with the U.S., according to the people.

The plan faces major obstacles. The partnership likely would mean a much more active role for the U.S. government in global oil markets, which could raise objections from oil-industry executives and lawmakers who have championed free trade.

 

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The Texas Energy Report NewsClips – March 23, 2020

Click on each headline to read more of the story at the source.
Asterisk * following headline indicates news content may be limited or unavailable at the source because it’s password protected.

 

Lead Stories

 

Houston Chronicle – March 21, 2020

Oil industry debate rages while crude dips to $19 per barrel*

A debate over whether Texas regulators should intervene in a historic oil industry downturn continues to intensify while crude prices dipped as low as $19.46 Friday. …

Parsley Energy CEO Matt Gallagher has found himself as a leader of a small group of producers asking the Railroad Commission to order the production cuts, a power the agency hasn’t used since 1973, while the industry is hammered by a global oil glut and plunging demand. …

Railroad Commission Chairman Wayne Christian and commissioner Ryan Sitton said they would listen to both sides of the debate over state-led production cuts while commissioner Christi Craddick has remained silent on the issue.

In a Friday statement, Christian praised the Trump administration for issuing an auction to buy 30 million barrels of oil to refill the U.S. Strategic Petroleum Reserve but said that he has a “number of reservations” about the agency using its production cuts power.

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Bloomberg News/KOSA (Midland-Odessa) – March 20, 2020

Tens of thousands of Texans losing jobs as coronavirus and an oil war slam shale fields

Houston pipemaker Tenaris to lay off 900, Apache to lay off 85 at Midland office, Canary lays of 43, Recoil Oilfield Services laid off 50

One of the most painful busts in the history of crude oil happened just six years ago when a sharp price drop cost 200,000 roughnecks, almost half the entire workforce, their jobs.

And now, the spread of the coronavirus coupled with an oil-price war between Russia and Saudi Arabia threatens to devastate the oil services industry and its workers once again.

Tens of thousands of Texans are being laid off across the state in places like the Permian Basin shale fields in west Texas as companies shut down their drilling rigs, according to Ryan Sitton, a state oil and gas regulator. Announcements are starting to trickle in. Drilling service company Canary LLC cut 43 workers last week.

 

 

Wall Street Journal – March 22, 2020

Occidental Nears Settlement With Carl Icahn*

Occidental OXY -5.54% Petroleum Corp. is nearing a truce with Carl Icahn that would conclude one of the highest-profile corporate clashes of the past year and usher the activist investor into the embattled oil producer’s board room as it seeks to recover from a series of setbacks.

Andrew Langham and Nicholas Graziano, two lieutenants of the billionaire investor, would receive seats on Occidental’s board under the terms currently being discussed, people familiar with the matter said. Mr. Icahn and the company would also mutually agree on a third, independent director, who is likely to be Herbalife Nutrition Ltd. board member Margarita Paláu-Hernández, some of the people said.

As part of the deal, Mr. Icahn would also bless Occidental’s plan to bring back Stephen Chazen, its former chief executive, as chairman, as The Wall Street Journal reported this past week.

 

 

Vancouver Sun – March 19, 2020

Mexico Slashes Its Crude Selling Prices, Deepening Global Crisis

Mexico slashed the price for its flagship Maya crude, the latest producer to discount its cargoes as the coronavirus pandemic destroys fuel demand and Saudi Arabia floods the world with crude.

Petroleos Mexicanos’s trading arm PMI lowered its Maya crude differential into U.S. Gulf Coast by $2 to minus $10.05 a barrel for April, PMI said in an emailed statement. The so-called K factor is applied to benchmark crudes to adjust for market conditions. It’s the biggest discount since the company changed its formula for December. The company also cut pricing to Europe, India and the Middle East by the same amount.

 

 

Texas Tribune – March 22, 2020

Texas’ budget could take massive hit as coronavirus crisis continues unfolding, lawmakers learn

Comptroller Glenn Hegar briefed Texas House members on the state’s economy and budget Sunday night, saying that while it was too soon for specific forecasts, both are expected to take potentially massive hits in the wake of the new coronavirus pandemic, according to multiple people who were on the conference call.

The members-only call, led by House Speaker Dennis Bonnen, R-Angleton, was one of state lawmakers’ first glimpses of the impact the virus is expected to have on multiple industries, state finances and Texas’ largely oil-fed savings account, known as the Economic Stabilization Fund or the rainy day fund.

 

 

Hellenic Shipping News – March 23, 2020

Jay Young: Why Oil Prices Will Be $65 Per Barrel By the End of 2020

Sit tight and don’t panic. We’re going to be fine. We’ve been here before. I remember signs in the front yards in Midland, Texas after the 1973 Oil Embargo saying “God, Please give us higher oil prices one more time. We promise not to screw it up again”. The prices were barely in the double digits for oil however, money was plentiful.

Since then, we’ve seen HUGE swings in the oil and gas markets so I wouldn’t be surprised if yard signs are being produced within the Midland/Odessa communities today because oil prices are seeing a huge dive, however, my prediction is oil will bounce back! And it won’t be because of the emotional reactions Saudi Arabia and Russia took last night, poking out their chests over production cuts. It will be because of basic supply and demand and a lot of people will be scratching their heads saying “Why didn’t I invest in the oil markets when prices were low?”

 

Oil & Gas

 

Reuters/CNBC – March 23, 2020

Before the Open: Oil markets slump amid coronavirus chaos

Oil prices fell on Monday as governments escalated lockdowns to curb the spread of the global coronavirus outbreak that has slashed the demand outlook for oil and threatened a global economic contraction.

Brent crude futures fell $1.09, or 4%, to $25.89 a barrel by 0209 GMT. West Texas Intermediate (WTI) crude futures was down 15 cents, or 0.7%, at $22.48 a barrel.

Oil prices have fallen for four straight weeks and have given up about 60% since the start of the year. Prices of everything from coal to copper have also been hit by the crisis, while markets in bonds and stocks enter rarely charted territory.

 

 

Reuters – March 20, 2020

U.S. drillers cut most oil rigs since April: Baker Hughes

Drillers cut 19 oil rigs in the week to March 20, the deepest weekly cut since April 2019, bringing the total count down to 664, the lowest since January, energy services firm Baker Hughes Co said in its closely followed report on Friday.

The oil rig count, an early indicator of future output, is down 19% from the same week a year ago when 824 rigs were active.

More than half the total U.S. oil rigs were in the Permian basin in West Texas and eastern New Mexico, where active units fell by 13 this week to 405, the lowest since January 2020. That was the biggest weekly decline since January 2016.

 

 

Houston Chronicle – March 20, 2020

Record low oil prices may trigger tax credit for 200,000 wells in Texas*

Record low crude oil prices may soon trigger a tax credit for more than 200,000 wells across Texas for the first time in four years.

Under state law, there is a 4.6 percent tax on oil produced at each well, but in 2005, lawmakers created exemptions for wells producing less than 15 barrels per day when prices fall below certain levels for a prolonged period of time. …

The Texas comptroller’s office manages the oil well tax exemption and is expected to issue a ruling in early April. The agency last issued the tax credits for five months during 2016 at the height of the most recent oil bust. There are more than 200,000 qualifying wells in Texas that produced an estimated 580 million barrels of crude oil and 3 trillion cubic feet of gas in 2019, figures from the Texas Independent Producers & Royalty Owners Association show.

 

 

Houston Chronicle – March 23, 2020

Federal judge sides with Kinder Morgan in Hill Country fight*

A federal judge has sided with Houston pipeline operator Kinder Morgan in a fight over building a $2 billion natural gas pipeline through the scenic and environmentally sensitive Texas Hill Country.

In a 29-page decision handed down late last week, U.S. District Court Judge Robert Pitman in Austin struck down a request to issue an injunction against the company’s Permian Highay Pipeline.

As part of a federal lawsuit, the cities of Austin and San Marcos, Hays and Travis counties, the Barton Springs Edwards Aquifer Conservation District and four landowners sought a preliminary injunction against the pipeline project which is being built through Texas Hill Country and over the Edwards Aquifer, an underground reservoir home to several threatened and endangered species of salamander, fish and insects.

 

 

Reuters – March 20, 2020

U.S. to send envoy to Saudi Arabia; Texas suggests oil output cuts

The Trump administration plans to send a special energy envoy to Saudi Arabia to work with the kingdom on stabilizing the global oil market, officials said on Friday, as the U.S. scrambles to deal with a price crash so deep that regulators in Texas considered curbing production there for the first time in nearly 50 years. …

A senior Energy Department official will be sent to Riyadh for months at least to work closely with State Department officials and the existing energy attache, the senior U.S. officials said, on condition of anonymity.

Trump administration officials said Saudi Arabia has for decades been a steadfast leader of stability in the global oil market. The energy representative would help the countries return to a path of stability, they said.

 

 

Financial Review – March 22, 2020

David Fickling: The fall of the Gulf’s oil empire looms

The era when the Gulf nations and their sovereign wealth funds were magic cash machines prepared to pay top dollar for assets on every continent may be coming to an end. They may even have to turn into net sellers. That will affect institutions from the US Treasury market, where Saudi Arabia holds about $US183 billion of securities; to Softbank Group, which may find Riyadh a less generous partner for funding Masayoshi Son’s expansive visions.

The monarchies have surfed a remarkable tide of wealth over the past half-century or so, but every wave eventually crashes. Future generations will never again see the wealth that current subjects enjoy. Perhaps the Gulf wasn’t spared from oil’s curse, after all. That moment was only deferred.

Related: Saudi-initiated all-out oil war could lead to collapse of kingdom itself

 

 

The Hill – March 20, 2020

Lawmakers ask Trump administration to help Gulf oil and gas producers

A group of 14 lawmakers is asking the Trump administration to help out the offshore energy industry amid a decline in oil prices linked to international disputes and the coronavirus pandemic.

The 13 Republicans and one Democrat sent a letter on Friday to Interior Secretary David Bernhardt asking him to reduce or waive royalties for oil and gas leases in the Gulf of Mexico.

“The Department of the Interior has existing authority to temporarily reduce or eliminate royalties set forth in the leases in the Western and Central Planning Areas of the Gulf of Mexico and other lease areas,” the lawmakers wrote.

[The letter was signed by] Reps. Dan Crenshaw (R-Texas), Randy K. Weber (R-Texas), Clay Higgins (R-La.), Mike Johnson (R-La.), Bill Flores (R-Texas), Chip Roy (R-Texas), Bruce Westerman (R-Ark.), Ralph Abraham (R-La.), Kevin Hern (R-Okla.), Jeff Duncan (R-S.C.), Brian Babin (R-Texas), Michael C. Burgess

 

 

San Antonio Express News – March 20, 2020

Valero Energy has a tough row to hoe: Oil is cheap, but demand for gas has plummeted*

In a note to investors Friday, Bloomberg energy analyst Fernando Valle expressed concern about refiners’ gasoline sales in California. The state is under an eight-week stay-at-home order by Gov. Gavin Newsom, issued Thursday night.

Valero isn’t the largest refiner operating in California, but the company — with two refineries in Northern and Southern California — still is a significant player in the state’s gasoline market.

“The lockdown in California will be a major blow to refiners exposed to the state, which is the largest consumer of gasoline in the country,” Valle said. “Losing significant demand from a high-margin state will be difficult for refiners,” he noted.

 

 

Midland Reporter Telegram – March 20, 2020

Yergin says oil crash has similarities to 1998, 1930s

“Two crises have hit the oil market at the same time – the coronavirus and an oil market war launched in the middle of a pandemic,” said Daniel Yergin, vice chairman of IHS Markit.

“Every crisis is different,” he said in a phone interview. “Some features of this remind me of 1998 and some remind me of the 1930s.”

In 1998, oil producers increased production into a shrinking market to the point that storage was overwhelmed, and oil prices fell to $10 a barrel, he said. That’s similar to the 1930s, when giant oil fields such as the one in East Texas came online in the midst of the Great Depression, driving oil prices to 13 cents a barrel.

 

 

Bloomberg News/Yahoo! News – March 20, 2020

Ryan Sitton, RRC: The U.S. Must Protect Free Markets in the Oil Price War

Uncertain times are upon us. Our jobs and way of life are being affected by the coronavirus pandemic and by the measures being taken to halt its spread. While these measures are necessary, they are also suppressing demand for goods and services, crippling key parts of our economy. Many families will soon feel a great deal of economic pain, if they aren’t already.

One silver lining is that gasoline prices have plummeted to near-record lows. Low gas prices are usually great for jobs and the economy, but they carry dangers under the current circumstances. It feels great to fill up for less and less each day, but the companies that produce our energy cannot sustain these prices.

See also: Texas regulator urges state to consider oil output limits as prices crash

 

 

Reuters – March 20, 2020

OPEC’s Barkindo says he spoke with Texas regulator about oil market

OPEC Secretary General Mohammad Barkindo said Friday that he spoke with a Texas oil regulator about the oil market’s current conditions and the “possibility of future cooperation.”

Barkindo said that the two spoke via teleconference, saying that he and Texas Railroad Commissioner Ryan Sitton were “both concerned with current market developments, including its impact on the security of supply.”

Saudi Arabia, the largest oil producer in the Organization of the Petroleum Exporting Countries, said it would boost production to 12.3 million barrels per day, a record, after it and Russia were unable to come to an agreement to curb supply earlier this month.

 

 

Associated Press/Brownsville Herald – March 21, 2020

Lawsuit to protect bird nicknamed feathered mouse

Environmentalists have sued the Trump administration for failing to follow through on a proposal made two years ago to protect a small, elusive marsh bird nicknamed the “feathered mouse.”

“The eastern black rail stands on the brink of extinction,” said the lawsuit filed Thursday in U.S. District Court in New Orleans. The U.S. Fish and Wildlife Service did not immediately respond to a request for comment, but generally cannot comment on lawsuits.

The sparrow-sized bird has brilliant red eyes, black or dark gray feathers flecked with white and a brown nape.

 

 

Wall Street Journal – March 22, 2020

Energy Giant Total Cuts Shareholder Returns, Spending After Oil Collapse*

French energy giant Total SA TOT 2.67% will immediately cut expenditures, trim returns to shareholders and freeze recruitment as the company combats the ravages of an oil-price rout and a demand-sapping coronavirus pandemic, Chief Executive Patrick Pouyanne told staffers last week in a video message seen by The Wall Street Journal.

The austerity measures at the fourth largest Western oil company will amount to about $5 billion, Mr. Pouyanne said. Total also plans to borrow $4 billion to make up for an expected $9 billion shortfall created by lower oil prices.

The shortfall is roughly equivalent to the amount Total spends on dividend payments to shareholders, Mr. Pouyanne pointed out in the video.

 

 

Bloomberg News – March 19, 2020

How Low Can Oil Go? One Forecast Sees $5 a Barrel*

Oil traders struggling to navigate one of the biggest oil crashes in history say the worst is yet to come. Even after plunging about 60% this year to the lowest since 2003, prices will likely drop further to $20 a barrel or below, according to a survey of traders from some of the world’s biggest oil companies and merchants. Analysts from Goldman Sachs Group Inc. to Citigroup Inc. also expect prices to extend declines in the coming months, with some even speculating certain regional prices could go negative as markets try to send signals to halt supply.

Oil has been battered by the simultaneous fight against Covid-19, which is expected to reverse more than a decade of global demand growth, and a flood of supply as Saudi Arabia and Russia battle for market share. The sudden and severe plunge in oil prices has helped fuel the broader sell-off across markets, and threatens economies across Latin America and the Middle East, as well as the U.S., where the energy industry accounts for large chunks of both output and debt. …

Eighteen of 20 oil and products traders surveyed by Bloomberg see Brent falling to $20 a barrel or lower, with West Texas Intermediate seen $3 to $5 below that. The price weakness is expected to last from a matter of weeks to as long as the end of the year, said the traders, who aren’t authorized to speak publicly.

 

Utilities

 

Community Impact Newspaper – March 20, 2020

Construction underway at Montgomery County Power Station

A $937 million power station in Willis is making headway, slated to come online mid-2021.

Entergy Texas, which provides electricity across Texas, including the Conroe area, broke ground on the project in February 2019. The new plant is located north of the Lewis Creek Reservoir and is on Entergy’s existing power station site.

The plant will service Entergy Texas customers across Montgomery County, including Conroe, and customers may expect an increase in user fees to fund the project. Entergy is also extending an existing 20-mile pipeline to fuel the plant with natural gas, said Stuart Barrett, vice president of customer service for Entergy Texas.

 

 

InForney – March 20, 2020

TVEC to stop residential and small business member disconnects

Kaufman County TX — Trinity Valley Electric Cooperative has announced it will stop disconnects for its non-paying residential and small business members during uncertain economic times brought on by the COVID-19 pandemic.

“During this unprecedented time of economic uncertainty, combined with a limitation on social resources and movement, we recognize the importance of keeping power on for our members in difficult circumstances,” read a statement from the company.

TVEC also plans to add funding to bill payment assistance organizations through the TVEC Charitable Foundation.

 

 

KTRE – March 19, 2020

Deep East Texas Electric Cooperative lobby closure begins

The health and safety of our members and our employees is Deep East Texas Electric Cooperative’s primary focus. Due to the Texas Department of State Health Services (DSHS) and the Office of the Texas Governor recommendations on controlling the spread of Coronavirus/COVID-19, the Cooperative’s lobby will be temporarily closed effective at 5:00 PM on Friday, March 20, 2020.

While no one can predict the overall impact of this global issue, or the local impact should it touch our community directly, DETEC employees are working hard to ensure electric service remains unaffected.

 

 

Florida Politics – March 20, 2020

NextEra Energy promises $1.5M in coronavirus assistance

The NextEra Energy family of companies is committing $1.5 million toward emergency assistance during the ongoing impact of the COVID-19 virus.

Florida Power & Light (FPL) and Gulf Power Company are subsidiaries of NextEra Energy. Both FPL and Gulf Power have already agreed to suspend electric service disconnections as the economy slows due to widespread social distancing efforts.

Now, NextEra Energy Chairman and CEO Jim Robo says the company will be allotting $1.5 million to assist those affected by the virus.

 

Alternatives & Renewables

 

S&P Global Platts – March 20, 2020

‘Uncertainty’ describes wind and solar projects’ immediate future: CEOs

The CEOs of six wind and solar development companies speaking on a webcast Friday all agreed that “uncertain” was the best word to use in answering questions about where the US renewables business stands in the face of the COVID-19 pandemic and its impact on the country’s economy.

The moderator of the webinar, Keith Martin of the law firm Norton Rose Fulbright, called the renewables situation “fluid.” He said he could imagine that that utilities in the Rust Belt and the oil patch will feel the drop in demand and thus revenues most significantly.,

James Torgerson, CEO of Avangrid, said that in Upstate New York and New England his company is expecting “somewhat of a decline in demand.” However, “with everyone staying home, the residential load is probably going to go up a little bit. So we are going to wait and see. We haven’t seen much yet, but expect that a decline will occur.”

 

Regulatory

 

Texas Tribune – March 22, 2020

Ross Ramsey: Order Texans to stay home, or risk impeding the fight against COVID-19?

Texas Gov. Greg Abbott is still looking for middle ground.

“There have been questions raised about whether Texas as a state must immediately go into a shelter-in-place status,” Abbott said Sunday, adding a few moments later, “We need to do several things first.”

He said his earlier executive orders — closing bars, restaurants, gyms and limiting the size of public gatherings — are still fresh, and he wants to see whether what’s already been done is enough. He said more than 200 of the state’s 254 counties haven’t reported a single case of the coronavirus. After saying that what might be appropriate for urban areas isn’t necessarily suited to rural parts of the state, he threw it to local control: “Local officials have the authority to implement more strict standards than I have implemented,” Abbott said. At this time, he said, it’s not the appropriate approach for the whole state.

 

 

Scientific American – March 21, 2020

Democrats Want to Include Climate Action in Coronavirus Aid

Democrats on both sides of Capitol Hill are pushing to add climate change provisions to the third aid package for people and industries affected by the novel coronavirus pandemic. But it’s unclear whether they have the political leverage to make those ideas stick—at least not yet.

The Democratic proposals touch on two main areas. Several Senate Democrats want airlines to reduce their carbon emissions in exchange for federal aid that could hit $50 billion or more. House Democrats, meanwhile, are looking at clean-tech tax credits. Those include incentives for electric vehicles, battery storage, offshore wind and solar energy that were left out of a December tax extenders package.

Their demands have precedent. In 2009, when the Obama administration bailed out the auto industry to the tune of $80 billion, it conditioned aid on improvements in vehicle fuel efficiency.

 

 

Newsweek – March 18, 2020

Inside the military’s top secret plans if Coronavirus cripples the government

Even as President Trump says he tested negative for coronavirus, the COVID-19 pandemic raises the fear that huge swaths of the executive branch or even Congress and the Supreme Court could also be disabled, forcing the implementation of “continuity of government” plans that include evacuating Washington and “devolving” leadership to second-tier officials in remote and quarantined locations.

But Coronavirus is also new territory, where the military itself is vulnerable and the disaster scenarios being contemplated — including the possibility of widespread domestic violence as a result of food shortages — are forcing planners to look at what are called “extraordinary circumstances”.

Above-Top Secret contingency plans already exist for what the military is supposed to do if all the Constitutional successors are incapacitated. Standby orders were issued more than three weeks ago to ready these plans, not just to protect Washington but also to prepare for the possibility of some form of martial law.

 

___________________________

 

The Texas Energy Report NewsClips – March 20, 2020

Click on each headline to read more of the story at the source.
Asterisk * following headline indicates news content may be limited or unavailable at the source because it’s password protected.

 

Lead Stories

 

Financial Times – March 19, 2020

US oil companies race to restructure debt

Independent US energy producers are restructuring billions of dollars of debt or discussing new ways to stay afloat as collapsing oil prices and soaring bond yields threaten bankruptcies across the beleaguered shale sector. Whiting Petroleum, an oil driller in North Dakota and Colorado, and Antero Resources, a gas-focused producer in the Appalachian region, are among companies that have begun exploring restructuring options and sounding out potential advisers, according to sector experts and bankers.

Meanwhile, California Resources, the largest oil and gas producer in the Golden State, and Ohio- and Oklahoma-focused Gulfport Energy have already both hired Perella Weinberg, a financial services group, to help restructure their debt, according to two people briefed on the matter.

Chesapeake Energy, once a shale gas pioneer, has hired law firm Kirkland & Ellis and financial advisers Rothschild & Co to help manage its $9bn debt pile. The company’s troubles are evident in debt markets, where its $2.2bn bond maturing in 2025 suffered a dramatic fall in recent weeks, from over 80 cents on the dollar on February 20 to just 18 cents on Wednesday, as investors priced in the risk of default.

 

 

Forbes – March 19, 2020

Christopher Helman: Just Six Months To ‘Tank Tops’ In Race To Store Up Cheap Oil

America’s frackers have been slashing spending to preserve cash. Billionaire Harold Hamm said today that his Continental Resources would reduce the number of drillings rigs it’s running from 9 to 3, and likely exit the year producing 5% less oil than at the beginning. Dozens of other companies have followed suit, with Halliburton this week announcing that it would furlough 3,500 workers on fracking crews. Hamm, having lost billions in the downturn, has been lobbying for a federal investigation into Russian and Saudi “illegal dumping.” Treasury Secretary Steven Mnuchin suggested today that Congress should appropriate $20 billion to essentially buy 1 billion barrels of cheap oil and save it for a rainy day.

The problem is, there’s not enough places to put it.

The world has about 900 million barrels of available storage capacity right now, figures Energy Aspects. That includes about 250 million barrels in China, 70 million in the U.S. Strategic Petroleum Reserve, and 40 million each in South Africa, Japan, South Korea and Cushing. If the coronavirus panic continues 350 million barrels of that storage will be filled up by June, with the rest of it maxxed out to “tank tops” by autumn 2020. U.S. storage for some products, like jet fuel, will reach capacity within a month, according to Rystad analyst Per Magnus Nysveen.

 

 

Wall Street Journal – March 19, 2020

Occidental Plans to Name Former CEO Chazen as New Chairman*

Occidental Petroleum Corp. OXY 2.85% plans to bring back former Chief Executive Stephen Chazen as its new chairman, according to people familiar with the matter, as the oil producer scrambles to right itself amid plunging demand and an activist onslaught by Carl Icahn.

Mr. Chazen, a heavy hitter in the energy world, led Occidental OXY 2.85% for roughly five years until 2016 and handpicked current CEO Vicki Hollub. His appointment could be announced in the coming days, assuming discussions don’t fall apart.

The move is likely aimed at mollifying Mr. Icahn and avoiding a costly and distracting proxy fight at Occidental’s annual meeting later this year. Mr. Icahn had tried to recruit Mr. Chazen for the slate of directors he nominated in November. Mr. Chazen at the time was reluctant to get involved unless it would help Ms. Hollub clear an impasse with the billionaire activist, The Wall Street Journal has reported.

 

 

Oil Price – March 19, 2020

How Chevron Could Win Big On “The Worst Oil Deal Ever”

Last week someone commented to me that Chevron could now buy Occidental Petroleum cheaper than it offered to acquire Anadarko. There is an element of truth to the statement, but it is complicated by Occidental’s debt. So let’s review the numbers.

Eleven months ago, Chevron attempted to buy Anadarko in the sixth-largest oil and gas deal in history. The deal would have given Anadarko $33 billion, and it would have assumed Anadarko’s $17 billion debt for a total cost to Chevron of $50 billion.

However, it’s a little more complicated than that. For example, Chevron would have to announce their intention, and that would potentially drive Occidental’s share price higher. So perhaps they could just make Occidental an offer. If Occidental’s current market capitalization is $13 billion, maybe it would make sense to offer them $50 billion — the original offer to acquire just Anadarko.

 

 

Associated Press – March 19, 2020

Oil and gas lease bidding in Gulf of Mexico drops anew

Bidding on federal oil and gas leases in the Gulf of Mexico on Wednesday was the lowest since gulf-wide sales began in August 2017 — and lower than any sale since 1993 for the productive central Gulf.

Twenty-two companies made $93 million in high bids on 71 tracts, according to the Bureau of Ocean Energy Management, which conducts the sales.

“Wow. That’s horrible, isn’t it?” said Rene Santos, an analyst for S&P Global Platts.

“If the prices stay low for a long time, the next sale is going to be potentially worse,” he said, noting that prices plummeted again Wednesday from less than $27 a barrel to $20.37 a barrel.

 

 

Houston Chronicle – March 19, 2020

Energy secretary says crude buy unlikely to boost prices

President Trump’s move to buy up 30 million barrels of crude for the Strategic Petroleum Reserve is unlikely to do much to improve oil prices, Energy Secretary Dan Brouillette said Thursday.

Rather he described the move as one designed to buy up oil cheap, in the event of future emergencies requiring a release of crude onto the market.

“It’s a very common sense approach and a strong signal to an important industry that underpins our national economy,” he said. “I don’t anticipate this is going to drive oil prices up.”

 

Oil & Gas

 

Reuters/CNBC – March 20, 2020

Oil extends gains after Trump hints at intervening in Saudi-Russia price war

U.S. crude oil prices rose over $1 on Friday, extending steep gains from the previous session, after U.S. President Donald Trump hinted he may intervene in the price war between Saudi Arabia and Russia at an “appropriate time”.

Prices were also supported by United States’ plans to buy oil for its emergency stockpile, while regulators in the country’s largest oil-producing state Texas were reportedly considering curtailing production. “Such actions, if implemented, would reduce global and domestic supplies and help support prices in the near-term,” Goldman Sachs said in a note on Friday.

“While this support could prove lasting in 2H20, the accompanying supply cuts would however remain much too small to offset the current 8 million barrels per day hit on demand from the coronavirus…”

The more active West Texas Intermediate (WTI) crude futures contract for May was up $1.01, or 3.9% at $26.92 a barrel by 0352 GMT. U.S. crude futures for April rose 92 cents, or 3.7% to $26.14 a barrel. The front-month April contract, which spiked 24% on Thursday, expires later on Friday.

Brent crude futures climbed 57 cents, or 2%, to $29.04 per barrel. Brent rose 14.4% on Thursday in its biggest one-day gain since September.

 

 

MarketWatch – March 19, 2020

U.S. oil futures score biggest one-day percentage rise on record

Oil futures rallied Thursday, with U.S. prices up nearly 24% to score their largest one-day percentage climb on record, as moves by global central banks and governments to support global economy helped to ease worries about the slowdown in energy demand.

April West Texas Intermediate oil CLJ20, +7.73% rose $4.85, or 23.8%, to settle $25.22 a barrel on the New York Mercantile Exchange. That was the largest daily front-month contract percentage climb on record based on data going back to March 1983, according to Dow Jones Market Data.

 

 

S&P Global Platts – March 19, 2020

Port of Houston to re-open container terminals after COVID-19 positive worker hospitalized

The Port of Houston [re-opened] both of its container terminals Thursday evening after shutting them down Wednesday because a worker who had been at both sites tested positive for the COVID-19 strain of the coronavirus, the port said Thursday.

The port said in a statement that it had conducted a joint investigation with the International Longshoremen’s Association, the union that represents the afflicted worker, “which indicated that his exposure to others was fairly limited.”

The port said it would re-open the Bayport and Barbour’s Cut terminals for vessel operations at 7 pm CT Thursday, and resume normal overall operations, including trucks coming in and out of gates to deliver or retrieve containers, at 7 am CT Friday.

 

 

Texas Tribune – March 19, 2020

Texas regulators contemplating a reduction in oil production amid coronavirus crisis

The state agency that regulates Texas’ behemoth energy industry is weighing a reduction in oil production — at the behest of some producers — as the public health and economic crises fueled by the new coronavirus continue deepening both nationally and here.

The Texas Railroad Commission’s inquiry into its options comes as demand for oil across the globe has dropped significantly, with people staying home and implementing social distancing practices in hopes of avoiding the spread of the virus that causes COVID-19.

“A couple of Texas producers have inquired into the feasibility of the Railroad Commission prorationing production,” said Travis McCormick, chief of staff to commission Chairman Wayne Christian. “No formal change in policy has been proposed. Staff is looking into what that change in policy would entail from a practical standpoint at the agency.” The Wall Street Journal first reported the producers’ request and the commission’s response Thursday.

 

 

S&P Global Platts – March 19, 2020

Exxon could slash 2020 capex by up to 20% this year as oil prices collapse

Exxon Mobil Corp., the U.S.’s largest publicly traded energy company, is feeling the squeeze of the dramatic oil price meltdown and could deliver what analysts have long hoped for a slash in spending.

With its back against the wall, Exxon could take drastic action to protect its balance sheet by potentially slashing spending this year by as much as 20%, according to analysts.

Though the integrated majors are better insulated from oil price down-cycles than independent producers, the expectation of sustained crude prices below $40 per barrel is inciting a rash of cost-cutting measures.

 

 

Houston Chronicle – March 19, 2020

Enterprise Products Partners seeks to cut budget as oil war continues*

Houston pipeline operator Enterprise Products Partners is looking at ways to trim its multibillion dollar capital expenditure budget cuts as the ongoing oil price war takes its toll on the company’s customers.

In a Wednesday afternoon statement, Enterprise reported that the company is reviewing its 2020 capital expenditure budget due to the potential impacts of record low crude oil prices and expected lower demand from its customers. “While substantially all of our major growth capital projects are supported by long-term, bilateral agreements, we are in discussions with our customers and evaluating opportunities to reduce or defer capital expenditures, as well as continuing to explore joint venture opportunities with strategic partners,” Enterprise Co-CEO Jim Teague said in a statement.

 

 

Bloomberg News/Yahoo! News – March 19, 2020

Andurand Oil Fund Soars 40% Amid Crude Market Meltdown

Pierre Andurand, the hedge fund manager known for his bullish oil calls, won big as prices crashed to 18-year lows.

The Andurand Commodities Fund was up 40% in the first two weeks of March and 30% year to date, according to people familiar with the matter, who asked not to be named because the information isn’t public. Those gains wipe out the last two years of losses, they added. A company spokesman declined to comment.

The move comes after unprecedented events caused a fallout in the oil industry. Prices had already started falling in January as investors started raising fears about how the then-unknown coronavirus would affect oil demand in China, the world’s second-largest economy. That sell off was suddenly exacerbated two weeks ago after talks between OPEC+ broke down, as Saudi Arabia and Russia started a war for market share, opening the spigots and hammering oil prices.

 

 

Wall Street Journal – March 19, 2020

What Price Collapse? U.S. Producers Keep Pumping.*

U.S. energy producers responded to one of the worst weeks ever for oil prices by pumping as much crude from the ground as they ever have before.]

While the price of oil plunged 23% last week, U.S. crude output hit 13.1 million barrels a day, the U.S. Energy Information Administration estimates.

That matched a record set in February and belies a swift reversal by domestic oil producers, who have scrapped the drilling plans they drafted at the start of the year, when crude prices were three times higher than they are now.

That was before Russia and Saudi Arabia promised to flood the world with cheap crude in a battle for market share and the coronavirus pandemic sapped demand for fuel.

 

 

Dallas Morning News – March 19, 2020

‘We are in the fight of our lives:’ American Airlines cutting more flights, parking 450 planes*

American Airlines will cut its capacity even further in May and park nearly half of its fleet as travel demand continues to deteriorate from the global coronavirus pandemic.

American Airlines President Robert Isom told employees Thursday in a letter that the company would cut capacity in April by 30% on domestic routes and 75% on international routes “with plans to reduce it even further in May.”

The Fort Worth-based carrier has now cut 55,000 flights out of its April schedule since the COVID-19 epidemic began.

“We are in the fight of our lives, and we will win,” Isom wrote. “Now is the time to come together and rally against a common enemy.” ….

“But it’s really uncertain how long the recovery from this will be,” said Gary Kelly, CEO of Dallas-based Southwest Airlines, in a video to employees this week. “And it is certain this will be far worse than 9-11 was.”

 

 

Reuters/Yahoo! News – March 19, 2020

How a Texas oil CEO’s luxury land deals cost him his job

In July 2018, oilfield service executive Dale Redman took out a loan to buy the Whitehead Ranch – a 20,000-acre cattle and hunting property in central Texas, featuring two luxury homes, livestock barns, and meadows stocked with deer and turkey.

The indulgence fit the lifestyle of a Texas oil tycoon, but the way Redman secured the deal was among a series of missteps that cost him his job. The CEO pledged 230,000 shares of his ProPetro Holding Corp. stock as collateral on the $24.8 million ranch loan – without telling investors – a move the company said violated his agreement to safeguard shareholders as it disclosed Redman’s resignation on Monday.

 

 

CNN – March 19, 2020

Goldman Sachs predicts 2.25 million Americans filed initial unemployment claims this week, the highest on record

Early Thursday, a government report showed 281,000 Americans filed for their first week of unemployment benefits last week. It was a sudden 33% jump over the week before and the biggest percentage increase since 1992. But next week’s report is likely to be far worse, according to Goldman Sachs economists.

They predict the report will show 2.25 million Americans filed for their first week of unemployment benefits this week — eight times the number of people who filed last week and the highest level on record.

That estimate is based on news reports of an unprecedented surge in layoffs early in the week. Airlines, restaurants, hotels, sports events and retailers are all struggling to cope with a sudden drop in revenue, as people stay home to prevent the spread of the virus.

 

 

Financial Post – March 19, 2020

Trump’s Plan to Stockpile Oil Plan Has a Rotten-Egg Smell

The idea of pumping oil out of the ground in one part of Texas to store it back underground in another part of the state is an idea that would have appealed to the economist John Maynard Keynes, who advocated the government burying bottles filled with banknotes in old coalmines for private enterprise to dig up again in times of recession. But it is more likely to benefit crude producers in Latin America and the Middle East than it is those in west Texas or North Dakota.

The reserve consists of 60 underground solution-mined salt caverns spread across four sites along the Gulf coast of Texas and Louisiana. Each site holds both sweet crude — with less than 0.5% sulfur — and sour crude in separate caverns. The total capacity of the SPR is currently 275 million barrels of sweet crude and 479 million barrels of sour, with 250 million barrels of sweet crude and 385 million barrels of sour already in the caverns.

The Strategic Petroleum Reserve Crude Oil Assay Manual, published in March 2017, shows that both sweet and sour crudes can have an API gravity — a measure of density — of between 30 degrees and 45 degrees, while the maximum sulfur concentration for sweet grades is 0.5% and for sour is 1.99%. Much of the shale oil output would meet the density requirements, but have too little sulfur to permit it to be blended into the sour crude pool. Only crude oils of similar composition are commingled in storage and the Department of Energy noted in the report that shale oils “present logistics and environmental concerns for the SPR.”

 

 

Utilities

 

Austin American Statesman – March 19, 2020

Coronavirus in Texas: Fund created to cover utility bills of Hays, Caldwell residents in need

United Way of Hays and Caldwell counties is offering to help people in those counties pay their utility bills if they were negatively affected by the new coronavirus.

Priority will be given to low-income individuals, people with high energy burdens, vulnerable people older than 60, people with disabilities, families with children who are 5 and younger, and veterans. Those interested can print and mail or email an application, found online.

“Organizations and businesses are beginning to furlough or lay off valued employees with no date for their return in sight,” United Way said in a statement. “This is putting great strain on many families who work in the retail, hospitality and other industries in our community.”

 

 

Houston Chronicle – March 19, 2020

Power use shifts as more people work from home*

Electricity use is shifting as more people work from home, schools have closed for the semester and restaurants and bars can no longer serve patrons in an effort to fight the spread of coronavirus.

Innowatts, the Houston-based energy analytics company, is predicting that daily residential energy use during the coronavirus outbreak will increase as much as 8 percent.

But overall energy use will decline with demand from schools dropping 30 percent and commercial buildings by 21 percent, according to Innowatts.

 

 

Los Angeles Times – March 19, 2020

How power companies are keeping your lights on during the pandemic*

Disaster planning is baked into the DNA of electric and gas utilities, which regularly deal with hurricanes, earthquakes, cyberattacks and other disruptions that threaten to disable critical infrastructure. …

The power sector started developing more detailed pandemic plans over a decade ago, in the wake of SARS and other contagious disease outbreaks, said Scott Aaronson, vice president of security and preparedness for the Edison Electric Institute, a utility trade group. Now, electricity providers are implementing those plans, and participating in twice-weekly phone conferences with federal officials at the Department of Energy, the Department of Homeland Security and other agencies. …

Meanwhile, California’s biggest utilities — including Edison, PG&E, San Diego Gas & Electric, Southern California Gas and the Los Angeles Department of Water and Power — have all said they will stop disconnecting customers who can’t pay their bills.

 

 

Wall Street Journal – March 19, 2020

Peggy Noonan: We Need Time to Absorb All This*

This is a quick piece that touches on where we are, where we may be going, and an attitude for the journey. …

It’s all so big. We are discovering the illness as we experience it. We don’t know its secrets, how long it lasts, how long its incubation, whether you can be reinfected. …

There are a million warnings out there on a million serious things. We add one: Everything works—and will continue to work—as long as we have electricity. It’s what keeps the lights on, the oxygen flowing, the information going. Everything is the grid, the grid, the grid.

A general attitude for difficult times? Trust in God first and always. Talk to him.

 

Alternatives & Renewables

 

Greentech Media – March 19, 2020

Lightsource BP Closes Big Texas Solar Deal Despite Coronavirus Chill

Despite the renewable energy industry’s concerns about the impacts of COVID-19, some deals are still getting done. Lightsource BP, a United Kingdom-based developer backed by oil major BP, said Thursday it had closed on a $250 million financing package for a 260-megawatt solar project in Texas.

Kevin Smith, Lightsource BP’s Americas CEO, pitched an optimistic outlook for the project and the company’s global development plans despite the uncertainty related to COVID-19. Lightsource BP is active in European markets like Italy and Spain, where coronavirus has shut down daily life.

“We view solar energy projects and energy supply generally as an essential business for U.S. and worldwide markets,” Smith told GTM on Thursday. “It’s important to keep our focus on a clean energy future.”

 

 

Wall Street Journal – March 19, 2020

Tesla to Suspend U.S. Car Production Over Coronavirus*

Facing pressure to shutter Tesla Inc.’s TSLA 18.39% California factory from local authorities worried about the spread of coronavirus, Chief Executive Elon Musk changed direction, announcing plans to suspend production at its lone U.S. auto-making plant.

The move threatens to disrupt the Silicon Valley auto maker just as it was stepping up production of its latest vehicle, the Model Y SUV, which is part of Mr. Musk’s plan to boost deliveries globally by more than 36% this year.

The health crisis from the spread of Covid-19—the illness caused by the coronavirus—in the U.S., especially in California, led counties in the San Francisco area on Monday to order nonessential businesses to close to allow people to stay home to combat the spread of the potentially deadly disease.

 

Regulatory

 

Houston Chronicle – March 19, 2020

Coronavirus relief bill could open up $2.5 billion in funding for Texas*

A coronavirus relief bill signed Wednesday by President Donald Trump could be the government intervention Texas’ hospitals need as they hurry to respond to the costs of testing and caring for patients who contract COVID-19, the sickness caused by the new coronavirus.

The Families First Coronavirus Response Act will infuse $104 billion into federal and state emergency response, allow federal Medicaid assistance funds to reimburse hospitals for the care of uninsured and Medicaid patients and increase Medicaid allotments for each state through 2021.

For Texas, that could allow health care providers to draw on an estimated $2.5 billion in federal funds, according to the Center on Budget and Policy Priorities, a Washington think tank.

 

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The Texas Energy Report NewsClips – March 19, 2020

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Asterisk * following headline indicates news content may be limited or unavailable at the source because it’s password protected.

 

Lead Stories

 

Houston Chronicle – March 18, 2020

Companies ‘encouraged’ to comply with Texas environment rules during coronavirus, may not have to, state says*

Industrial facilities regulated by the Texas Commission on Environmental Quality may request exemptions from environmental compliance if normal operations are disrupted by the coronavirus pandemic, the state’s environmental agency told companies Wednesday.

A notice to companies from the TCEQ said that the agency is aware that companies may be experiencing an impact to regular operations from a reduced workforce.

“All regulated entities are encouraged to take all available actions necessary to ensure compliance with environmental regulations and permit requirements,” a notice from Ramiro Garcia, the TCEQ office of compliance and enforcement deputy director read. “However, in the instance that noncompliance is unavoidable directly due to impact from the coronavirus, an email box has been established by TCEQ to accept requests for potential enforcement discretion.”

 

 

Riviera – March 18, 2020

Authorised ‘second-wave’ LNG export projects would double US capacity

Over the last few months, the US Department of Energy (US DOE) issued separate records of decision authorising LNG exports from five second-wave American LNG export projects stretching from Florida to Texas

Not taking into account other second-wave projects, if all five LNG export projects are built, they would add 57 mta of new LNG liquefaction capability, doubling US production capacity.

Annova LNG Common Infrastructure, Eagle LNG Partners Jacksonville, Rio Grande LNG, Texas LNG Brownsville and Venture Global Plaquemines LNG all received authorisation from US DOE to export domestically produced LNG to non-free trade agreement countries.

 

 

Albuquerque Journal – March 12, 2020

Oil price plunge wallops NM

New Mexico’s oil boom could soon turn to bust after world prices for crude crashed on Monday. …

State Rep. Larry Scott, R-Hobbs, called it a “perfect storm” that sent stock markets into turmoil Monday morning, slashing stock prices for oil companies and pushing crude prices into free fall.

“OPEC and Russia’s inability to achieve production cuts has effectively led to a price war,” Scott said. “Couple that with reduced demand from the coronavirus, and it’s creating a perfect storm of oversupply and under-demand.” …

“If these low prices persist, there’s no doubt oil drilling here will be curtailed,” said Scott, a longtime oilman and owner of Lynx Petroleum in Hobbs. “The decline could be gradual, but it could still be fairly steep over time.”

And: Low oil prices threaten Louisiana economy — again

 

 

S&P Global Platts – March 18, 2020

Eric Yep: Asian appetite for petroleum storage, reserves will not save global oil prices

China’s insatiable appetite for hoarding oil reserves or the expansive independent petroleum storage capacity from Singapore to South Korea will not be enough to absorb the coming flood of crude and refined products, which threatens to push oil prices even lower.

For decades, Asia’s petroleum storage has expanded in the form of underground salt caverns, independent tank farms, operational storage for mega refineries and even oil in pipelines by key oil companies, national oil companies and commodity trading houses alike.

This expansion had a big role in absorbing global oil shocks in the past, such as the 2015-2016 oil downturn when global inventories hit a peak of 5.3 billion barrels in late 2016, according to industry estimates, forcing OPEC to make production cuts to help ease the glut.

 

Oil & Gas

 

Reuters/CNBC – March 19, 2020

Oil halts three-day slump but virus outbreak, oversupply still weigh

Oil prices rose nearly 10% on Thursday after a three-day sell off drove them to their lowest levels in almost two decades as demand plummeted due to the coronavirus and supplies surged in a fight for market share between Russia and Saudi Arabia.

Benchmark Brent, which has lost half its value in less than two weeks, was offered some respite as investors across financial markets assessed the impact of massive central bank stimulus. Brent crude jumped $2.29, or 9.2%, at $27.16 a barrel by 0831 GMT, after plunging to $24.52 on Wednesday, its lowest level since 2003.

U.S. crude gained $3.20, or 15.7%, to $23.52 after dropping nearly 25% in the previous session to an 18-year low.

But analysts said gains were likely to be temporary, as tumbling demand due to the coronavirus outbreak was compounded by the collapse this month of a deal on supply curbs between OPEC and other producers.

 

 

Houston Chronicle – March 18, 2020

ConocoPhillips cuts $2.2 billion in spending and stock buyback program

ConocoPhillips on Wednesday rolled out a plan to slash spending by $2.2 billion, joining a growing number of oil companies cutting back amid historically low crude prices.

The Houston-based company said it plans to cut its 2020 capital spending budget by more than 10 percent and reduce its stock repurchase program by $1.5 billion.

“We are choosing to take an approach that strikes a balance between the obvious urgency of the moment and uncertainty about how this situation plays out,” ConocoPhillips CEO Ryan Lance said in a call with investors. “We believe that today’s actions are the right actions at the right time for us.”

 

 

Fort Worth Star Telegram – March 18, 2020

Major automakers shutting down factories, including GM in Arlington, over coronavirus

The three biggest automakers in Detroit — Ford, General Motors and Fiat Chrysler — will temporarily close all U.S. factories because of the coronavirus pandemic.

GM has a factory in Arlington, where it employs about 4,500 people.

Union leaders and employees urged the shutdown as the COVID-19 continued to spread to all 50 states and infected more than 215,000 people worldwide. Honda North America will close four U.S.-based plants beginning Monday because of an anticipated decline in market demand. Honda said in a release it would halt production for six days but expects to reopen at the start of April.

 

 

Houston Chronicle – March 18, 2020

As oil prices plummet, producers to cut jobs, spending in Eagle Ford Shale

Cutbacks and layoffs already are underway in the 26-county shale play. The price of West Texas Intermediate, the U.S. benchmark crude oil, dropped to $22.39 as of 5 p.m. Wednesday, hitting its lowest level since 2004.

At that price, producers can’t profitably drill for new pockets of oil or undertake many of the other capital projects they’d planned for 2020. One result will be job cuts, said Paige Meyer, an energy analyst with CFRA Research. ….

Murphy Oil Corp. said it’s reduced its capital budget to $950 million, a 35 percent reduction. The company is “releasing operated rigs and frac crews in the Eagle Ford Shale, with no operated activity planned for the second half of 2020.”

Marathon Oil Corp, said it’s slashing $500 million in projects. The reductions include “optimizing development programs in the Eagle Ford and the Bakken Shale play, which cover North Dakota, northeastern Montana, southern Saskatchewan, and southwestern Manitoba.”

 

 

Houston Chronicle – March 18, 2020

Targa Resources cuts one-third of budget amid record low oil prices*

Houston natural gas pipeline operator Targa Resources is cutting nearly one-third of its budget for new projects amid record low commodity prices.

In a Wednesday afternoon statement, Targa reported that the company is cutting $400 million from its 2020 capital expenditure budget. Specializing in natural gas gathering pipelines that move natural gas from oil wells to processing plants and larger pipelines, the company plans to spend between $1.2 billion and $1.3 billion on new projects this year.

The new figures mark a 32 percent drop from the company’s previously announced budget. Targa also reduced its first quarter dividend from 91 cents per share down to 10 cent per share, a move that is expected sting stockholders but save the company an estimated $755 million that will be used to pay down debt.

 

 

Wall Street Journal – March 18, 2020

Truckers Facing Coronavirus Hurdles in Keeping Supply Chains Moving*

Truckers are trying to navigate growing challenges on highways and at loading docks as they seek to keep supply chains running to meet surging coronavirus-driven demand for consumer staples and medical equipment.

Truck-stop restaurants in some states have shut dining rooms and switched to takeout service to comply with health orders aimed at controlling the spread of the virus. On Tuesday, Pennsylvania closed its state-run rest stops, cutting back significant parking space along key logistics corridors.

Some customers are asking drivers to stay in their trucks or switch from paper to electronic methods to document pickups and deliveries, trucking companies and freight brokers said. Additionally, some trucking companies said their drivers are facing new restrictions at receiving docks if they have been in states considered coronavirus hot zones.

 

 

E&E News – March 16, 2020

The American Exploration and Production Council, which represents large and medium-sized oil producers, has been urging the Trump administration to consider a waiver of the Jones Act, which requires cargo carried between American seaports to be transported on U.S.-flagged ships.

“We want to be clear: our industry is not seeking a bailout from the federal government,” Anne Bradbury, the council’s chief executive officer, wrote in a letter to Congress. “What we are seeking is a restoration of a functioning, stable, global market for oil, which removes artificial manipulation of the global marketplace.” ….

Texas’ economy … “depends in no small measure on the health of its oil extraction industry,” said Ehud Ronn, a finance professor and co-director of the Energy Management and Innovation Center at the University of Texas, Austin.

Texas lost 103,427 direct jobs during the previous bust and only added back 36,146 from 2016 to 2019, Ed Longanecker, president of the Texas Independent Producers and Royalty Owners Association, said in an email.

 

 

New Orleans Times Picayune – March 10, 2020

Offshore oil and gas accidents, deaths spike amid regulatory rollbacks

While President Donald Trump’s administration was working to relax offshore drilling regulations, there was a spike in offshore accidents and a decrease in safety inspections, according to an analysis by the Center for American Progress, a liberal think tank.

The Bureau of Safety and Environmental Enforcement — the federal agency tasked with regulating offshore drilling — has not yet released a tally of offshore incident statistics for 2019. But the Center for American Progress dug through the agency’s budget documents to find the number of reported injuries per hour worked on oil and gas facilities on the federal Outer Continental Shelf.

The center found that the rate of injuries increased by 21% in 2018 and 2019 compared with the previous two-year period of 2016-17. The data include injuries that require medical treatment beyond first aid. They exclude injuries stemming from natural causes or illness or that are self-inflicted, according to the budget documents.

“At worst, this is an unraveling of safety gains made after Deepwater Horizon,” the catastrophic BP spill of 2010, said Matt Lee-Ashley, a senior fellow at American Progress.

 

 

Yahoo! Finance – March 16, 2020

Commodities Analyst Says Oil Price Slump Hammers US Shale Companies: ‘Supply And Demand Are Going In Opposite Directions’

Bjarne Schieldrop, the chief commodities analyst at SEB, said he expects U.S. shale oil production to decline by 1 million barrels a daily in the next 12 months.

“Supply and demand are going in opposite directions in a way we have hardly seen before, with OPEC increasing production strongly at the same time as global demand takes a deep dive. The inventory build will be large in the short term and depress the market in the medium term.” Demand is declining sharply due to the unfolding coronavirus crisis, the analyst said.

“Oil demand in China indicatively declined by 30% in February 2020 but China dealt with the outbreak aggressively and swiftly with less than 0.01% of the population becoming infected.” Although the Chinese economy is now rebounding, SEB said it expects oil global demand to decline further in the second quarter of 2020 to as low as 95.2m bl/day before rebounding in the second half of 2020.

 

 

WAGA (Atlanta) – March 18, 2020

Gas prices could hit 99 cents in some states due to coronavirus and supplies, expert says

Gas prices have been trending sharply downward for the past few weeks, but could go much lower according to GasBuddy.com.

Gas Buddy analyst Patrick De Haan said on Monday that the national average could soon hit $1.99, with $1.49 on the horizon and some stations potentially pricing a gallon of regular as low as 99 cents.

The last time prices dropped below $1.60 was in December 2008 during the financial crisis, after falling from a July high of $4.10.

 

 

Financial Times – March 17, 2020

Gideon Rachman: How Beijing reframed the coronavirus response narrative

The coronavirus outbreak started as a propaganda disaster for the Chinese government. But now — with the number of new cases falling sharply in China and rising quickly in the US and Europe — Beijing has reframed the narrative. China’s new story points to the Communist party’s success in taking draconian measures to control the disease and contrasts that with the chaotic response of the US and much of Europe.

This version of events is designed for both domestic Chinese and international consumption. If it gains traction, the geopolitical effects of the coronavirus will linger — even after a vaccine has been found for the disease. The belief that China is on the rise and the west is in inexorable decline will gain new adherents. And arguments for authoritarianism and against democracy will be made with increased boldness — in both China and the west. …

The last global crisis — the financial meltdown of 2008 — triggered a loss of western self-confidence and a shift in political and economic power towards China. The coronavirus crisis of 2020 could force a much bigger shift in the same direction.

 

 

Victoria Advocate – March 18, 2020

Houston company announces crude oil export operation in Calhoun County*

SGR Energy announced plans Wednesday to export more than 3 million barrels of crude oil through the Calhoun Port Authority by the end of of 2020 – a volume the Houston-based company expects to double by 2021.

The refined products and crude oil blending and distribution company is already loading 160,000 barrels of crude to a vessel at the port, and has another ship scheduled to dock in about two weeks, said Craig Hicks, senior vice president of investor relations for SGR Energy.

The company expects to invest about $70 million to $80 million in the port as a result of the operation, which will also bring job opportunities to the region, he said.

 

 

Waco Tribune-Herald – March 18, 2020

Todd Staples, TXOGA: Texas oil, gas supplies stable in ongoing viral crisis

In America, it’s comforting to know we can have energy security in the midst of financial and market insecurity. COVID-19, the malady caused by a new coronavirus, has thrust our nation into uncharted territory. As families, businesses and our leaders do their parts to help slow the spread of the virus, the oil and natural gas industry is part of the critical infrastructure that will help to keep Texans safe, fueled up and stocked in the coming weeks and months.

The drop in global oil prices, coupled with the emergence of COVID-19, has created unusually difficult circumstances to be sure. We are confident that the underlying economic structure in America will enable our country to persevere.

 

 

March 13, 2020

Dallas Morning News: Texas’ future is big, young and diverse

Texas is growing. If that isn’t surprising, it is nonetheless stunning that Texas continues to grow even as other larger states level off or see a significant portion of their residents leaving. Yes, we’re talking about California and New York. Though interstate moves are declining, (just 1.5% of Americans moved across state lines last year) those who are moving are fleeing the high-cost, high-tax mega-cities for jobs and affordable housing.

On the census bureau map showing net population increases in blue and net decreases in orange from 2010 to 2018, New York, Los Angeles and Chicago anchor big orange disks, while Texas, Florida and the Carolinas show clusters of blue. From 2010 to 2018, Texas grew by 14%, or 3.5 million residents. Annual lists of the nation’s fastest growing counties are consistently dominated by Texas. In 2016-17, eight of the nation’s 15 fastest growing counties were in Texas. Dallas, Tarrant, Denton and Collin were among them.

All that growth is part of what has come to be known as the Texas Miracle that has highlighted the strength of Texas’ economy while the rest of the nation caught up in the post-recession years. According to the career and employment company Zippia, Texas had the fourth strongest job growth in the U.S. from 2009 to 2019, at 24.8%. While people may be moving to Arizona to retire or California to chase their dreams, they’re moving to Texas to go to work.

 

 

Bloomberg News – March 12, 2020

Oil Crash Is a Double-Edged Sword for LNG Projects at Risk

Oil’s rout may have been an unexpected boon for the biggest buyers of liquefied natural gas, but its knock-on effects may come back to bite them.

That’s because more than a dozen proposed LNG export projects from the U.S. to Mozambique are at risk of being delayed or scrapped as crude careened to levels that make most of them unprofitable. If fewer of them come to fruition, that would ease a widening LNG supply glut later this decade and potentially lift prices amid breakneck demand growth in Asia.

The multibillion-dollar export terminals typically sell their output at a price linked to crude. While projects are financed based on long-term models, because they take years to build and then operate for decades, if oil and gas prices stay at current levels throughout the year, it could force backers and financial institutions to rethink their plans.

 

Utilities

 

Utility Dive – March 18, 2020

‘An immediate and dramatic business concern’: How COVID-19 is disrupting the energy sector

The economic repercussions of the COVID-19 pandemic could cause widespread disruptions in the energy sector, tightening demand, jeopardizing supply chains, diverting regulatory attention and negating previous growth forecasts for solar and storage deployment, according to financial analysts and industry experts.

The novel coronavirus outbreak will be a “significant global crisis, triggering an economic slowdown” — which will likely affect the broader clean energy transition, including renewables, energy storage, and electric vehicles, analysts at BloombergNEF said in a report published last week. The analysts are particularly concerned about demand —​ BNEF has reduced its 2020 global solar demand forecast from between 121 GW and 152 GW to a range of 108 GW to 143 GW, which could make this the first year that solar capacity additions have declined since the 1980s.

 

 

Utility Dive – March 13, 2020

Green tariffs drive big increases in corporate renewable procurement

The trend of utilities offering green tariffs so large customers can purchase renewable energy has remade the map of states with the highest relative amounts of corporate clean energy procurement, boosting some states with regulated electricity markets above others with deregulated markets, a new report released by the Retail Industry Leaders Association on Thursday said.

The report’s rankings of the 50 states shows that from 2017 to 2020, New Mexico and Nevada have leaped ahead of states like New Jersey, California, New York and Texas in terms of renewable generating capacity installed through various forms of procurement, in large part due to green tariffs or direct utility purchases of renewable energy.

 

Alternatives & Renewables

 

Caixin – March 11, 2020

China to Slash Subsidies for Renewable Energy Amid Drive to Cut State Support*

China’s National Energy Administration said on Tuesday that it’s cut 2020 subsidies for new solar power projects by 50% to 1.5 billion yuan ($215.8 million).

China will halve this year’s subsidy budget for new solar power plants and will end handouts completely for new offshore wind farms in what one expert said is an effort to ease the strain on the Central government’s budget.

The measure is just the latest cut to government support for renewable energy projects in China, which has long benefited from Beijing’s largesse as policymakers sought to make the industry more competitive with conventional energy.

 

Regulatory

 

Wall Street Journal – March 18, 2020

Oil, Mining Companies Voice Opposition to Proposed Disclosure Rule*

A proposed rule mandating the disclosure of payments made by oil, gas and mining companies to foreign governments has become the target of anti-corruption advocates and even some businesses who say it fails to align with international standards.

The updated rule, proposed by the U.S. Securities and Exchange Commission in December, seeks to ease the compliance burden the disclosure obligations placed on the extractive industry, according to the agency.

But some companies, in written comments to the SEC, have said the proposal will do the opposite.

The multinational companies, including the U.K.’s BP PLC, France’s Total SA, Norway’s state-controlled Equinor AS A and Anglo-Australian miner Rio Tinto PLC, have said they support disclosing payments on a contract-by-contract basis, as currently required in Canada and Europe, instead of aggregating them on a national level, as proposed by the SEC.

 

 

The Hill – March 18, 2020

EPA faces possible coronavirus outbreaks at multiple offices

An employee who works at the Environmental Protection Agency (EPA) regional office in Helena, Mont., tested “presumed positive” for COVID-19, according to the agency and an internal email obtained by The Hill. …

In recent days, the federal government has taken actions such as allowing many employees to work from home in an attempt to lessen the spread of the deadly virus.

An EPA spokesperson told The Hill in an email earlier this week that it has “authorized voluntary unscheduled leave and telework for all EPA employees across the nation” and that it is encouraging those who can work remotely to not go into the office.

 

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The Texas Energy Report NewsClips – March 18, 2020

Click on each headline to read more of the story at the source.
Asterisk * following headline indicates news content may be limited or unavailable at the source because it’s password protected.

 

Lead Stories

 

Reuters/CNBC – March 18, 2020

US crude prices fall to 17-year low as coronavirus spreads

Oil prices fell for a third session on Wednesday with U.S. crude futures tumbling to a 17-year low as the outlook for fuel demand darkened with travel and social lockdowns triggered by the coronavirus epidemic.

U.S. crude was down 84 cents, or 3.12%, at $26.11 a barrel by 0822 GMT, having earlier fallen to $25.83 a barrel, the lowest since May 2003.

Brent crude was trading down 37 cents, or 1.29%, at $28.36 a barrel by 0650 GMT, after dropping to $28.05, the lowest since early 2016.

“The oil demand collapse from the spreading coronavirus looks increasingly sharp,” Goldman Sachs said in a note forecasting a fall in the price of Brent to as low as $20 a barrel in the second quarter, a level not seen since early 2002.

 

 

Texas Monthly – March 17, 2020

How Will the Oil Bust and the Coronavirus Affect the Texas Budget?

Getting a handle on exactly how bad the impact will be on current state spending levels is difficult. Tax revenue reports from Comptroller Glenn Hegar only go through February, and almost every negative aspect of the virus and the oil price war has occurred this month. At a glance, Hegar’s reports indicate the state is in a healthy financial position, set to end the current two-year budget cycle in the black. The coming crisis will not show up until the reports are in for this month, April, and May.

The state’s major source of finance is the sales tax. Through February, the state had collected $17.5 billion in sales taxes this year, a 15.7 percent increase over the first six months of 2019. (The state’s fiscal year begins on September 1.) The comptroller had estimated that the state would collect a total of $32.7 billion for 2020. If COVID-19 had not come along, Texas probably would have surpassed the estimate. Common sense says that no longer will be the case. …

Now, as the state’s budget woes will come into focus this summer, the November election is more likely to be about state spending and whether Texas will meet the challenge of educating children and providing health care for the poor and disabled, or if the state will fall back to shortchanging our future to avoid even temporary tax increases.

 

 

Houston Chronicle – March 17, 2020

Seven of the most prolific Texas shale drillers cut $7.6 billion from budgets as oil prices collapse*

Exxon Mobil, the Texas-based oil major, Concho Resources of Midland and Pioneer Natural Resources of Irving this week became the latest oil and gas companies to promise cuts to their spending as the coronavirus outbreak brings the global economy to a halt and erodes energy demand. Oil fell to $26.95 a barrel in New York Tuesday, just above the low of $26.21 a barrel reached in February 2016. ….

The figures exclude Exxon, which have not yet disclosed details of their spending reductions. Other major oil companies such as Chevron and ConocoPhillips are expect to follow with their own budget cuts. …. With a combined 2,100 drilling permits filed with the Railroad Commission of Texas last year, EOG Resources, Occidental Petroleum, Pioneer Natural Resources, Concho Resources, Ovintiv, Apache Corporation and Marathon Oil accounted for nearly one-fifth of exploration and production activity in Texas.

 

 

Wall Street Journal – March 17, 2020

Oil-Field-Service Stocks Are Getting Scrapped*

Shares of companies that help energy producers get oil and gas out of the ground have become collateral damage in the global oil-price war.

Firms that own drilling rigs, manufacture oil-field tools and manage the fleets of pumper trucks that blast open shale wells are caught in the three-way battle for market share between Saudi Arabia, Russia and the North American oil industry. The coronavirus pandemic’s startling destruction of oil demand doesn’t help.

Plunging oil prices portend a steep decline in drilling activity and dim prospects for oil-patch contractors and equipment suppliers. Investors, who have suffered years of losses with oil-field-service stocks, are in full flight.

Global oil-field-service giants Halliburton Co., HAL 3.37% Schlumberger SLB -2.85% NV and Baker Hughes Co. BKR -3.10% have each lost more than half of their stock-market value since the start of the year. Ditto for drilling-rig owners Helmerich & Payne Inc., HP 9.96% Patterson-UTI Energy Inc. PTEN 9.21% and Transocean Ltd. RIG 3.08%

 

 

KPRC (Houston) – March 17, 2020

Halliburton furloughs 3,500 Houston workers amid falling oil prices

Top U.S. oilfield services provider Halliburton will furlough 3,500 employees in Houston for 60 days as shale producers slash spending amid falling oil prices, the company confirmed to KPRC 2.

“To best position our Company in the current environment, Halliburton is implementing a mandatory furlough for employees at its North Belt campus in Houston beginning March 23,” spokesperson Erin Fuchs wrote in an email. “During the furlough, which will last up to 60 days, employees will work a one-week on, one-week off working schedule and will not be paid or permitted to perform any work on behalf of the Company on their week-off.” But employee benefits will remain.

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France 24 – March 17, 2020

Saudis to boost oil exports to 10 mn barrels per day

Saudi Arabia said Tuesday it plans to boost oil exports to more than 10 million barrels per day as the OPEC kingpin escalates a price war with Russia.

The world’s biggest crude exporter said it would free up an additional 250,000 bpd of oil for exports by using gas for domestic consumption. “Saudi Arabia will utilise the gas produced by the Fadhili gas plant to compensate for around 250,000 bpd of domestic oil consumption,” a spokesman for the Saudi energy ministry said in a statement without detailing how one would replace the other.

This “will enable the kingdom to increase its crude exports during the coming few months to exceed 10 (million bpd).” The kingdom has long sought to diversify its energy mix by tapping gas and renewables to free up more oil for export, the kingdom’s chief revenue earner.

Opinion — Clara Ferreira Marques: Oil War May Revive China’s Yuan Ambitions

Related: GOP senators ask Saudis to stabilize oil market

 

Oil & Gas

 

Houston Chronicle – March 17, 2020

Texas unemployment claims jump as economic turmoil from virus hits*

First-time claims for unemployment insurance in Texas last week jumped nearly 40 percent from a year ago (to over 16,000) as local governments shut down events, low oil prices buffeted the energy industry and customers stayed home to prevent exposure from the new coronavirus.

Related: Historic slide in oil could cost energy industry thousands of jobs

 

 

Shelton Herald – March 17, 2020

Concho to cut capital spending by at least $600 million after oil crash

Concho Resources will cut its shale oil exploration and production spending by between $600 million and $800 million after oil prices crashed last week.

The Midland-based oil and gas producer on Tuesday reduced its 2020 capital budget to $2 billion, down about 25 percent from its previously announced plans. The cuts will help the company strengthen its balance sheet and continue paying dividends to shareholders, the company said.

“While our hedge position minimizes the volatility of our cash flow over the near term, we are quickly adjusting our activity to ensure we execute a capital allocation strategy that creates value for our shareholders over the long term,” Chief Executive Tim Leach said in a statement.

 

 

Seeking Alpha – March 17, 2020

Hess Midstream to cut capex by $200M over two years

Hess Midstream (HESM -14.8%) says it is cutting its capital budget and lowering investor expectations for 2020, bracing for lower volumes of crude oil, natural gas and produced water to be sent through its networks.

Hess Midstream is reducing its 2020 expansion capital by ~$75M, or 20%, to $260M from previously announced guidance, primarily due to fewer expected well connects and the deferral or cancellation of certain gas compression activities.

The company also plans to cut expected 2021 expansion capex by ~$125M, or 55%, from its previous plan to $100M. Hess Midstream also trims FY 2020 net income guidance to $420M-$440M and 2020 adjusted EBITDA guidance to $690M-$710M, a 4% reduction at the midpoint from prior guidance, due to lower expected throughput volumes resulting from basin-wide lower rig activity.

 

 

JD Supra – March 17, 2020

Coronavirus and the Energy Industry: Drilling into Force Majeure Clauses

Many oil and gas contracts – leases and JOAs for example – have force majeure clauses. The purpose is to allow contracting parties to suspend or terminate performance when certain circumstances arise that are beyond their control. These clauses, if applicable, could potentially save a contracting party millions of dollars in penalties and fees.

Recently, a Houston court interpreted a force majeure clause in a drilling contract. TEC Olmos, LLC v. ConocoPhillips Company* examines just how specific contracting parties need to be in drafting force majeure clauses in order to avoid liability.

 

 

Successful Farming – March 17, 2020

Ethanol prices hit all-time low, unconfirmed reports of plant shutdowns

Corn demand by the U.S. ethanol oil industry could drop by 120 to 170 million bushels during the next two months if gasoline consumption — and the ethanol blended with it—continues to decrease as expected.

That’s according to Todd Hubbs of the Department of Agricultural and Consumer Economics at the University of Illinois. In an analysis posted March 16 on the farmdocdaily web site, Hobbs wrote that an estimated 15-20% reduction in gasoline consumption that is expected by many industry analysts in the next couple of months will lead to a decrease in demand for corn to make ethanol. “If gasoline consumption falls by the expected amounts over the next two months, corn used for ethanol production may lose 120-170 million bushels,” Hobbs wrote. “A continuation of reduced economic activity for an extended period will only exacerbate the demand loss.

 

 

Barron’s – March 17, 2020

Why Oil Prices Could Fall to $20 and Saudi Arabia Will Emerge on Top

Oil markets have been rocked by two simultaneous events. The novel coronavirus has knocked out millions of barrels worth of demand for oil, and a supply war between Saudi Arabia and Russia has added millions of barrels of supply.

For the past week, most analysts have treated these developments as disconnected events. The supply war seemingly had more to do with a clash of personalities within OPEC and an allied group known as OPEC+ that includes Russia. The hope was that “cooler heads will prevail” and everyone will agree to a supply cut, so prices go back up.

But Saudi Arabia’s move to boost supply, to an expected 12.3 million barrels a day in April from 9.7 million last month, now looks like a more-calculated move to take advantage of the demand drop and grab a more substantial chunk of market share. Others also see a longer drawn-out supply war.

 

 

Wall Street Journal – March 16, 2020

Biden Aims for Tricky Balance on Fracking*

Former Vice President Joe Biden is walking a tightrope in proposing restrictions to fracking, as he tries to court progressives, without alienating the thousands of voters employed by the energy industry in some key swing states.

In a back and forth during the debate Sunday, Vermont Sen. Bernie Sanders said he wanted to stop “fracking as soon as we possibly can,” adding he was “talking about telling the fossil fuel industry that they are going to stop destroying this planet—no ifs, buts and maybes about it.” Mr. Biden responded: “So am I,” seemingly agreeing with a ban before saying, ”No more —no new fracking … no more drilling on federal lands.”

A spokesman for Mr. Biden’s campaign clarified that the former vice president wouldn’t ban fracking, which is now commonly used to produce natural gas and oil in key states with blue-collar voters like Pennsylvania, Ohio and Colorado. He was referring only to his stated policy to ban new permits for oil and gas drilling on federal land and offshore, the spokesman added.

 

 

Wall Street Journal – March 17, 2020

Gasoline Is Cheap. Americans Can’t Take Advantage.

Under normal circumstances, the recent fall in gas prices would make Sharon Sykes happy. But she isn’t driving much these days.

Her three children are home from school because of the coronavirus, and the 45-year-old living in the Dallas suburbs has seen her tennis games and lunches with friends canceled. Mrs. Sykes’s husband is working from home, also cutting down on the number of trips the family will take, even with a regular gallon of gasoline only costing about $1.75 a gallon locally.

“My tank should last three weeks,” Mrs. Sykes said. She isn’t alone. Demand for fuel around the world has plummeted because of travel restrictions and precautionary measures taken to contain the new coronavirus, which has sent markets into a tailspin and threatens to tip the world economy into a recession. At the same time, an expected glut of crude oil—due to a clash between Saudi Arabia and Russia over their share of energy markets—has amplified the decline in fuel prices.

 

 

Wall Street Journal – March 17, 2020

Coronavirus, Oil Prices Send Shockwaves Through Houston Real Estate*

So far, most of the fallout in the commercial property world has been in lodging, malls and the other property types that have been hit the hardest by the evaporation of travelers and shoppers. Office-building landlords are relatively insulated because their tenants sign long-term leases.

But Houston is dependent on the fortunes of the oil-and-gas industry, which has been sent into a tailspin by weakened oil demand combined with the failure of the Organization of the Petroleum Exporting Countries and Russia to agree on production cuts. Owners, brokers and others in its office market are bracing themselves for layoffs, bankruptcies and downsizings that will translate into lower rents, higher vacancies and foreclosures. ….

Houston’s energy sector could lose 8,000 to 10,000 jobs in the wake of the current turmoil, Patrick Jankowski, head of research of the Greater Houston Partnership, said Monday. “That could even nudge up to 12,000,” he said. …

Still, participants in the Houston market feel that it is positioned better to survive hard times now than in previous downturns. The city’s economy, which has weathered many an oil bust, has diversified in recent years adding tens of thousands of jobs in health care, global trade and other non-energy related businesses.

 

 

S&P Global Platts – March 10, 2020

Oil, gas deal tracker: 1st transaction over $1B in 2020 announced in February

The oil and gas industry saw its first billion-dollar M&A deal announcement of the year in February as EQM Midstream Partners LP and Equitrans Midstream Corp. agreed to combine in a transaction valued at $1.76 billion, according to S&P Global Market Intelligence data.

The midstream arms of Appalachian shale gas giant EQT Corp. struck a share-for-unit merger deal that would result in a simplification of the two entities, converting into a C corporation structure and acquiring EQT’s equity stake in Equitrans. Tom Karam, who serves as chairman and CEO of both EQM and Equitrans, cited transparent governance and the potential to attract a broader pool of investors as drivers for the roll-up transaction.

 

 

Bloomberg News – March 16, 2020

Double Shock of Oil Gambit, Virus Upend Putin’s Growth Plans*

Until just a few weeks ago, Russian President Vladimir Putin was promising Russians their stagnant incomes would finally pick up along with the economy this year. But his oil market gambit and the fallout from coronavirus have all but demolished those hopes.

As crude suffered its worst weekly collapse since 2008 following Russia’s bitter breakup with OPEC, economists slashed their growth forecasts. Even if oil stays roughly where it is now, the economy might not grow at all this year, Alexey Kudrin, a former finance minister who now runs a government oversight agency said last week.

“The Russian economy is experiencing a double shock this year from oil and the virus,” said Sofya Donets, an economist at Renaissance Capital in Moscow. “If the epidemic follows the European scenario, a recession is inevitable.” Putin appointed a new pro-spending cabinet in January headed by Prime Minister Mikhail Mishustin, who promised that people would “feel the difference” in their lives as soon as possible. On Monday he said the government has set up a 300-billion ruble fund ($4 billion) to assist businesses and citizens affected by the virus and will allow affected industries to pay taxes late.

 

Utilities

 

Houston Chronicle – March 17, 2020

Regulators ask power providers to give Texans a break during outbreak*

The Public Utility Commission is receiving complaints from consumers whose power has been disconnected for not paying their bills during the coronavirus crisis and is urging retail electric providers to make accommodations.

Texas utility rules prohibit retail electric providers from cutting off customers during times of extreme weather but there are no stated exceptions to the rules during times of emergency. Texas Gov. Greg Abbott declared a state of emergency over the coronavirus last week. The commission is encouraging retail electric providers to help consumers affected by coronavirus.

Utilities need to address it, commission Chairwoman DeAnn Walker said. She said she was glad to see that several were already stepping up to help their customers.

 

 

KLBK (Lubbock) – March 17, 2020

City of Lubbock Utilities suspending disconnections on electric and water service

After the city council approved an emergency declaration Monday due to COVID-19 (coronavirus) in Texas, Lubbock Power & Light announced it will suspend disconnections of water and power service.

“The action goes into effect immediately until further notice,” LP&L said.

The City of Lubbock is committed to the health and safety of our community. Following the Lubbock City Council’s action this evening to declare a public health disaster, City of Lubbock Utilities will suspend utility service disconnects for non-payment to assist customers who may be experiencing financial hardship due to COVID-19 or its economic impacts. The action goes into effect immediately until further notice.

 

 

Greentech Media – March 17, 2020

Keeping the Lights On: US Utility Sector Braces for Coronavirus Impact

Every industry in the world faces dangers and disruptions from the COVID-19 pandemic. Not all of those industries are tasked with keeping the lights on. U.S. power utilities and generators face an array of risks in the weeks ahead, from energy “demand destruction” as economies slow to tightening debt conditions that could ripple through the commodity markets.

So far, North American utilities have not yet seen the sort of power demand reductions that occurred during China’s massive lockdown or those now hitting European countries. But they’re likely to start seeing similar impacts soon, according to a Tuesday update from the Wood Mackenzie Power & Renewables and Energy Transition teams.

Italy, as one example, saw an 8.1 percent week-on-week decrease in energy demand after the country ordered its citizens to stay at home and forced the closure of all nonessential businesses, as the chart below illustrates. Power demand fell 7.3 percent year-over-year.

 

 

S&P Global Platts – March 13, 2020

Analysis: Oil price war increases power utilities’ uncertainty over EV infrastructure plans

As states such as Florida adopt electric vehicle infrastructure legislation, electric utilities face uncertainty about how much power demand could be affected, in light of the recent crash in oil prices, analysts said Thursday.

On Wednesday, Florida’s GOP-controlled House of Representatives approved Senate Bill 7018, “Essential State Infrastructure” for the signature of Governor Ron DeSantis, a Republican. Support in both chambers was bipartisan.

The bill directs the state Department of Transportation to “recommend a master plan for the development of electric vehicle charging station infrastructure along the State Highway System” by July 1, 2021, in consultation with the Public Service Commission and the state Office of Energy.

Goals of the plan include identifying types of possible locations of EV charging stations to support both short- and long-range travel, expand EV use and serve evacuation routes.

 

Alternatives & Renewables

 

Solar Power World – March 17, 2020

More solar was installed than any other electricity source in 2019

Solar accounted for 40% of all new electric generating capacity in the United States in 2019, its highest share ever and more than any other source of electricity, with 13.3 GW installed.

Despite policy challenges and a second year of the Section 201 tariffs, the U.S. solar market grew by 23% from 2018, according to the U.S. Solar Market Insight 2019 Year-in-Review report, released by the Solar Energy Industries Association (SEIA) and Wood Mackenzie.

“Even as tariffs have slowed our growth, we’ve always said that the solar industry is resilient, and this report demonstrates that,” said Abigail Ross Hopper, president and CEO of SEIA. “We know anecdotally that the COVID-19 pandemic is starting to impact delivery schedules and that it could affect demand for solar as well as our ability to meet project completion deadlines based partly on new labor shortages. This once again is testing our industry’s resilience, but we believe, over the long run, we are well-positioned to outcompete incumbent generators in the ‘Solar+ Decade’ and to continue growing our market share.”

 

Regulatory

 

Texas Tribune – March 17, 2020

Texas coronavirus cases prompt Gov. Greg Abbott to activate National Guard

Gov. Greg Abbott announced Tuesday that he is activating the Texas National Guard in response to the novel coronavirus outbreak in the state, which had at least 76 positive cases as of Tuesday. While there is no need to deploy troops yet, he said, Guard members will be standing ready.

“I am grateful to the men and women of the National Guard for their dedication to serving their fellow Texans, and want to assure the public that this is a precautionary measure to make sure the Texas National Guard has the capability to serve at a moment’s notice where they are needed most,” Abbott said in a statement.

 

 

Midland Reporter Telegram – March 14, 2020

Increased oil patch activity can magnify legal issues

Almost 300 lawyers and landmen gathered recently at the Bush Convention Center in downtown Midland for the 22nd Annual Permian Basin Oil & Gas Seminar.

“It’s the largest gathering of oil and gas lawyers and landmen west of Interstate 35,” said Bill Keffer, professor of energy Law and director of the Energy Law program at Texas Tech University’s School of Law. ….

Mineral interest pooling is the only version of forced pooling that exists in Texas, Keffer said, and it is beginning to be increasingly used in areas such as Pecos in Reeves County where operators are drilling laterals under the town.

“People not voluntarily signing up for pools are being lost to history,” he said. Unless mineral interest pooling is used, drilling operations would have to be suspended because “those people don’t exist anymore.”

 

 

KUHF (Houston) – March 16, 2020

Kirk McDaniel: I Spent A Month Trying To Find Out What Chemicals Are Stored Near My Home. I Still Don’t Know.

Under the Texas Homeland Security Act, the state can refuse to provide records that contain information about “materials that could be made into” an explosive device. I realized that this would be information that is hard to get but essential to answering the question: What chemicals are near my home?

To answer that question, I began with a public records request with the TCEQ. I requested the Tier II reports for 17 different facilities from 2015 to 2018. Twenty minutes after submitting my request, an attorney with the TCEQ responded that my request is denied stating that they are prohibited from disclosing “any information maintained by a governmental entity that is more than likely to assist in the construction or assembly of a terrorist weapon.”

While the TCEQ was not going to release the documents, the attorney did say that I could obtain reports from the Local Emergency Planning Committee in my area, or from the facilities themselves.

 

 

Yahoo! News – March 17, 2020

Bernie Sanders staffers say it’s ‘time for some hard decisions,’ after another trio of losses

With three losses on Tuesday night, Bernie Sanders’s chances of winning the Democratic presidential nomination became even slimmer.

The defeats in Arizona, Florida and Illinois left even some of the Vermont senator’s top staffers frustrated and questioning whether he should continue his campaign.

One campaign senior adviser told Yahoo News it was time for Sanders to begin winding down his campaign.

“The time has come for some true reflection for this campaign,” the senior Sanders adviser said, adding, “Tonight is hard, and it’s also time for some hard decisions.”

 

___________________________

 

The Texas Energy Report NewsClips – March 17, 2020

Click on each headline to read more of the story at the source.
Asterisk * following headline indicates news content may be limited or unavailable at the source because it’s password protected.

 

Lead Stories

 

Dallas Morning News – March 16, 2020

Pioneer Natural Resources to cut rig count in half over next two months

Pioneer Natural Resources is cutting its oil rig count in half within the next two months as the global coronavirus pandemic and a price war sparked by Saudi Arabia and Russia is forcing energy companies to react quickly to lower oil prices.

Irving-based Pioneer will slash its overall drilling, completion and facilities budget by 45% this year, the company announced Monday.

Over the next couple months, Pioneer will decrease its rig count from 22 to 11, and reduce its contracted completion crews from six to two or three. It is one of the largest players in the Permian Basin. The move will help the oil company protect its “pristine balance sheet” during a challenging time, said president and CEO Scott D. Sheffield.

 

 

Beaumont Enterprise – March 16, 2020

EOG Resources cuts budget as oil prices continue to fall

Houston oil company EOG Resources is cutting its 2020 capital budget by nearly a third amid record low commodity prices.

The company said Monday that it plans to spend $4.3 billion to $4.7 billion on drilling, hydraulic fracturing and other capital projects in 2020. The figure marks a 31 percent reduction of the company’s previously announced budget.

The company regarded as one of the most efficient shale drillers in the U.S., says it will remain profitable even with oil at $30 per barrel.

“Our business is more resilient today than it has ever been in the company’s history,” EOG Resources CEO Bill Thomas said in a statement.

 

 

Wall Street Journal – March 16, 2020

EP Energy’s Apollo-Backed Financing Collapses After Oil Rout*

Apollo Global Management Inc. APO -13.35% and other firms are backing off a commitment to finance shale driller EP Energy Corp. EPEGQ -15.79% ’s exit from chapter 11, people familiar with the matter said, the second major bankruptcy deal to falter over the turmoil in U.S. energy markets.

The investors, which own large chunks of EP Energy’s debt, went back on a $475 million commitment to purchase its equity under a court-approved chapter 11 strategy, these people said. Without the financing commitment, EP Energy lacks a clear path out of chapter 11 at a time when billions of dollars in capital have retreated from energy assets.

EP Energy won approval of the restructuring plan from the U.S. Bankruptcy Court in Houston earlier this month, hours before a rift between Saudi Arabia and Russia flooded global markets with crude and sent oil prices plunging.

 

 

Wall Street Journal – March 16, 2020

Oil Crash Is Bad News for Regional Banks That Went Big on Energy*

Cullen/Frost Bankers Inc. has reduced its exposure to energy borrowers since 2015, during the last big plunge in energy prices. Still, 11% of the San Antonio-based bank’s loan portfolio was dedicated to energy companies at the end of 2019….

The borrowing-base redeterminations, as they are known, could pose a problem for banks like Dallas-based Comerica Inc. The bank has reduced the size of its energy portfolio by $1.3 billion since 2015; energy loans now account for 4.5% of its loan book, said CEO Curtis Farmer at a banking conference on Tuesday. Still, should prices stay low, its borrowers could lose access to credit.

“The ultimate outcome will depend on the duration of the cycle,” Mr. Farmer said.

Also: Texas’ banking commissioner Monday said he’s allowing state-chartered banks to temporarily close all or part of their offices in response to the novel coronavirus pandemic.*

 

 

Bloomberg News/Yahoo! News – March 16, 2020

Saudis’ Oil Tanker Spree Drives 700% Surge in Ships’ Earnings

Saudi Arabia is snapping up more and more oil tankers as the kingdom prepares to flood the world with crude causing a surge in the cost of transporting crude.

The world’s largest exporter, which began hiring extra ships almost as soon as a pact with Russia to limit oil supplies fell apart, has now provisionally hired 25-30 giant carriers to load late this month or early next, according to six shipbrokers and executives involved in the market. It’s rare for Saudi Arabia’s state tanker company to book other companies’ ships as it’s doing now. The cargoes in question would be enough to supply France for about a month.

The Saudis’ forays into the tanker market come at a time when the country has told customers it will massively ramp up deliveries to regions including Europe at heavily discounted prices. The bookings have caused a ship shortage as well as a surge in tanker earnings and the shares of owners like Frontline Ltd. and Euronav NV. Crude is trading deep in a so-called contango price structure, where spot barrels are so cheap that traders try to store them at sea for sale at higher prices later.

 

Oil & Gas

 

Reuters/CNBC – March 17, 2020

Oil prices jump over $1 as sharp falls draw bargain buyers

Oil rose more than $1 on Tuesday as bargain hunters emerged after recent sharp falls due to the coronavirus pandemic and the price war between Saudi Arabia and Russia, but fears of a recession still dragged on the market.

Brent crude was up by 3%, or 89 cents, to $30.94 a barrel by 0746 GMT, after hitting a high of $31.25.

U.S. West Texas Intermediate (WTI) crude rose 4.7%, or $1.36, to $30.06, having come off a high of $30.21.

“Presumably, the market is getting supported by physical bargain hunters and short covering,” said Stephen Innes, chief markets strategist at AxiCorp.

 

 

MarketWatch – March 16, 2020

EIA forecasts U.S. shale oil output to climb by 18,000 barrels a day in April

Crude-oil production from seven major U.S. shale plays is forecast to climb by 18,000 barrels a day in April to 9.075 million barrels a day, according to a report from the Energy Information Administration released Tuesday. Oil output from the Permian Basin, which covers parts of western Texas and southeastern New Mexico, is expected to see an increase of 38,000 barrels a day in April from March.

Shale oil output from the Anadarko, Bakken, Eagle Ford, and Niobrara regions, however, is expected to see monthly declines, the report showed.

 

 

Houston Chronicle – March 16, 2020

Weatherford returns to profitability after leaving bankruptcy*

Chapter 11 bankruptcy allowed Houston oilfield service company Weatherford International to close 2019 with its first profit in more than six years.

The company made $5.3 billion in the fourth quarter compared with a $2.1 billion loss in the same quarter of 2018. Revenue declined by 14 percent to $1.2 billion from $1.4 billion a year earlier.

Weatherford, which had not turned a profit since the third quarter of 2014, cut about $6 billion of debt before emerging from Chapter 11 reorganization in mid-December,

 

 

Bloomberg News/Yahoo! News – March 16, 2020

Big Shale Borrowers on Fast Track to Junk in Latest Oil Rout

The latest crash in oil prices is threatening to push $140 billion of investment-grade energy debt over the edge into junk.

Despite the modest recovery after 2016, oil prices have been capped by plentiful global supplies, and at the same time the U.S. shale sector has exhausted the patience of many equity investors with consistently poor returns. Now, the industry has been blindsided by the double whammy of a supply shock from the coronavirus and an oil price war, and President Donald Trump’s efforts to prop up prices is unlikely to offset more expected supply from major producers.

That’s left exploration and production companies in a weaker position coming into the latest crisis, with WTI crude dropping below $30 a barrel. Those including Occidental Petroleum Corp., as well as Apache Corp. and Marathon Oil Corp. are cutting spending wherever possible, but bond traders seem to have already made up their minds — some of these companies’ debt, and that of others, is trading around 70 cents on the dollar, a far cry from near par where most traded just a few weeks ago.

 

 

S&P Global Platts – March 16, 2020

S Korea may trim US crude imports as WTI loses competitive edge in OPEC+ price war

US crude suppliers could fall victim to the price war triggered by Saudi Aramco’s latest move to slash official selling prices in Asia, with South Korea rapidly losing its appetite for light sweet North American grades amid WTI’s narrowing discount against Dubai.

South Korean refiners imported 11.67 million barrels of US crude oil in February, down 5.8% from 12.39 million barrels received a year earlier, marking the biggest decline since the country began importing US crude on a regular basis in August 2017, latest data from Korea Customs Service showed.

As a result, Kuwait overtook the US to be South Korea’s second-biggest crude supplier in February behind Saudi Arabia, the customs data showed.

 

 

Reuters/WHTC – March 16, 2020

Few U.S. shale firms can withstand prolonged oil price war

Just 16 U.S. shale companies operate in fields where the average new well costs are below $35 per barrel, according to Rystad. Among those, Chevron Corp , Devon Energy Corp and EOG Resources said they plan or are weighing new spending cuts.

The largest U.S. oil producer, Exxon Mobil Corp , turns a profit at $26.90 per barrel on its New Mexico properties, which are about a quarter of its Permian holdings, according to Rystad. The company declined to comment for this story, but earlier this month said it would slow its development in the Permian Basin, the largest U.S. shale field that spans Texas and New Mexico.

Occidental Petroleum Corp , and privately held CrownQuest Operating, both have costs below $30 per barrel, according to Rystad Energy.

 

 

Bloomberg News – March 8, 2020

The Oil Price War Is Turning Into a Debt War

In a war of attrition, the winner isn’t the force with overwhelming power, but the one with the greatest capacity to sustain damage.

The current price war in the oil market is little different. Brent crude fell the most since the 1991 Gulf War Monday, dropping 31% in a matter of seconds, after Friday’s OPEC+ meeting broke up in disarray and Saudi Arabia slashed its crude prices and promised a surge in output.

That decision to open the spigots may seem contradictory from a country that just days ago was trying to coax Russia to join a 1.5 million barrels-a-day production cut. What’s happening, though, is really just a change of tactics. While previously Saudi Arabia hoped to maintain its position and revenues in the oil market by encouraging cooperation between major players, it’s now betting that its best prospect is to do the opposite: Engage in a game of chicken with Moscow and the U.S. independent oil industry, and count on being the last player standing.

 

 

Austin American Statesman – March 16, 2020

Expect rapid increase in COVID-19 cases in Texas, Abbott warns*

Gov. Greg Abbott on Monday warned Texans to expect to see the number of people diagnosed with COVID-19 grow rapidly in the coming days as testing ramps up across the state.

“You are going to see an exponential increase in the number of people who test positive on a daily basis. People just need to be prepared and not shocked for the mathematical reality,” Abbott said.

Evidence of person-to-person spread of the disease in several parts of Texas — as opposed to those who traveled outside the state or had contact with a traveler — will lead to an increased number of illnesses related to the new coronavirus, the governor said during an update on the pandemic from San Antonio.

 

 

Midland Reporter Telegram – March 14, 2020

TXOGA president expects bumpy road as oil markets balance

The oil price collapse that kicked off last week put Todd Staples, president of the Texas Oil & Gas Association, a bit off his message when he visited Midland to address the Permian Basin chapter, American Association of Drilling Engineers.

Staples had prepared to discuss his association’s report on the oil and gas industry’s contributions to the Texas, national and world economies, but felt compelled to address the state of oil prices while speaking at the chapter’s luncheon at Bush Convention Center.

“The price collapse will be impactful to operators,” he said following his speech. “With the excess supply coming on the market, we need to reset the supply-demand ratio. Hopefully it will be a speedy process getting through this.”

 

 

Texas Lawyer – March 16, 2020

As Oil Prices Slip, Texas Firms Are Adding Bankruptcy Lawyers

“We’ve seen this coming for quite a while—maybe not just this most recent drastic downturn this past weekend—but there’s no question numerous factors have been leading to this downturn for many months,” said Jason Cohen, a restructuring partner at Bracewell in Houston.

Bracewell is already energy-focused, Cohen said, but the firm last fall established a distressed oil and gas task force, comprising bankruptcy and restructuring lawyers, but also M&A and finance. …

Haynes and Boone has been preparing for a global recession since 2015, when oil prices had an earlier decline, said Ian Peck, a partner in Dallas who chairs the firm’s restructuring group. Since that time, the firm hired three bankruptcy lateral partners and three associates. While it has 17 full-time restructuring lawyers, he said, that team works closely with 20 in the oil and gas finance group.

 

 

KUT (Austin) – March 13, 2020

‘We Just Don’t Have A Playbook For This One’: What The Oil Crash Means For Texas

“In 2014, there was a substantial decline in market prices, but through technology and innovation the industry was able to overcome,” Todd Staples, president of the Texas Oil and Gas Association, said in a prepared statement responding to this week’s crash. …

[But] “The industry is a lot leaner and fitter than back in 2014,” said Ed Crooks, who analyzes energy in the Americas for the Wood Mackenzie consultancy firm. “There’s a lot less fat there available to be cut.”

Crooks said jobs are a good example of how this crash is different from the last one. Over the past couple years, U.S. oil production has increased by about 30%. But, he points out, employment has remained flat. In fact, the number of people employed in oil and gas is still about 15% lower than it was before the 2014 bust. ….

“We have over $200 billion in debt that is maturing in over the next four years,” said Ed Longanecker, president of the Texas Independent Producers and Royalty Owners Association. “So there are a number of cash-constrained operators that may be impacted more significantly” from the downturn.

 

 

World Oil – March 13, 2020

Oil hedges that burned shale drillers in 2014 cause trouble again

In the aftermath of the 2014 oil crash, U.S. shale learned a painful lesson: Not all hedging strategies pay off. Countless producers were left exposed to big losses after oil plunged to levels that made their insurance less valuable.

Now, as the shale industry tries to pick up the pieces after Saudi Arabia’s latest price war caused crude to plummet, some of those same producers are reliving the same costly mistake. Noble Energy Inc., Callon Petroleum Co. and Parsley Energy Inc. are among producers sorely exposed to the latest market crash due to their hedging strategy, a Bloomberg review of company records show.

At issue are complex financial contracts called three-way collars. The options are a relatively cheap way to hedge against price fluctuations, as long as prices don’t fall too much. Compared with swaps, which guarantee a certain price, the collars are essentially costless — a key consideration in such a capital intensive industry where expenses have been cut nearly to the bone in order to survive and turn a profit.

While the three-way collars fell out of favor after the crash of 2014, many shale producers started loading up again in the past year or so, comforted by crude prices that reliably hovered between $50 and $60 a barrel.

 

 

Houston Chronicle – March 13, 2020

Data shows Houston economy on shakier footing than thought, oil and gas sheds jobs for first time in a year*

The Houston economy created jobs at a slower pace than initially estimated last year, as weakness in local energy and manufacturing sectors weighed on growth, employment data released Friday show.

The revised figures show Houston added about 63,000 jobs in 2019, down from initial estimates of about 90,000. The revisions the energy sector were more dramatic; oil and gas extraction added just 400 jobs last year, compared to initial estimates of 3,300. …

The oil and gas extraction sector was already losing jobs in January, data showed, shedding 100 from a year earlier — the first year-over-year loss since the end of 2018. If oil prices stay in the $30 a barrel range this year, as many as 20,000 energy jobs could be lost in the Houston area, according to Bill Gilmer, an economist with the University of Houston.

 

 

Houston Chronicle – March 16, 2020

Which Houston companies made Inc. magazine’s fastest-growing Texas companies list?

Instafuel, a Houston-based startup that provides mobil refueling services to business-to-business clients, landed the top spot among Houston companies on Inc. magazine inaugural Inc. 5000 Texas list of the 250 fastest-growing companies.

The ranking, which is a spinoff of the publisher’s annual Inc. 5000 list, is made up of the 250 privately-owned companies in Texas. In all, 68 Houston companies made the list, which ranks companies by the percentage increase in revenue from 2016 to 2018. Case Energy Partners, based in Dallas, topped the Texas list, with revenue growth of more than 11,600 percent during the period. To0 be listed, companies had to have revenue of at least $100,000 in 2016 and $1 million in 2018.

 

 

Financial Times – March 16, 2020

Saudi oil war: ‘The beauty is you can blame it on the Russians’*

“With all the global criticism and people jumping on the Khashoggi killing, I think the feeling is, ‘we are not getting credit for being the responsible [oil] player that we are’, and ultimately everybody is in this for themselves. Why should we sit and sacrifice for nothing?” said a Saudi close to the royal court. “The beauty of this is you can blame it on the Russians. You have a legitimate answer, ‘Go talk to Vladimir, he’s the one who started this’.”

The person added that it was in Saudi Arabia’s interests to “allow this thing to go on for a while to bring structural change to the industry”. “Get rid of weak shale players and send a message to the Tesla’s of the world and alternative energy, there’s a lot that could change the whole picture of oil,” the person said. …

The collateral damage will ripple from Baghdad to Texas. A decade ago, US would have clearly benefited from lower oil prices, but its rapid emergence as the world’s top oil producer has altered that calculation. States that were beneficiaries of the shale boom such as Texas, North Dakota and Pennsylvania will be victims of a price war that seeks not just to lower prices but to crash them.

 

Utilities

 

Midland Reporter Telegram – March 16, 2020

CenterPoint to boost base rate of Houston-area gas bills

Beginning in May, Houston-area natural gas bills will increase as CenterPoint Energy raises its monthly base rate.

The regulated utility that supplies electricity and natural gas to the Houston area, is raising the base rate for residential natural gas by 89 cents a month, a 5.4 percent increase. The increase is more than double the U.S. inflation rate of 2.3 percent.

Residential customers now pay a monthly charge of $16.50 for basic service that does not include the cost of natural gas, which is billed separately and based on usage. Customers must pay the monthly charge — which has become the biggest portion of the bill in some months — even if they don’t use any natural gas.

 

 

Austin American Statesman – March 16, 2020

Coronavirus in Austin: Austin Energy will reconnect electricity to customers

Austin Energy announced Monday it will turn electricity back on for customers who recently had service shut off due to unpaid bills.

The utility on Friday announced it would not cut electricity to customers delinquent in payments amid the new coronavirus pandemic. On Monday, the utility said it now wants to speak to customers who had their electricity shut off prior to Friday to restore their service.

 

 

KCBD (Lubbock) – March 16, 2020

South Plains Electric will not disconnect service in March

South Plains Electric Cooperative sent out a news release Monday evening stating they will not disconnect service in March, extending its support of members.

“As a not-for-profit cooperative, working with and helping our members during tough times is not new for us. While the temporary hold on disconnects helps to keep the lights on, it doesn’t keep a balance due from accumulating. If members will communicate with us, we may have other ways we can help. We will continue to monitor the situation and will let our members know if something changes.

Related: LP&L suspends electric and water disconnections in response to COVID-19

And: Duke, AEP, Dominion among utilities to halt service shutoffs in coronavirus response

 

 

S&P Global Platts – March 16, 2020

Market interruptions prompt Southwest Power Pool to propose real-time market execution changes

Southwest Power Pool is seeking Federal Energy Regulatory Commission sign-off of new tariff language that would bring some flexibility to the grid operator’s execution of its real-time balancing market process in order to account for periodic market interruptions.

SPP’s tariff currently requires the grid operator to execute the real-time balancing market for each five-minute dispatch interval. But this fails to account for planned and unplanned market interruptions that SPP may periodically face, the grid operator said in a filing (ER20-1263) with FERC.

As such, each occurrence of an interruption presented the grid operator with a potential tariff violation. To remedy this, SPP staff and stakeholders convened to devise a solution for coordinating real-time balancing market execution with market interruptions.

 

 

E&E News – March 16, 2020

According to a bulletin EEI released on the issue, 40% of a company’s employees could be out sick, be quarantined or stay home to care for sick family members. And pandemics may prevent “traditional mutual assistance programs that help companies restore service after natural disasters and weather events,” EEI said.

The utility sector is also juggling the needs of its customers. Many major utilities across the nation have vowed to suspend shut-offs and keep power, heat and water on for all customers — a particular concern for people who may be out of work and cannot afford to pay their bills. Companies are also suspending disconnections for nonpayment, some under direction from officials and regulators in states like Ohio and Connecticut.

Like other businesses preparing for pandemics, utilities focus on keeping the workforce healthy and operations running. But EEI’s Aaronson noted that a key difference with keeping critical infrastructure humming is the possible requirement for the sheltering in place of essential employees who are unable to do their jobs from home.

 

Alternatives & Renewables

 

Talk Business and Politics – March 16, 2020

SWEPCO reaches agreement in Louisiana on $1 billion proposal for wind farms

Electricity utility Southwestern Electric Power Co. (SWEPCO), a company of American Electric Power, announced Monday (March 16) a settlement agreement with the Louisiana Public Service Commission staff, the Alliance for Affordable Energy and Walmart Inc. regarding SWEPCO’s $1.01 billion proposal to add 810 megawatts of wind energy.

SWEPCO wants to purchase three wind facilities in north-central Oklahoma, known as the North Central Energy Facilities, along with its sister company, Public Service of Oklahoma (PSO). The Oklahoma Corporation Commission approved Feb. 20 a settlement agreement in PSO’s plan to add 675 megawatts of wind energy.

 

Regulatory

 

Austin American Statesman – March 16, 2020

Abbott suspends Open Meetings Act over coronavirus pandemic*

Gov. Greg Abbott on Monday suspended portions of the Texas Open Meetings Act, the law that ensures public access to and participation in government meetings, amid the coronavirus pandemic.

Texas Attorney General Ken Paxton had requested some provisions of the law be put on hold temporarily to pave the way for city councils, school boards and county commissioners courts across Texas to conduct meetings by telephone or video conference, according to a news release from Paxton’s office.

The lifting of the requirements comes as the Austin City Council is weighing how it will continue to conduct its business amid the outbreak. The city canceled all upcoming meetings related to the council’s controversial overhaul of the land development code. The effort to update the city’s rules on what can be built and where likely will be postponed as a result.

 

 

Austin American Statesman – March 16, 2020

Virus concerns delay special election for Watson seat to July 14

The special election to replace retiring state Sen. Kirk Watson will be July 14 — 2½ months later than expected due to concerns about the coronavirus outbreak, Gov. Greg Abbott announced.

Watson, D-Austin, had timed his April 30 departure to allow for the expected special election on May 2.

But in a Monday night announcement, Abbott said the delay was necessary to mitigate the spread of COVID-19, the disease caused by the new coronavirus. Abbott also said he was continuing to talk to the secretary of state’s office about strategies to protect public health in other upcoming elections, such as the May 26 primary runoffs.

 

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The Texas Energy Report NewsClips – March 16, 2020

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Lead Stories

 

Texas Tribune – March 13, 2020

Texas governor declares statewide emergency, says state will soon be able to test thousands

Gov. Greg Abbott declared Friday that the new coronavirus is a statewide public health disaster and said that Texas is on the verge of being able to significantly ramp up its testing capacity.

At the same time, he announced that he was directing day cares, nursing homes and prisons to limit visitations and ordering state employees to work from home, where possible.

He said San Antonio is opening the first state drive-through with testing capabilities Friday. It will initially prioritize health care workers and high-risk patients. Dallas, Houston and Austin should expect similar testing sites to open in coming weeks, Abbott said.

Related: Texas Lt. Governor Tells Fox News Lone Star State Could See 300,000 Coronavirus Cases in Coming Month

 

 

World Oil – March 3, 2020

Oxy swallows ‘poison pill’ as Carl Icahn tries to oust its board of directors

Occidental Petroleum implemented a so-called poison pill plan to defend against unsolicited takeover approaches just a day after activist investor Carl Icahn escalated his campaign to fire the beleaguered U.S. oil producer’s board.

Such measures are usually deployed in hostile takeover situations. Occidental is implementing the plan later this month and will allow shareholders to vote on it at its annual general meeting, it said Friday in a statement. If the shareholders vote down the pill at the meeting, it will expire. But if they vote in favor of it, it will extend for one year.

The company’s stock has dropped about 60% this month amid collapsing oil prices, allowing Icahn to quadruple his investment in Occidental, which he has savaged for buying Anadarko Petroleum Corp. last year for $37 billion. On Thursday, Icahn said “strong bids” would eventually emerge for Occidental and a new board should consider them.

 

 

The Hill – March 15, 2020

Fed cuts interest rates to zero percent amid coronavirus fallout

The Federal Reserve on Sunday slashed interest rates to zero percent and announced it would purchase $700 billion in bonds and securities to stabilize financial markets and support the economy.

The Federal Open Market Committee (FOMC), the Fed’s monetary policymaking panel, announced Sunday it would cut its baseline interest rate range to 0 to 0.25 percent, drastically increase purchases of Treasury bonds and mortgage-backed securities, and take several other steps to allow banks, businesses and households to weather a sharp economic downturn.

“The actions we have announced today will help American families and businesses in our entire economy weather this difficult period and will foster a more vigorous return to normal once the disruptions from the current coronavirus abate,” said Federal Reserve Chairman Jerome Powell during a Sunday conference call with reporters.

 

 

The Hill – March 16, 2020

Fauci says possibly ‘a few months’ until life gets ‘back to normal’

Dr. Anthony Fauci, the head of the National Institute of Allergy and Infectious Diseases, said Sunday that it is possible it will take “a few months” before life goes “back to normal” amid the coronavirus outbreak.

“Can you try to help us understand, when will life get back to normal?” ABC’s Jonathan Karl asked Fauci on “This Week.”

“It’s going to be a matter of several weeks to a few months, for sure,” Fauci responded. … Asked if he is “confident that the federal government is doing everything that needs to be done right now to contain this,” Fauci responded, “Right now, Jon, yes. Absolutely.”

 

 

Washington Free Beacon – March 15, 2020

Biden Promises ‘No More Drilling’ Under His Presidency

Democratic presidential candidate Joe Biden said Sunday he would prevent oil companies from drilling as part of his effort to combat climate change.

“No more subsidies for the fossil fuel industry,” he said at the CNN debate. “No more drilling on federal lands. No more drilling, including offshore. No ability for the oil industry to continue to drill, period. Ends.”

Biden hasn’t called for an all-out ban on oil drilling before, which would have a radical, negative effect on the U.S. energy industry.

His $1.7 trillion climate change plan is dwarfed in spending by the $16.3 trillion proposal by his chief remaining primary opponent, Sen. Bernie Sanders (I., Vt.).

 

 

Bloomberg News – March 12, 2020

Global Lockdowns Slam Energy Demand*

Electricity demand in Europe and the U.S. will make weekdays seem like weekends as the coronavirus prompts a growing number of countries to consider telling people to stay home.

Power use in Italy slumped 7.4% Wednesday from a week earlier after the government shut schools and told workers to remain home. The World Health Organization has now officially declared the outbreak a pandemic.

That trend is threatening to spread across the globe as countries from Germany to the U.K. to the U.S. weigh stricter measures to keep the virus from spreading. It shows that a broad economic slowdown is becoming more likely as millions of people stay home, slashing the need for electricity in offices, theaters, restaurants and elsewhere.

 

Oil & Gas

 

Reuters – March 16, 2020

Oil slumps again as coronavirus hits demand and price war bites

Oil fell on Monday as an emergency rate cut by the U.S. Federal Reserve failed to soothe global financial markets panicked by the rapid spread of the coronavirus, while a price war between top producers added to a growing supply glut.

Brent crude fell $2.07 to $31.78 a barrel by 0729 GMT, extending last week’s plunge of 25%, which was the largest weekly fall since 2008. The front-month price opened at a high of $35.84 but slipped to a low of $31.63.

U.S. crude was at $30.35, down $1.38 after slipping below $30 earlier in the session, losing ground despite U.S. President Donald Trump’s pledge to fill strategic petroleum reserves (SPR) in the world’s largest oil consumer “to the top”. ….With current SPR stockpiles at 634 million barrels, or 80 million barrels less than a nameplate SPR capacity of 714 million barrels, the government buying would clean up only about 20 days of a global overhang that RBC estimates at an imbalance of 4 million bpd, Tran said.

 

 

Midland Reporter Telegram – March 13, 2020

Rig counts remain steady

Rig counts held steady this week, according to oil field services company Baker Hughes.

The U.S. rig count lost one rig to 792 and remains at a three-year low.

Texas added four rigs to 408, while the Permian Basin added three rigs, bringing its tally to 418. Texas accounts for about half the nation’s active drilling rigs, and the Permian Basin 60 percent of all oil drilling activity.

New Mexico, the only other producing state with a triple-digit rig count, added one rig to 117.

 

 

Seatrade Maritime News – March 13, 2020

Oil demand forecast to dip 600,000 bpd: Rystad Energy

Just as major oil producers pump millions of extra barrels of oil on to world markets, Oslo-based Rystad Energy has released updated estimates for global fuel demand as a result of the impact of coronavirus (COVID-19) on world energy markets.

The energy research and business intelligence firm is now forecasting a fall in demand for oil of 600,000 barrels per day (bpd) year-on-year, equivalent to a decrease of 0.6%.

The company’s estimate of total oil demand in 2019, about 99.8m bpd, is now projected to fall to 99.2m bpd. Describing the new figures as ‘a severe downgrade’, Rystad cites the quarantine lockdown in Italy, flight cancellations by airlines, the travel ban between Europe and the US announced by President Trump on Wednesday, and the firm’s simulations of possible virus growth patterns this year as the basis for the new numbers.

 

 

S&P Global Platts – March 13, 2020

Producers line up to slash capex, activity in wake of low oil prices

Click on this article for a chart of O&G companies that are reducing their capex, including Apache, which has cut its payout by 90% and its capex down from $1.6-$1.9 billion to the $1-$1.2 billion range

Four more E&P producers have joined the lineup of oil companies that are slashing 2020 capital budgets and cutting back activity, as oil prices hover at low levels not seen for years.

Noble Energy, Ovintiv (formerly Encana), and small-cap E&Ps QEP Resources and Bonanza Creek all have sharply cut capex from 11% to as much as 60%, and QEP is even predicting cuts into 2021.

Managements have been much more responsive to oil price signal and supply surge/demand shock than to OPEC’s supply surge declaration in November 2014, when the cartel decided not to cut production amid falling oil prices in an effort to force shale supply reductions, Goldman Sachs said Friday.

 

 

Wall Street Journal – March 13, 2020

Oil-Price Crash Raises Risk for Banks, Commodity Traders*

Trafigura had around $5 billion in so-called prepayments for energy and metals in 2019, while Glencore had $1.2 billion, company reports showed. Traders usually strike the deal, acting as an intermediary between a consortium of banks and the producer. The trader keeps a small slice of economic interest in the deal—typically less than 10%. Many banks and traders take out insurance policies to at least partially cover their credit risk.

“It would be wildly implausible that the banks would not suffer something of a hit when prepayments are renegotiated,” said Craig Pirrong, a professor of finance at the University of Houston.

Some deals where part of the repayment depends on a ramp-up in production will be subject to a greater impact because when oil prices collapse, investments in expansions are shelved, Mr. MacNamara said.

 

 

Rome News Tribune (GA) – March 13, 2020

Dallas Morning News: If the Saudis think an oil-price war will crush West Texas, they don’t understand Texas

Texas in the past few years has become a major producer and exporter of crude oil, causing such consternation among OPEC members that the Saudis attempted to drive down prices in the past to take back market share from Texas producers. The cartel succeeded in pushing many producers to improve their operations enough to compete at lower oil prices. And Texas oil production volumes ultimately increased.

Can Texas do it again? Well, count us among those who believe the creativity advantage in the long term rests with the free markets and the private companies that continually overhaul our energy industry, allow women into their senior ranks, and allow free speech to flourish. ….

This will likely be a painful year, but what emerges could very well be an energy industry better positioned to take on the Saudis and Russians. In the meantime, we hope the president is paying attention. More than a few voters in West Texas will understand that the Saudis & Russians would love to undercut their livelihood in the midst of a price war.

 

 

Houston Chronicle – March 14, 2020

Houston’s OTC delayed until late summer over coronavirus

OTC, the world’s largest oil and gas trade show held each year in Houston, will be postponed until late summer because of the coronavirus pandemic.

The Offshore Technology Conference, which drew 60,000 attendees last year, was scheduled to take place May 4-7 at NRG Center. It will be rescheduled for August or September, organizers said Friday.

“OTC recognizes the unprecedented global challenge associated with the current COVID-19 pandemic,” organizers said in a statement Friday. “The health and safety of our partners, attendees, exhibitors, staff and community are of the utmost importance, and our hearts go out to all who have been affected.”

 

 

Houston Chronicle – March 15, 2020

Can Republicans use energy politics to sink a pro-fracking, anti-Green New Deal Houston Democrat in 2020?*

After the House passed a pair of bills last September banning offshore drilling in the Atlantic, Pacific and Florida Gulf, U.S. Rep. Lizzie Fletcher laid into her 226 Democratic colleagues and the roughly two dozen Republicans who supported the ban.

Fletcher, a Houston Democrat and one of five in her party to oppose the legislation, said curbing offshore drilling would intensify greenhouse gas emissions, not reduce them. And the bills would make the U.S. more reliant on foreign oil, reflecting “a lack of understanding about where our energy comes from and how we solve the climate crisis,” she and Louisiana Republican Garret Graves wrote in an op-ed.

The offshore drilling vote demonstrates the balancing act Fletcher must perform to retain her seat in Texas’ 7th Congressional District — an area replete with Fortune 500 oil and gas companies and thousands of energy jobs — as her party embraces more urgent and drastic measures to stifle climate change.

 

 

Midland Reporter Telegram – March 13, 2020

Craddick says state leaders keeping an eye on falling oil prices

The oil price freefall last week wasn’t felt just in the Permian Basin.

State Rep. Tom Craddick said leaders in Austin were paying attention and are worried about the price of oil in the $30s.

“They are using a price of $58 a barrel in their projections,” the Midland Republican said. “We are not going to be at that.” …

He said the lack of drilling taking place in 2020 also might impact the state when it comes to the collection of sales tax. The State Comptroller’s Office showed that sales tax declined by 20 percent inside the city of Midland, 13 percent inside Midland County and by more than 11 percent inside the city of Odessa. All three entities appear likely to fall behind last year’s record annual collection by at least 10 percent.

 

 

Reuters – March 13, 2020

U.S. energy guru Yergin sees no easy way out of oil price collapse

U.S. energy historian Daniel Yergin said it could be a long time before pressure is eased on sinking oil markets as the coronavirus causes public events and schools to close while global oil producers flood markets with crude. ….

“I don’t see how you can use the SPR,” he said. “With the amount of oil coming into market this is really going to lead to swollen inventories, it’s going to take a long time to bring down.” He also discounted efforts to lay out a case that Saudi Arabia and Russia were dumping oil on global markets. Harold Hamm, the executive chairman of Continental Resources Inc, has said that those countries are undertaking a “direct attack” on U.S. drillers by increasing the oil supply, according to local media.

Hamm, a supporter of President Donald Trump, is the chairman of the Domestic Energy Producers Alliance, which is petitioning the Department of Commerce to pursue the anti-dumping case. Yergin said it would be hard to prove that anyone was putting out oil below market value, and in any case it would not be an overnight fix.

Related: If oil prices stay in the $30 a barrel range this year, as many as 20,000 energy jobs could be lost in the Houston area alone

 

 

Santa Barbara News Press (CA) – March 16, 2020

Plains All American to pay more than $60 million for Refugio Oil Spill

Plains All American Pipeline has been ordered to pay more than $60 million due to federal pipeline safety laws and liability for the Refugio Oil Spill.

The civil settlement was announced Friday between federal officials and the Texas-based pipeline company. The May 19, 2015, oil spill from Plains’ 901 immediately north of Refugio State Beach discharged more than 100,000 gallons of crude oil, with some 20,000 gallons flowing into the ocean.

“The discharge was caused by Plains’ failure to address external corrosion and have adequate control-room procedures in place, and was further exacerbated by Plains’ failure to respond properly to the release,” read a news release issued Friday by the Department of Justice Office of Public Affairs. “The crude oil discharge resulted in the oiling of Refugio State Beach, the Pacific Ocean, and other shorelines and beaches, resulted in beach and fishing closures and adversely impacted natural resources such as birds, fish, marine mammals and shoreline and subtidal habitat.”

 

 

World Oil – March 15, 2020

Oil’s crash is both a help and a hazard for LNG export projects

Oil’s rout may have been an unexpected boon for the biggest buyers of liquefied natural gas, but its knock-on effects may come back to bite them.

That’s because more than a dozen proposed LNG export projects from the U.S. to Mozambique are at risk of being delayed or scrapped as crude careened to levels that make most of them unprofitable. If fewer of them come to fruition, that would ease a widening LNG supply glut later this decade and potentially lift prices amid breakneck demand growth in Asia.

The multibillion-dollar export terminals typically sell their output at a price linked to crude. While projects are financed based on long-term models, because they take years to build and then operate for decades, if oil and gas prices stay at current levels throughout the year, it could force backers and financial institutions to rethink their plans.

 

 

Reuters – March 15, 2020

Aramco to cut capital spending over coronavirus; 2019 profits plunge

Saudi Aramco on Sunday said it plans to cut capital spending in the wake of the coronavirus outbreak, and also posted a plunge in profit for last year, missing forecasts in its first earnings announcement as a listed company.

Saudi Arabia’s decision last year to float shares in its state oil company – the most profitable company in the world – was one of the central elements in Crown Prince Mohammed bin Salman’s program for economic and political reform.

The record-setting IPO was touted as making the world’s biggest energy exporter more professional and transparent.

The 21% decline in net profit for last year means it fell short of analysts’ forecasts for the period that culminated in the share sale, months before the coronavirus pandemic became a factor for oil prices.

 

 

Inc. – March 13, 2020

It’s Called Mineral Rights Arbitrage and It’s a Massive Business. Just Ask Inc.’s No. 1 Texas Company

Charlie Matter spotted the opportunity to start Case Energy Partners while working after college as a “landman”–someone who acquires mineral rights from landowners on behalf of large energy companies. After a few years, he came to recognize that the industry was woefully behind the times, and in 2012, at the age of 28, he struck out on his own with a mission to modernize the way things were done.

“We built a platform and our own proprietary process for identifying and acquiring these assets more efficiently,” Matter says. “There are a lot of variables involved, and we look to mitigate risk and identify value.”

Dallas-based Case Energy Partners identifies landowners whose mineral rights are potentially valuable to the oil and gas business, buys those rights at competitive prices, and then bundles them with others into diversified financial products that it can flip to larger, publicly traded companies. (Matter won’t share the secret sauce that makes the company’s platform work, but he allows that the technology evaluates patterns in the market to point to “undervalued” properties.)

 

 

KJAS (Jasper) – March 11, 2020

Proposed waste disposal facility at headwaters of Lake Sam Rayburn drawing discussion

There is much discussion in the community about a proposed waste disposal facility near the headwaters of Lake Sam Rayburn. Daily News and More is reporting that attorneys representing PA Prospect Corporation, which is located in Montana, recently met with concerned residents in the Chinquapin Community in San Augustine County to discuss a planned waste disposal facility. Reportedly, the facility would be located on State Highway 103 about a mile west of U.S. Highway 96.

Reports say that applications filed with the Texas Railroad Commission state that waste products to be disposed of at the site include; oil based drilling fluids, old tank bottoms from gas, crude oil production facilities and reclamation plants, soil contaminated with crude oil, condensate, produced water, old O & G waste pit liners, and other waste containing arsenic, barium, cadmium, chromium, lead, mercury, selenium, and benzene.

 

Utilities

 

El Paso Times – March 13, 2020

Bernie Sanders, other senators want to clarify El Paso Electric buyer’s ‘true ownership’*

Democratic presidential candidate Bernie Sanders and two other United States senators want two federal agencies to hold hearings on the pending El Paso Electric sale to clarify the buyer’s ties to JPMorgan Chase.

That’s an issue that’s haunted the pending $4.3 billion sale for months.

Vermont Sen. Sanders, and Democratic senators Jeffrey Merkley, of Oregon, and Edward Markey, of Massachusetts, sent letters March 10 to the Federal Energy Regulatory Commission, or FERC, and the U.S. Nuclear Regulatory Commission, or NRC.

The two letters, signed jointly by the three senators, state that the agencies need to hold evidentiary hearings to “correct the record as to the true ownership and control over IIF,” or Infrastructure Investments Fund, which is in the final stages of completing its purchase of the 117-year-old utility.

 

 

Houston Chronicle – March 13, 2020

Texas electricity prices are already falling, just in time for summer*

Texans got good news last week when the manager of the state’s power grid reported Texas will have more electricity generating capacity this summer than it did when a heat wave last summer forced consumers and businesses to conserve power as supplies became perilously tight.

The announcement from the Electric Reliability Council of Texas that the state has added 523 megawatts of capacity since December — mostly new wind power, but also new solar and natural-gas fired generation — has already lowered electricity prices.

Twelve-month electricity plans are already about a half-cent cheaper than they were a week ago, one energy analyst said.

 

 

Energy and Policy Institute – March 13, 2020

A list of utilities that have and have not suspended disconnects amid COVID-19

Many utilities that sell electricity and gas around the United States are either voluntarily suspending disconnections of customers who do not pay their bills during the coronavirus crisis, or are being ordered to suspend disconnections by regulators or other government officials.

Other utilities are saying that they will not suspend disconnections, or are making commitments that appear to be more limited in scope.

The Energy and Policy Institute (EPI) is collecting data based on published reports about which utilities are suspending disconnections, and which public utility commissions or other governmental bodies are ordering suspensions. EPI reached out on Friday, March 13, to about two dozen large utility companies directly to ask whether they would be suspending disconnections.

Related: SWEPCO temporarily suspending disconnections for non-payment

And: Travis County evictions put on hold, Austin Energy won’t shut off utilities amid COVID-19 outbreak

 

 

KTBC (Austin) – March 13, 2020

Pedernales Electric Coop temporarily closes offices to members in response to coronavirus

The Pedernales Electric Cooperative will be temporarily closing its offices to members starting Monday, March 16.

Employees will continue to be available to meet the needs of its membership over the phone and online. Members can pay their bills online, by phone, mail, payment kiosk, the SmartHub mobile app, and all participating Moneygram locations.

 

 

Bluebonnet News – March 13, 2020

Sam Houston EC responds to coronavirus to protect consumer-members, employees

In a statement released Friday afternoon, Sam Houston Electric Cooperative said it is temporarily closing its office lobbies to the public to protect the health and safety of its consumer-members and employees due to concerns about the coronavirus/COVID-19.

“Our lobbies will be closed temporarily so we can help protect people with underlying health issues,” said Chief Executive Officer Doug Turk, P.E. “Please contact us, we will be happy to work with our members.”

There are many options for doing business with the Co-op. The mySamHouston portal on SamHouston.net and the mySamHouston app offer detailed energy consumption information and a variety of services, such as bill payment.

 

Alternatives & Renewables

 

Forbes – March 13, 2020

UofH Energy Fellows: What Does The Oil Price Crisis Mean For The Energy Transition?

The current crisis facing the oil industry happened seemingly overnight, the result of a two-pronged situation: the economic slowdown caused by the global COVID-19 pandemic and the predatory attempt by Saudi Arabia and Russia to eliminate competition from the American energy industry.

The fallout, however, may be felt for years, and in disparate ways. The move to zero-carbon energy and even the electrification of the vehicle fleet are likely to be slowed. The oil majors’ hold on the Permian Basin will grow stronger. And traditional energy companies may shift priorities from environmental and corporate social responsibility initiatives preferring instead to focus on employee safety, community health and profits over a broader remit.

 

Regulatory

 

E&E News – March 4, 2020

[A]lthough Super Tuesday was big, it’s still early in the primary calendar. There will be Democratic primaries and caucuses until June. Next up: March 10 contests in Idaho, Michigan, Mississippi, Missouri, North Dakota and Washington.

Here’s a look at four energy issues to watch as the race goes forward:

Oil and gas — The Democratic field looks to rein in U.S. fossil fuel development, though the candidates differ over how they would oversee a U.S. oil and gas industry that has grown dramatically in the last decade owing to extraction techniques like hydraulic fracturing, or fracking. Fossil fuels made up more than 62% of U.S. electricity generation last year.

Trump targeted Bloomberg yesterday, tweeting that the former New York mayor — who appeared for the first time on a Democratic primary ballot — would pose a threat to the oil and gas industry.

“Texas & Oklahoma: Mini Mike Bloomberg will kill your drilling, fracking and pipelines,” Trump said on Twitter.

 

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The Texas Energy Report NewsClips – March 13, 2020

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Lead Stories

 

Forbes – March 12, 2020

Gaurav Sharma: Supertanker Prices Spike By Nearly 678% On Oil Market War And Storage Plays

Despite a sobering week for the global crude oil market as the coronavirus or Covid-19 outbreak strangles the global economy, shipping rates for supertankers or very large crude carriers (VLCCs) – capable of shifting 2 million barrels – have gone through the roof.

Sources in Texas and Louisiana say lease rates for VLCCs are jumping on a “near daily basis”, while shipping brokerage contacts in Singapore and Rotterdam say the scramble is on for a slice of a finite global fleet.

One source told your correspondent, the VLCC lease rate stateside is currently at $42,000 per day, up from $30,000 on March 6 (the day of the collapse of OPEC+ talks) and $16,000 on February 1, an uptick of 162.5%. “In our neck of the woods, much of the call on available VLCCs from fleets happen to be down to contango plays.”

 

 

KOSA (Midland-Odessa) – March 12, 2020

Apache reducing rig count in Permian to 0

Apache says it will reduce its Permian rig count to zero over the coming weeks, and plans to lower activity in Egypt and the North Sea, according to SeekingAlpha.com.

It also announced plans to cut 2020 capital spending to $1B-$1.2B, down from $1.6B-$1.9B, a 37% drop at the midpoint.

The company says it has ample liquidity through its $4B undrawn revolver and flexibility to manage the $937M of bonds maturing between February 2021 and January 2023.

 

 

Reuters – March 12, 2020

Factbox: Flaring by oil majors in the Permian

Some oil companies are “flaring” far more natural gas from oil production in the Texas section of the Permian Basin than they are across the state border in New Mexico, data shows. Exxon Mobil wasted nearly 17% of the gas it produced in Loving County, Texas last year, but in Eddy Country, New Mexico, it burned 7%, data from consultancy Rystad Energy shows.

The total for the Permian last year hit 293.2 billion cubic feet, enough gas to provide electricity to more than 7 million U.S. homes for a year. Across the entire Permian, 83.5% of the gas flared is on the Texas side, Rystad calculates.

And while New Mexico has become the third largest shale oil producer behind Texas and North Dakota, its companies last year burned on average 2.3% of their gas output, compared with 3.8% in the adjacent Texas counties.

 

 

Dallas Morning News – March 12, 2020

Coronavirus concern, price war drives Texas gas prices to lowest level in more than a year*

Gas prices across Texas are reaching lows not seen in more than a year as concerns about the coronavirus impact coupled with price wars between top producers have caused crude oil prices to plummet.

“Texas gas prices are at their cheapest point in more than a year,” AAA Texas spokesperson Joshua Zuber said in a statement Thursday. “Gas prices usually increase in the spring due to an increase in demand and lower supply. But this year, drivers could continue to see lower prices amid concerns over the coronavirus and impacts to global demand.”

Top oil producers Saudi Arabia and Russia have also been at an impasse this week over how to adjust crude oil production in light of falling demand in China, according to The Wall Street Journal. Saudi Arabia announced Wednesday that it would boost oil production in a price war with Russia while other oil-producing countries attempted to strike a truce.

 

 

Reuters – March 11, 2020

U.S. oil company workers make big, bad retirement bet: their own stock

Employees at the largest U.S. oil companies have lost around $5 billion in retirement savings since the end of 2018 because of outsized bets on their own slumping stock, according to a Reuters analysis of company disclosures, a trend exacerbated by the recent crash in oil prices.

The losses spread across the 401(k) plans of some 66,000 workers underscore the dangers facing employees that do not diversify their retirement investments. The issue is most pronounced at big blue-chip corporations that have historically matched worker retirement contributions in shares and whose stocks have track records of stable growth.

“A lot of people think their company’s stock is safer than an index fund,” said David Blanchett, head of retirement research at Morningstar Inc.

 

 

South China Morning Post – March 10, 2020

Chinese oil giants face steep losses, set to cut production, dividends as Saudi Arabia stokes price war, analyst says

China’s state-backed oil giants, facing potential steep losses, are likely to slash spending on projects and pay smaller dividends to stock investors this year after oil prices plunged to the lowest level in four years, according to Sanford C. Bernstein. …

PetroChina and China Petroleum & Chemical or Sinopec, are expected to trim their annual production by 2 to 3 per cent, similar to that seen in the last oil recession in 2014, according to Neil Beveridge, senior analyst in Hong Kong at Sanford C. Bernstein & Co. Both producers are less competitive on costs than China’s offshore major CNOOC, he said.

The US brokerage on Monday slashed its 2020’s earnings per share forecast for PetroChina by 61 per cent, for Sinopec by 41 per cent and for CNOOC by half, as the stocks slid in Hong Kong. Beveridge expects all three to pay less dividends, although they will try to maintain their payout as a percentage of their earnings.

Oil & Gas

 

Reuters/CNBC – March 12, 2020

Oil falls a third day, Brent crude set for worst week since 1991

Oil prices fell on Friday for a third day, with Brent crude set for its biggest weekly drop since 1991 and U.S. crude heading for the worst week since 2008 as panic about plunging demand from the coronavirus outbreak grips the market.

Brent crude was down 67 cents, or 2%, at $32.55 a barrel by 0126 GMT after falling more than 7% on Thursday. For the week, Brent is set to fall 28%, the biggest weekly decline since the week of Jan. 18, 1991, when it fell 29% at the outbreak of the first Gulf War.

U.S. West Texas Intermediate (WTI) crude was down 66 cents, or 2.1%, at $30.84 after falling more than $1 earlier. The contract fell 4.5% in the previous session. WTI is set to drop 25% this week, the most since the week of Dec. 19, 2008, when it fell 27% at the height of the Global Financial Crisis.

A flood of low-priced oil into the market from Saudi Arabia and the United Arab Emirates is intensifying the pressure on prices after the collapse of a price supporting agreement with Russia last week.

 

 

MSN – March 12, 2020

Stocks Plunge 10% in Dow’s Worst Day Since 1987

U.S. stocks plunged Thursday in their worst day since the 1987 crash. The Dow Jones Industrial Average fell 10%, and the S&P 500 and Nasdaq tumbled nearly as much to join the Dow in a bear market. ….

Even companies that investors thought would reap the benefits of the virus tumbled. Clorox CLX -6.32% ended the day down 6.3%. Gilead Sciences, GILD -6.08% which has started testing a virus treatment, fell 6.1%. …

“We are beyond the logical, mathematical approach to things,” said Steven Dudash, president of Chicago-based IHT Wealth Management. “We’ve got complete overreactions going on because of the fear of the unknown.”

“When you see that, you can’t expect to see a logical response to interventions,” he said. …

 

 

Fort Worth Star Telegram – March 9, 2020

Conservative megadonors backed Fort Worth-area candidates. They earned the most votes.

Conservative West Texas donors poured hundreds of thousands of dollars into two Fort Worth area races for the Texas House, and the Republican candidates they supported gained the most votes in their primaries — with one avoiding a runoff altogether.

In House District 92, former Bedford city councilman Jeff Cason beat back his opponents in the contested Republican primary for outgoing Rep. Jonathan Stickland’s seat. Cason avoided a runoff by securing more than half the vote, with 54.09%, according to the Secretary of State’s unofficial results with all polling places reporting. …

The megadonors that backed Cason and Francis are also some of the top financial supporters of the conservative political advocacy group Empower Texans. The group made headlines last summer, after its CEO released a recording that led to House Speaker Dennis Bonnen announcing he would not run for re-election.

 

 

S&P Global Platts – March 12, 2020

US producers Apache, Devon, Murphy Oil slash budgets by 30% or more

Oil and gas producers Apache Corp., Devon Energy and Murphy Oil all announced dramatic capital budget cuts of 30% or more amid the latest collapse in oil prices.

The independent firms on Thursday joined a slew of other producers slashing large chunks of their 2020 capital budgets with oil prices now hovering near four-year lows of $30/b.

The novel coronavirus, now a global pandemic, is hurting global oil demand while Saudi Arabia and Russia are gearing up for a price war to fight for market share and dump extra cheap oil on a world facing a global glut.

Houston-based Apache Corp. said it would cut its budget by more than 37% from a $1.6 billion-$1.9 billion range down to a tighter range of $1 billion-$1.2 billion range, taking the extraordinary step of eliminating all drilling in the Permian Basin within a few weeks.

 

 

KOSA (Midland) – March 12, 2020

Pioneer Natural Resources CEO says he sees tens of thousands will be laid off over next year across oil industry

The CEO for Irving-based Pioneer Natural Resources told the Washington Post this week he’s prepared for two years of lower than average oil prices. Scott Sheffield said, “I consider this as a $1 trillion stimulus to the world economy with a $30 oil price decline.”

He says Pioneer is secure, but other companies drilling in the shale deposits in North Dakota, Oklahoma and even here in Texas will face difficulties.

“We are preparing for two years of low prices and will make the necessary adjustments to maintain our great balance sheet,” he told the Post.

 

 

Forbes – March 12, 2020

Christopher Helman: Deathwatch Begins For The Subprime Of Shale Oil Drilling

It’s no surprise that as shares in these companies have plunged this week, so have the value of their bonds.

Whiting Petroleum. Whiting’s stock has lost 95% in the past year, leaving an equity market cap of just $75 million against $2.8 billion in debt. Its 2023 bonds traded at 99 cents last July, but this week have dropped to 19 cents, for an implausible yield of 81%.

Oasis Petroleum is a Bakken-focused driller like Whiting and Continental. Oasis’s 2021 issue traded Wednesday at 41.5 cents, for an implied yield of 73%.

Centennial Resources is focused on marginal acreage in the Permian basin and was founded by Mark Papa, who built EOG Resources. Papa retired recently. A Centennial senior unsecured note due 2026 traded at 48 cents Wednesday, for a 21% yield. It traded at par as recently as January.

Credit Suisse oil analyst Bill Featherstone included all of those companies in his “most cautious” watchlist of operations with a potentially lethal combination of high debt, near-term maturities and a cost structure that needs $50 oil just to stay even.

 

 

MSN – March 12, 2020

A Buffett bet that infuriated Icahn is hit hard by oil crash

It had all the trappings of a classic Warren Buffett deal. There were the preferred shares created just for him, the warrants giving him an option to buy more common stock and a hefty dividend — 8%, which came to a cool $800 million a year on the $10 billion he plunked down.

On their face, the terms were so favorable for Buffett’s Berkshire Hathaway — and so onerous for the company, the oil driller Occidental Petroleum Corp. — that fellow billionaire investor Carl Icahn seethed with indignation. It was, he wrote, “like taking candy from a baby.”

But now, some 11 months later, Buffett’s bet on Occidental is suddenly a far cry from the slam dunk that it once appeared. Few large companies, if any, in the U.S. shale patch have been hit harder than Occidental by the collapse in oil prices this week. And while Buffett’s preferred shares don’t trade, the plunge in price on the company’s common stock, down 70% in the last 12 days, and in its benchmark bonds, down 25%, provide clues about the market’s perception of the value of his investment.

Meanwhile: Icahn Anticipates Strong Bids to Emerge for Oxy on Oil Rebound

 

 

KUHF (Houston) – March 12, 2020

Not Time For Government Intervention In Oil Market, API Leader Says

Houston Public Media’s Energy Reporter Kyra Buckley spoke to Mike Sommers, President and CEO of the oil and gas industry’s largest trade group, the American Petroleum Institute. …

Sommers says this is not the time for federal government intervention in the oil and gas markets. Instead, he says the Trump administration should pressure countries that are threatening to flood the market with cheap oil.

“The best thing that the President can do right now is to engage with the leaders of Saudi Arabia and Russia to make sure that these markets are not oversupplied,” Sommers says. “We do not believe that this is time for federal government intervention into the oil and gas markets.”

Some experts say the current drop in oil prices especially hurts small and mid-size producers in places like the Permian Basin. Sommers agrees.

 

Bloomberg News/Yahoo! News – March 12, 2020

Liam Denning: Fracking Needs a Shakeout, Not a Bailout

In the case of the U.S. exploration and production business, to say the current predicament is the fault of Saudi Arabia or a virus is to cite catalysts rather than the underlying pathology.

Consider Continental Resources Inc.: Founder and majority shareholder Harold Hamm told Bloomberg TV on Wednesday he had “reached out” to the Trump administration and wants it to take action to prevent cheap Russian and Saudi Arabian barrels flooding the U.S. to the detriment of the domestic industry. Yet Continental should look to itself. Its guidance — which envisages growing production in a market that was oversupplied even before coronavirus struck — implies free cash flow going to zero this year if oil averages about $48. As of now, 2020 swaps trade around $34. Only last summer, the company was buying back shares at an average price of about $34 apiece. They are now below $9.

The shale oil boom of the past decade (and natural gas before that) has come with a hefty dose of moral hazard built on various assumed market puts.

 

 

San Antonio Express News – March 12, 2020

Port Aransas may face a future under big oil that some fear will destroy the idyllic vacation spot

Images of mermaids, sailors, giant shark’s maws and fake lighthouses give the seaside city of about 3,500 residents a carefree demeanor.

But despite appearances, all is not well in Port Aransas.

Still recovering from the battering it took from Hurricane Harvey in 2017, the city is now grappling with the Port Authority of Corpus Christi’s unpopular plan to build a crude oil loading terminal and a desalinization plant on nearby Harbor Island. ….

Among the disputed issues are the city’s right to apply its regulations on the part of Harbor Island that is within the city limits. The Port Authority claims the city has limited oversight, at best, and also lacks the technical expertise to oversee the project.

The city claims the agency has kept it in the dark about its plans

 

 

Houston Chronicle – March 11, 2020

Chris Tomlinson: Texas oil companies can’t compete if OPEC doesn’t manipulate prices*

Everyone loves a free market on the ride up, but they become socialists on the journey down. …

Meanwhile, American oil executives, those conservative paragons of capitalism, hypocritically cheered the price-fixing scheme. After all, they know they can’t compete in a truly free market, where oil flows without someone, somewhere manipulating the market.

What OPEC+ gives, though, OPEC+ can take away. I repeatedly warned the world had too much supply. Why would Saudi Arabia and Russia allow U.S. oil companies to leech market share? OPEC+ has 2 million barrels a day of spare capacity, most of it cheaper to produce than West Texas Intermediate.

The deal lasted longer than I expected and fell apart last week.

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Energy Voice – March 10, 2020

Helen Dickson, Burness Paul: Being logical about oil and gas contracts amid the coronavirus outbreak

While industry works to reduce the impact of the coronavirus, from cancelling travel, to working from home, some impact on operations will be unavoidable. Accordingly, it is also crucial for companies to consider the impact this supply chain disruption may have on their respective contractual arrangements.

Force Majeure — Most, but not all contracts contain a “force majeure” clause. A force majeure clause allows an affected party to be (temporarily) relieved of its obligations under the contract in the case of certain emergencies.

Some Chinese parties are already relying on force majeure clauses in their contracts and the China Council for the Promotion of International Trade is offering force majeure certificates to help Chinese companies avoid being in breach of their contractual obligations. These certificates are not a get-out-of-jail-free card, and each contract requires to be considered individually in order to consider whether the event complained of is a force majeure event in terms of that particular contract.

What is a force majeure event will usually be provided for in the contract, or the contract may have wider wording to allow it to be an event beyond the control of the parties.

 

 

March 11, 2020

Houston Chronicle: Houston has what it takes to survive the coronavirus, oil crisis

The new coronavirus is nearing pandemic status, stock market performance reads like a bad EKG, and an oil price war between Russia and Saudi Arabia will mean real pain for the U.S. energy industry. That means big hurt for Texas.

Don’t panic, Houston. We’ve been through a lot. We’ll get through this, too. What’s a little extra hand washing and social distancing in a city whose air-conditioned car culture has made us darn near experts in social distancing during our daily commutes? …

Unemployed oil service workers will face a tough job market. They will need to reduce spending, downsize, dust off the resume and maybe consider some gig economy jobs to get them through the transition.

Meanwhile, it’s up to the rest of us to continue to do our part to stop the spread of the disease. Wash our hands — often, for at least 20 seconds. Limit physical contact and, especially for those over 60 or with health problems, be wary of large crowds.

Houston has been hit by oil busts, hurricanes, flooding, pestilence and economic recessions and we’re still standing. This too shall pass — if we keep our heads and wash our hands.

 

Utilities

 

Las Cruces Sun News – March 12, 2020

NM Public Regulation Commission approves acquisition of El Paso Electric

The New Mexico Public Regulation Commission unanimously approved the sale of publicly traded utility company El Paso Electric to a private investment fund at a public meeting in Las Cruces Wednesday.

The meeting, held in the Board of County Commissioners chambers at the Doña Ana County Government Center, opened with an hour’s worth of public comments, during which numerous speakers criticized the acquisition while a few linked the utility’s fortunes to economic development in the region.

The Infrastructure Investments Fund, or IIF, agreed last June to buy the utility. On Wednesday, PRC staff told commissioners the purchase premium would exceed the book value of the utility by $1.63 billion.

 

 

E&E News – March 12, 2020

Texas grid fight may echo nationally

Texas officials prevailed in the first round of a legal fight that carries implications for the national grid, but federal courts will have more chances to shape the outlook of competitive transmission in the U.S.

The Texas saga involves a state law passed last year as S.B. 1938, which essentially gives incumbent utilities first dibs on building new high-voltage power lines that serve the state.

In February, U.S. District Court for the Western District of Texas Judge Lee Yeakel issued an order dismissing with prejudice a complaint from affiliates of Florida-based NextEra Energy Inc. NextEra argued the law could freeze it out of a planned transmission project and a pending power line acquisition in Texas. A motion for a preliminary injunction also was dismissed.

NextEra has since filed notice of an appeal. And it asked the district court to block application of the law on the two deals while the appeal is pending — a request that drew a scathing rebuke from Texas’ attorney general and others representing the defendants.

 

 

Forbes – March 12, 2020

Joshua Rhodes, UT: Now Is The Time To Invest In Our Energy Infrastructure

The coronavirus (COVID-19) outbreak has and is wreaking havoc on society leaving almost no part of life and the economy untouched. How long the interruption and downturn lasts is uncertain as leaders and economies grapple with how to respond. The US CDC has issued guidelines on cleaning hands and social distancing to try to slow the immediate spread of the virus and keep the numbers of infected at any given time low enough for our healthcare system to manage. Stock markets across the globe have seen trillions of dollars evaporate in just weeks and the major US indices have entered into bear territory after a decade-long bull run.

Short-term outlooks are bleak, and one would be forgiven for feeling lost. However, phoenixes only arise from ashes and this too shall pass. Longer-term, there is an opportunity to provide a vaccine of sorts to the US economy and the timing couldn’t be better. Interest rates on the benchmark 10-year US Treasury Note (how the government borrows money) are the lowest that they have ever been, dropping to as low as 0.32% as investors flock to safety. This means that the US government can get the best loans that they have ever gotten – an opportunity that they should take and use it to fund an extensive backlog of projects.

 

 

Associated Press/US News – March 12, 2020

Plan to Store Nuke Fuel in New Mexico Gets 1st Regulatory OK

Federal regulators are recommending licensing a proposed multibillion-dollar complex in southern New Mexico that would temporarily store spent fuel from commercial nuclear reactors around the United States.

But the recommendation issued this week by the Nuclear Regulatory Commission is making waves with critics who say the agency did not look closely enough at potential conflicts with locating the facility in the heart of the Permian Basin, one of the world’s most prolific energy production regions.

 

Alternatives & Renewables

 

Environmental Defense Fund – March 12, 2020

John Hall, EDF: ERCOT Report shows Texas leadership on solar and wind is helping safeguard our power grid

Last summer, Texas’ electric grid was put to the test by scorching temperatures that sent power demand soaring and raised the specter of potential brownouts. Thankfully, the grid did what it was designed to do and pulled through without any major issues.

This week, the Electric Reliability Council of Texas released its projection for how we’ll fare this summer. Thanks to massive growth of solar and wind resources made possible by Texas’ competitive electricity market, the outlook is much improved.

What the numbers say: Texas’ economy has seen robust growth, and so has the demand for electricity to power our homes and businesses. In fact, ERCOT, which manages our state’s grid, projects a peak demand this summer of 76,696 megawatts. That’s 2,000 MW higher than it projected ahead of last summer, and nearly 2,000 MW higher than ERCOT’s all-time system peak demand that was reached last summer.

 

Regulatory

 

Houston Chronicle – March 8, 2020

Chris Tomlinson: Energy execs need market overhauls to fight climate change

Not sure how many people have noticed, but energy executives have changed their tunes over the last six months; apparently, climate change is real, they are ready to fight it, and they have something called the energy transition.

To which, I reply with an Elvis refrain: Let’s see a little less conversation and a lot more action, please.

I have seen dozens of feel-good press releases and soft pledges. For years, I’ve listened to executives incrementally acknowledge the reality of global warming and slowly accept fossil fuel’s responsibility. Platitudes, though, are insufficient. They need to promote a new paradigm.

Oil and gas leaders must demand a global price on carbon at the point of extraction. National governments must charge a carbon tax on every lump of coal, every barrel of oil, and every molecule of natural gas the moment it leaves the ground.

 

 

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The Texas Energy Report NewsClips – March 12, 2020

Click on each headline to read more of the story at the source.
Asterisk * following headline indicates news content may be limited or unavailable at the source because it’s password protected.

 

Lead Stories

 

S&P Global Platts – March 11, 2020

Looming flood of Saudi crude could benefit US Gulf Coast refiners

Because of an oil price war on the supply side and coronavirus fears on the demand side, analysts said U.S. refiners can expect to weather low margins and volatile petroleum markets in the near term. But in an echo of 2015, some may benefit from the coming flood of Saudi Arabian crude.

“All else equal, greater OPEC supply in the market should benefit the coastal refiners, who have the ability to process incremental medium/heavy crude,” Goldman Sachs analysts wrote March 9. They noted that in 2015, both Valero Energy Corp. and Tesoro, which is now part of Marathon Petroleum Corp., “had a year of sharp outperformance in 2015 versus the [S&P 500] and the Energy index.”

 

 

Bloomberg News/Houston Chronicle – March 11, 2020

Oil traders stand to make fortunes as more oil hits market

Saudi Arabia and Russia’s price war is handing over a multi-billion dollar profit opportunity to the world’s largest oil traders.

With both Riyadh and Moscow outdoing each other by pumping more oil into an already flooded market, crude prices have flipped. A new price structure, called a contango, allows the traders to make easy money by buying crude cheap, storing it, and selling it forward.

“Full contangos are back in,” said Olivier Jakob, founder of energy consultant Petromatrix GmbH and a former oil trader. “The industry and traders will load up all storage capacities on land or afloat.”

 

 

S&P Global Platts – March 11, 2020

Default probability rises for oilfield services in “unimaginably tougher” market

Many oilfield services companies and drillers are at high risk of default after a crude oil price crash that pummeled their stock prices and is likely to diminish work opportunities as producers slash budgets.

In January, Bernstein analysts predicted 2020 would be a tough year for oilfield services companies. With the latest oil price crash, life for them has gotten “unimaginably tougher,” Nicholas Green said.

Share prices of oilfield services companies and drillers got a beatdown March 9 along with oil prices, after Russia refused to agree to Saudi Arabia’s demand for new production cuts, prompting Saudi Arabia to slash prices and signal it would ramp up oil production by more than 10 million barrels per day in April.

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Wall Street Journal – March 11, 2020

Carl Icahn Boosts Occidental Stake to Almost 10% as Shares Plummet*

Carl Icahn has doubled down on a fight to take control of Occidental Petroleum Corp., OXY -17.71% buying up more shares of the embattled oil-and-gas producer in recent days as its stock price plummets.

The billionaire shareholder activist now owns almost 10% of Occidental, he said in an interview Wednesday. He held a roughly 2.5% stake as of the end of last year.

For almost a year, Mr. Icahn has been loudly criticizing Occidental’s $38 billion acquisition of Anadarko Petroleum Corp. and campaigning for the ouster of Chief Executive Vicki Hollub, the main architect of the deal. Occidental outbid its much-larger rival Chevron Corp., relying on $10 billion of pricey financing from another octogenarian billionaire investor, Warren Buffett. Occidental’s market value has shrunk to less than $11 billion from more than $46 billion just before the deal was struck, hurt by doubts about the transaction and more recently the plunge in the stock and oil markets.

 

 

San Antonio Express News – March 11, 2020

CPS Energy won’t disconnect services while San Antonio deals with coronavirus*

CPS Energy has temporarily halted the practice of disconnecting services for residents who fail to pay their bills as the country grapples with the outbreak of the novel coronavirus, the city-owned utility said Wednesday.

Utility leaders made the decision after District 1 Councilman Roberto Treviño and Mayor Ron Nirenberg called on CPS and San Antonio Water System to hold off on disconnecting services at an emergency City Council meeting Wednesday. …

But the city’s most vulnerable residents especially need running water during a health emergency that calls for residents to keep their hands washed to prevent any potential spread of the virus, Treviño said during an emergency City Council meeting Wednesday.

 

Oil & Gas

 

Reuters/CNBC – March 12, 2020

Oil falls sharply as US bans travel from Europe over pandemic

Oil prices fell again on Thursday, adding to steep losses in the previous session after the U.S. banned travel from Europe following a declaration that the coronavirus outbreak is now a pandemic.

The threat of a flood of cheap supply compounded market concerns as Saudi Arabia promised to raise oil output to a record high in a standoff with Russia.

Brent crude was trading down $1.03, or 2.9%, at $$34.76 by around 0130 GMT having switched in and out of positive territory before the U.S. announcement. The contract fell nearly 4% on Thursday.

U.S. crude was down $1.13, or 3.4%, at $31.85 after dropping 4% in the previous session.

The United Arab Emirates followed Saudi Arabia in announcing plans to boost oil output after the collapse last week of an agreement between OPEC, Russia and other producers, a grouping known as OPEC+, to withhold supply and buttress prices.

 

 

Bloomberg News/Houston Chronicle – March 11, 2020

Saudi Arabia pledges to expand oil output capacity

Saudi Arabia ordered state-run oil producer Aramco to boost the kingdom’s output capacity by 1 million barrels a day, the latest escalation in a battle for control of the global petroleum market.

While delivering the extra capacity may take years and many billions of dollars in investment, the decision shows that Crown Prince Mohammed bin Salman has little intention of pulling back from his aggressive response to the breakdown of OPEC’s alliance with Russia and other oil producers.

The country’s energy ministry, headed by Prince Mohammed’s half-brother, ordered Saudi Aramco to boost its output capacity for the first time in at least a decade. The world’s biggest oil exporter will raise capacity to 13 million barrels a day from 12 million, it said Wednesday in a statement.

 

 

Yahoo! News – March 11, 2020

Oil companies are cutting hundreds of millions in spending, and halting shareholder payouts

Diamondback Energy in Midland to reduce Permian drilling rigs down to 18 from 20, and Austin’s Parsley Energy drop Permian rigs from 15 down to 12

Seven Generations Energy (VII.TO) is reducing its 2020 capital investment budget by $200 million, or 18 per cent, to $900 million. MEG Energy (MEG.TO) is cutting its 2020 capital budget by 20 per cent, from $250 million to $200 million. Cenovus Energy (CVE.TO)(CVE) announced a roughly 32 per cent cut to its 2020 capital spending plan, and a temporary suspension of crude-by-rail operations, on Monday.

Bonterra Energy (BNE.TO) said it’s suspending its dividend due to ongoing volatility. In the United States, Houston-based Occidental Petroleum (OXY) cut its dividend by 86 per cent on Tuesday. ….

MEG Energy and Seven Generations also pared back production guidance for 2020. MEG Energy now expects between 93,000 and 95,000 barrels per day compared with earlier guidance for between 94,000 and 97,000 barrels per day. Seven Generations forecasts 185,000 and 190,000 barrels per day, down from between 200,000 and 205,000.

 

 

Bloomberg News/World Oil – March 11, 2020

Shale insiders snapping up stock as prices hit record lows

Shale insiders are swooping in to buy stock in their ailing firms this week after an oil price war erupted between Saudi Arabia and Russia late Sunday.

The purchases come as many shares are trading at record lows, and companies have responded by slashing capital spending and operating costs to protect their balance sheets in the midst of weak crude oil prices.

Ray Davis, Energy Transfer LP board member and co-owner of Major League Baseball’s Texas Rangers, scooped up 1.28 million shares in the pipeline company at an average price of $7.77 on March 9, according to a filing.

 

 

Houston Chronicle – March 10, 2020

Experts: Companies with strong ‘hedge books’ will survive oil war*

Oil companies that locked in part of their production at prices before the oil war between Russia and Saudi Arabia are in a better position to survive record low commodity prices, experts said.

Muscling for dominance and seeking to take market share from U.S. shale producers, Russia and Saudi Arabia have vowed to flood the global market with crude oil, sending prices down to the $32 per barrel.

However, oil companies that signed contracts to lock part of their production at $50 per barrel prices before the crash in an industry practice known as “hedging” will fare better than their peers who did not, said Jesse Lotay an energy attorney with the Houston and San Antonio offices of the law firm Jackson Walker.

 

 

S&P Global Platts – March 11, 2020

US crude exports, Permian production expected to fall: Port of Corpus Christi CEO

US crude exports and Permian Basin production may soon see notable declines as the plunge in oil prices triggers a painful but possibly short-lived downturn, said Port of Corpus Christi CEO Sean Strawbridge Wednesday.

Crude exports from Corpus Christi already started to dip in February from record highs in January as impacts from the coronavirus took hold, but larger declines are expected in the weeks and months ahead now that Saudi Arabia and Russia are preparing to flood the market in a price war that’s sent oil prices down into the $30/b area, Strawbridge said in an interview.

“It is fully expected you’ll see a significant decrease in demand and, therefore, a significant decrease – or a decrease I should say – in US exports of crude oil,” he said. “The question is how much of a decrease?

 

 

S&P Global Platts – March 10, 2020

US LNG developers try to ride out market turmoil with China’s door shut

An initial trade deal between Washington and Beijing in mid-January was hailed by the energy industry as a first step to encouraging China to sign new long-term contracts to import more US LNG.

Two months later — amid super low international prices, weaker than expected demand and trade flow restrictions due to the coronavirus outbreak — that door is still shut.

Several liquefaction terminal developers acknowledged during an industry conference in Houston on Tuesday that without China as a buyer it will be very difficult for most new US projects to advance to construction this year and perhaps even next year. Commodity traders and traditional utility end-users in East Asia and Europe have also been hesitant to sign new binding offtake contracts for US supplies.

 

 

Stat – March 10, 2020

What does the coronavirus mean for the U.S. health care system? Some simple math offers alarming answers

As of March 8, about 500 cases of Covid-19 had been diagnosed in the U.S. Given the substantial underdiagnosis at present due to limitations in testing for the coronavirus, let’s say there are 2,000 current cases, a conservative starting bet.

We can expect a doubling of cases every six days, according to several epidemiological studies. Confirmed cases may appear to rise faster (or slower) in the short term as diagnostic capabilities are ramped up (or not), but this is how fast we can expect actual new cases to rise in the absence of substantial mitigation measures.

That means we are looking at about 1 million U.S. cases by the end of April; 2 million by May 7; 4 million by May 13; and so on.

 

 

Laredo Morning Times – March 11, 2020

Former Mr. South Texas Norbert Dickman passes away

Norbert Dickman, the general manager of Fasken Oil & Ranch — which owns La Posada Hotel — and longtime advocate for downtown Laredo, passed away from leukemia Wednesday morning at M.D. Anderson Cancer Center.

He was named Mr. South Texas in 2016, one of the highest honors for people who have made a “significant and lasting contribution” to the growth and development of Laredo and South Texas.

Dickman was known as a kind, humble, community-minded and hard-working person. Monica Perales, in-house counsel for Fasken Oil & Ranch, said she visited him in the hospital on Tuesday and he still wanted to talk shop.

 

 

Power Engineering – March 11, 2020

McDermott, Zachry and Chiyoda complete final Freeport LNG train

Engineering, design and construction (EPC) partners McDermott, Chiyoda and Zachry announced that the third train of the Freeport (Texas) liquified natural gas (LNG) project has reached its final commissioning stage.

This late stage includes introduction of feed gas into Train 3 of the liquefaction export facility along the Gulf Coast.

The Freeport LNG facility incorporates large electric motor-driven refrigeration compressors. Natural gas must be chilled to minus 265 degrees Fahrenheit (-160 C*) to reach a liquid form and become ready for shipping to global markets.

 

 

Wall Street Journal – March 11, 2020

Hedge Fund Solus Shutting Flagship Fund, Citing Coronavirus Turmoil*

Hedge-fund manager Solus Alternative Asset Management LP, known for its investment in retail chain Toys “R” Us, told investors this week that it is shutting its flagship fund and will restrict redemptions as it works to sell off holdings, according to a letter viewed by The Wall Street Journal.

Solus is a frequent lender to distressed borrowers, with large holdings in energy companies, and its troubles come as market participants grapple with volatility and forced selling driven by a collapse in oil prices.

The firm in the letter told investors it has received unexpected withdrawal requests this year and that the turbulence caused by the coronavirus has made it difficult to raise cash as it normally would to fulfill those requests by selling holdings. .

Solus’s energy investments have included stakes in offshore rig servicer Hornbeck Offshore Services Inc., helicopter company Bristow Group Inc. and coal supplier Peabody Energy Corp.

 

Utilities

 

Bloomberg News – March 11, 2020

Oil Rout Imperils Texas as Rare Bright Spot for Electricity*

The global collapse in oil prices threatens to hobble booming electricity demand on the plains of West Texas.

The Lone Star state’s economy is inextricably tied to crude. If drillers drastically pull back, the slowdown will ripple across its power market, reducing growth in one of the few U.S. regions where electricity demand has been surging.

That could pose challenges for Calpine Corp., Vistra Energy Corp. and other large power providers that serve the state. It could also reduce demand for new solar projects proposed by Canadian Solar Inc.’s Recurrent Energy and others.

 

 

Midland Reporter Telegram – March 11, 2020

More wind, solar and natural gas will ease summer power demandThe state’s grid manager is bracing for another record-setting summer of electricity demand but more generation capacity should help ease some pressure.

The Electric Reliability Council of Texas predicts summer peak load will top out at 76,696 megawatts this summer if the weather is normal. That’s about 2.5 percent higher than last summer’s peak load of 74,820 megawatts set during the afternoon of Aug. 12, when a heat wave caused wholesale electricity prices to rise to $9,000 per megawatt hour.

The higher estimate for this summer reflects the expectation of continued strong economic growth in Texas, according to ERCOT. The preliminary estimate will be updated in May and will take into account the the summer weather forecast.

 

 

Corpus Christi Business News – March 11, 2020

Electric Utility Scammers Return to Coastal Bend

AEP Texas representatives are not calling Coastal Bend customers demanding late electric bill payment over the phone one hour before disconnecting service. If you get one of these calls, hang up. An old scam has returned to town, according to AEP, the area’s electric utility company.

“Don’t be a victim,” reads a media release issued by AEP. “AEP Texas is not making these calls.”

Some of these scammers are even knocking on front doors, saying meters need to be changed and asking for a deposit or payment. Customers are threatened with the loss of electrical service if they do not pay immediately.

 

 

Pulse 2.0 – March 10, 2020

David Energy: This Software-Driven Electricity Provider Just Raised $1.5 Million

David Energy announced it has closed $1.5 million in a pre-seed of funding co-led by Box Group and Greycroft. And Great Oaks, Oceans, and a group of strategic angel investors including Zach Weinberg, Nat Turner, and Kiran Bhatraju also joined the round. David Energy developed a proprietary software platform that utilizes machine-learning to act as the Energy Operating System for buildings and modernize how customers purchase energy.

It is used by commercial and industrial owners and operators. And the company’s platform was developed to streamline wholesale energy purchasing, report sustainability metrics, and optimize Distributed Energy Resources like smart thermostats, battery storage, and solar according to a building’s unique needs.

David Energy was founded by James McGinniss, Brian Maxwell, and Ahmed Salman. McGinniss (CEO) previously founded and led Texas Guadaloop, which had a team of over 30 engineers competing in the SpaceX Hyperloop competition where they received the 2017 Innovation Award.

 

Alternatives & Renewables

 

New Mexico Political Report – March 10, 2020

Natural gas will play a big role in state’s energy transition

We are one year into the Energy Transition Act, and utilities across the state are now charting their courses towards carbon-free generation. The goal is to meet demand for electricity with 100 percent “zero-carbon” sources by 2045 for investor-owned utilities and 2050 for electric cooperatives.

Renewable energy is now cost-competitive with other sources of power generation like coal and nuclear; and investments in renewable energy projects have steadily grown in New Mexico, which is rich in both wind and sun.

But renewables don’t produce energy as reliably as coal, and utilities say that poses a big problem for delivering electricity to customers when the wind isn’t blowing, or the sun isn’t shining. So, they’ve turned to natural gas to supplement power needs while bringing more renewables online, touting it as a crucial stepping stone in the transition to renewables.

 

 

Dallas Morning News – March 11, 2020

Could Elon Musk bring Tesla’s Cybertruck factory to Texas?

Billionaire Elon Musk announced that Tesla is scouting locations for a plant to produce the Cybertruck it unveiled late last year, and experts say Texas could be on the short list.

Musk took a break from sharing his thoughts on the coronavirus-driven postponement of Coachella on Tuesday to tweet that the company was looking for a location to set up a Cybertruck Gigafactory somewhere in the “central USA.”

Announced in November, Tesla’s Cybertruck will be the company’s first electric pickup. It will be produced in three versions, the most expensive of which costs $69,900 and tops out at 500 miles on a charge.

Musk and other big tech company CEOs have leveraged location scouting efforts to their advantage in the past. Amazon famously ran its HQ2 search over the course of a year, soliciting incentives from major cities around the U.S., including Dallas.

 

Regulatory

 

JD Supra – March 10, 2020

Interior Department Warns Bidders For Oil And Gas Leases To Consider CFIUS Rule On Real Estate Transactions

The Department of the Interior has warned all bidders for oil and gas leases in federal waters in the Gulf of Mexico to consider the potential impact of the Committee on Foreign Investment in the United States (“CFIUS”) prior to bidding. The warning was issued in connection with the upcoming oil and gas lease sale by the Department of the Interior’s Bureau of Ocean Energy Management (“BOEM”).

In Lease Sale 254, scheduled for March 18, 2020, BOEM will offer over 78 million acres in federal waters in the Gulf of Mexico for lease. Lease Sale 254 is the sixth of ten region-wide sales under the 2017-2022 Outer Continental Shelf Oil and Gas Leasing Program. BOEM estimates that the Gulf of Mexico’s Outer Continental Shelf contains about 48 billion barrels of undiscovered, recoverable oil and 141 trillion cubic feet of undiscovered, recoverable gas.

 

 

Washington Examiner – March 11, 2020

Conservatives look to squash Trump bailout for oil industry

Conservatives are pushing back against the possibility of the Trump administration providing federal aid to oil and gas producers grappling with a historic drop in oil prices.

“They can take care of themselves,” said Republican Sen. Mike Braun of Indiana, who co-chairs the Climate Solutions Caucus, referring to the oil industry. “Why do you overreact just when there’s a little pain? That doesn’t make sense.”

White House officials, who’ve said they’re interested in providing economic aid to sectors hurt by the spread of the coronavirus, discussed shale producers as a group that could be hit particularly hard during a lunch with Senate Republicans Tuesday, said Braun. Shale producers have been hit by the double whammy of an oil price war between Saudi Arabia and Russia and flagging demand from the coronavirus.

 

 

The Hill – March 9, 2020

Energy bill stalled amid amendment gridlock

A mammoth energy policy bill hit a roadblock in the Senate on Monday night with a stalemate over amendments threatening to derail the legislation entirely.

Lawmakers voted against closing debate on an updated version of the bill that included a package of noncontroversial amendments forwarded by its sponsors, a sign lawmakers are still eager to push for some of the 191 amendments that have been proposed for the bill.

The path forward for the bill, which had been expected to pass as soon as Tuesday, is now unclear. Senate Majority Leader McConnell (R-Ky.) did vote against it, a procedural tactic that could allow him to try to end debate for a second time if he’s able to reach a deal.

 

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The Texas Energy Report NewsClips – March 11, 2020

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Lead Stories

 

CNN – March 10, 2020

Matt Egan: Why Russia and Vladimir Putin are waging an oil war with America

Vladimir Putin knows America’s fragile oil industry is built on a mountain of debt. So when Saudi Arabia called for production cuts to mitigate oversupply, Putin decided to pounce. Russia shocked the world last week by blowing up its shaky alliance with OPEC. Moscow’s refusal to join with the cartel is aimed in part at drowning US shale oil companies that rely on higher prices in a sea of cheap crude.

Putin’s goal is to wrest market share back from American frackers, whose debt-fueled growth caused Russia to lose its title in 2018 as the world’s largest oil producer. “This is a response to try to cripple the US shale industry,” said Matt Smith, director of commodity research at energy research firm ClipperData. …

Beyond the market share battle, analysts said that Russia could be retaliating for Washington’s recent campaign of energy sanctions — penalties made possible by the shale oil revolution. For instance, just three weeks ago the Trump administration announced sanctions against a subsidiary of Rosneft in response for its support of the Maduro regime of Venezuela.

 

 

Wall Street Journal – March 10, 2020

Inside Saudi Arabia’s Decision to Launch an Oil-Price War*

Saudi Arabia and Russia intensified an escalating oil-market war on Tuesday, with Riyadh set to raise output to record levels and Moscow saying it was ready to pump more crude.

State-run Saudi Arabian Oil Co. said it would boost production to 12.3 million barrels a day in April, some 300,000 barrels a day over the company’s previous maximum sustained capacity.

Russian Energy Minister Alexander Novak said Moscow isn’t ruling out further cooperation with OPEC, adding that the next scheduled meeting is planned for May or June. “The doors are not closed,” he said. …

Russia’s failure to find common ground with Saudi Arabia and OPEC on oil cuts was preceded by talks in early February between Riyadh and Moscow that focused on the possibility of forging a broader, long-term alliance. Under one scenario, Saudi Arabia would have sped up its investments inside sanctions-hit Russia and backed the Kremlin’s military efforts in Syria, according to people familiar with the matter.

Ultimately, the crown prince didn’t commit to a deal, say the people familiar with the matter, because he didn’t want to alienate the U.S. Weeks later, roughly at the same time that Russia was refusing to endorse the Saudi-backed plan to cut oil output, Mr. Putin was initiating a rapprochement with Turkey, a Saudi foe, the people said.

 

 

Texas Tribune – March 10, 2020

White House likely to pursue federal aid for shale companies hit by oil shock, coronavirus downturn

The White House is strongly considering pushing federal assistance for oil and natural gas producers hit by plummeting oil prices amid the coronavirus outbreak, as industry officials close to the administration clamor for help, according to four people familiar with internal deliberations.

President Trump has touted the growth of oil and natural gas production under his administration, celebrating their rise in politically crucial swing states such as Pennsylvania. But many oil and gas firms were hammered Monday by the price war that broke out between Saudi Arabia and Russia, driving oil prices down in their steepest one-day drop in almost 30 years.

White House officials are alarmed at the prospect that numerous shale companies, many of them deep in debt, could be driven out of business if the downturn in oil prices turns into a prolonged crisis for the industry. The federal assistance is likely to take the form of low-interest government loans to the shale companies, whose lines of credit to major financial institutions have been choked off, three people said.

Taxes: Oil-producing U.S. states to lose revenue as crude prices collapse

 

 

Transport Topics – March 10, 2020

USDOT Awards $39 Million in Grants to Two Texas Ports

Officials at a pair of ports in Texas were awarded more than $39 million in federal grants to assist with expansion initiatives, the U.S. Department of Transportation announced March 10.

Through funding from the Maritime Administration, Port Houston received more than $21.8 million to develop 1,000 linear feet of green space into a wharf at the Bayport Terminal. The project includes installing crane rail to assist with the development of the wharf, according to an advisory by DOT.

The Port of Corpus Christi was awarded $17.6 million to assist with a refurbishment of docks at the Avery Point terminal used by the port’s users to transload petroleum products. The project is meant to double the capacity of a dock used for oil operations.

 

 

Dallas Morning News – March 10, 2020

Port of Corpus Christi says it’s set to slash spending*

America’s biggest oil-export hub is poised to slash spending and possibly defer more than one-third of its 2020 capital budget amid the worst price rout in nearly three decades.

Texas’ Port of Corpus Christi, which recently surpassed Houston to become the country’s largest source of U.S. crude exports, is bracing for its customers to start cutting back after global oil prices cratered this week.

“Certainly you can expect there’s going to be a hit on exports,” said Sean Strawbridge, the port’s chief executive officer. “We have reviewed our capital plan and we’re going to make some adjustments and be disciplined about pulling back.” …

Early casualties of the crash could be two pipelines under development — Phillips 66’s Liberty and Red Oak projects— that are set to connect the Rocky Mountains and Cushing, Okla., to the port. “It wouldn’t surprise me if those lines were delayed,” Strawbridge said.

 

Oil & Gas

 

CNBC – March 11, 2020

Oil rises for 2nd day amid hopes for output cut by US producers

Oil prices climbed for a second day on Wednesday, lifted by hopes that U.S. producers will cut output, but gains were limited compared with Monday’s crash after Saudi Arabia and Russia triggered a price war.

Brent crude futures rose $1.44, or 3.9%, to $38.66 a barrel by 0226 GMT, while U.S. West Texas Intermediate (WTI) crude gained $1.12, or 3.3%, to $35.48 a barrel, following a jump of over 8% the previous day.

“Expectations that U.S. shale oil producers will need to trim output helped improve the market sentiment,” said Satoru Yoshida, a commodity analyst with Rakuten Securities.

Oil and equity markets had staged solid rebounds on Tuesday after the previous day’s pummeling, supported by signs of co-ordinated action by the world’s biggest economies to cushion the economic impact of the coronavirus epidemic.

But growing skepticism about Washington’s stimulus package to fight the coronavirus outbreak knocked the steam out of an earlier rally in Asian shares on Wednesday.

 

 

Associated Press – March 10, 2020

Biden wins hard-fought Michigan, deals major blow to Sanders

Joe Biden decisively won Michigan’s Democratic presidential primary on Tuesday, seizing a key battleground state that helped propel Bernie Sanders’ insurgent candidacy four years ago. The former vice president’s victory there, as well as in Missouri, Mississippi and Idaho, dealt a serious blow to Sanders and substantially widened Biden’s path to the nomination.

Biden again showed strength with working-class voters and African Americans, who are vital to winning the Democratic nomination. Sanders’ narrow hopes for good news rested on North Dakota and Washington state. Washington’s primary was too early to call, and because all votes there are cast by mail or by dropping them off in a ballot box, many ballots were marked for candidates who have since dropped out of the race.

 

 

March 9, 2020

Wall Street Journal: Putin shows again he’s not Trump’s friend. What about MBS?

[Russia aside,] the Saudi strategy is harder to understand. Riyadh is cutting prices at the expense of its own national oil company, which recently floated shares in the public market. With the price cut, Aramco’s shares have fallen well below their December offering price. The Saudis last tried a stunt like this in 2014-15. Their target then was U.S. shale and they nearly tipped America into a recession as lower global prices pushed numerous U.S. oil-and-gas companies into bankruptcy.

Crown Prince bin Salman, widely known as MBS, is famous for actions that seem rash and ill-considered. In this case he’s hurting Saudi interests by hurting his main geopolitical benefactor, the United States. President Trump may need to use the phone to remind the crown prince which country has stuck by him during his war with Yemen, his standoff with Qatar, and missile attacks from Iran.

 

 

Greater Baton Rouge Business Report – March 10, 2020

Outlook for oil and gas demand remains strong

Oil and gas executives say the long-term industry demand remains high, despite the spread of the novel coronavirus and other global actions.

Executives from both ExxonMobil and Shell U.S. reiterated their beliefs in a growing global energy demand during a joint meeting of the Louisiana Mid-Continent Oil and Gas Association and Louisiana Oil & Gas Association last week.

The president of ExxonMobil Fuels & Lubricants is still bullish on fossil fuels, Executive Bryan Milton said. The company expects demand for oil and gas to grow 8% and 6%, respectively, over the next 20 years.

 

 

World Oil – March 10, 2020

Texas Oil Bodies Respond to Oil Price Crash

The Texas Independent Producers & Royalty Owners Association (TIPRO) and the Texas Oil & Gas Association (TXOGA) have spoken to Rigzone following the latest oil price crash.

In a comment sent to Rigzone via email, TIPRO’s President, Ed Longanecker, stated, “if the Saudis and Russia reach a compromise in the near term, which I believe will be the case, the impact will be minimal”.

“If not, current market challenges will be exacerbated, particularly for cash constrained operators,” he added.

Longanecker went on to say that the U.S. oil and natural gas industry remains “one of the most resilient sectors in the world” and claimed it will emerge “even stronger” but conceded that it may look “very different” than it does today.

 

 

Reuters – March 10, 2020

North American oil companies slash spending to cope with $30/bbl crude

Occidental Petroleum Corp (OXY.N) on Tuesday became the latest to join a growing list of hard-pressed North American oil producers slashing spending and drilling after crude prices slumped to their lowest levels in more than three years.

Chevron Corp (CVX.N) became the first global oil major to say it was also looking to cut spending that could lead to lower near-term oil production.

Global oil benchmarks plunged by nearly 25% on Monday, their biggest rout since the 1991 Gulf War, amid the eruption of a price war between Saudi Arabia and Russia, sending another shockwave through an industry already nervous over the spread of coronavirus that has hit worldwide demand.

Related: Only Exxon, Chevron, Occidental, and Crownquest are still profitable at $30 oil

And: MRO Announces $500 Million Reduction to 2020 Capital Budget, Prioritizing Financial Flexibility and Dividend

 

 

S&P Global Platts – March 10, 2020

Lower oil prices unlikely to significantly slow US associated gas production

The rout in global crude oil prices this week is unlikely to show an immediate impact on US associated natural gas production, but if sustained, could keep domestic output flat to modestly lower this year.

On Monday, the NYMEX prompt-month WTI crude price tumbled more than $10/b, or nearly 25%, settling at just $31.13/b, S&P Global Platts data shows. In early trading Tuesday, the US benchmark oil index had retraced some of those losses, moving in the mid-$33/b area.

The crude market’s selloff, which started in late February amid mounting concern over the coronavirus outbreak, was exacerbated Monday following a move by Saudi Arabia to slash the kingdom’s oil price in response to weakening market conditions.

 

 

Albuquerque Journal – March 10, 2020

Concern leads NM governor to veto road spending bill

A global oil price war had New Mexico lawmakers and other elected officials on edge Monday, as a prolonged price crash could zap a recent revenue boom and cause a state budget surplus to evaporate.

The uncertainty prompted Gov. Michelle Lujan Grisham to veto a spending bill that would have appropriated $49.5 million to fund 216 road projects statewide, including funding for bike paths, safety enhancements and median landscaping in Albuquerque.

“We do not yet know the degree to which (the coronavirus) and declining oil prices will impact our state’s economy,” Lujan Grisham wrote in her veto message of Senate Bill 232. “Given this uncertainty, I bear a heightened obligation to ensure that all significant expenditures constitute a demonstrably sound investment in New Mexico.”

She also said the spending on road projects whose scope and total cost are not often clear was not warranted given the uncertainty over the plummeting oil prices and other economic factors.

 

 

Yahoo! News – March 10, 2020

Energy-exposed banks attempt to bounce back after second punch from oil prices

Monday’s brutal sell-off hammered the banking industry as bond market volatility sent rates crashing, but banks with high energy exposure endured a double whammy from the oil war triggered by OPEC on Sunday.

Some energy-exposed regional banks, such as Houston-based Cadence Bancorporation (CADE), lost over 30% at market close on Monday while Oklahoma City-based Bank7 Corp. (BSVN) lost over 25%.

Still, KBW analysts wrote Monday that the collapse in oil prices to levels around $33-a-barrel are “worrisome” for banks with substantial business ties to oil and gas companies. The concern: that lower prices will crunch margins at companies borrowing from those banks, thus worsening credit quality.

“The depressed energy pricing will be problematic, in our opinion, for those banks with legacy problem energy loans,” KBW analysts Brady Gailey and Wood Lay noted. They flagged Texas Capital (TCBI), Independent Bank Group (IBTX), Hancock Whitney (HWC), and Cadence as examples.

 

 

S&P Global Platts – March 10, 2020

US suspends 12 million barrel SPR sale due to drop in oil prices

The US Department of Energy has suspended a sale set for later Tuesday of up to 12 million barrels of government-owned crude, due to the recent crash in global oil prices, an agency spokeswoman said.

“In light of the recent fluctuations in global oil markets, the US Department of Energy is suspending the recently announced sale of crude oil from the Strategic Petroleum Reserve,” Jess Szymanski, a DOE spokeswoman, said in a statement. “Given current oil markets, this is not the optimal time for the sale.”

The suspension of the SPR sale had little apparent impact on oil futures prices, but boosted the value of Mars crude Tuesday, after it fell sharply Monday following the steep cut in the official selling prices for Saudi crude globally.

 

 

Texas Monthly – March 10, 2020

Evan Mintz: Houston Is Not Prepared for the Oil Bust

For all the boosterish rhetoric about our diversified economy, the [Houston] region’s continued economic success relies on international consumption of oil. The petroleum industry drives a third of greater Houston’s GDP and directly employs a quarter-million workers—a number that was already beginning to shrink before things went south this month. Crude has always been a global commodity, and Texas became even more exposed to market swings when the Obama administration removed the ban on crude oil exports. …

Every good Houstonian knows that booms eventually turn to bust, and local leaders have been preparing for this moment—or at least they’ve been trying. Ed Hirs of the University of Houston has spent years pitching the idea of a quota on oil imports to stabilize oil prices—and oil employment. The policy would function as a sort of coastal storm surge barrier, protecting domestic producers from international oil and gas trouble. Now would be a good time to implement it, but politicians in Washington, D.C., would have to act, so it’s not gonna happen. What are elected officials up to? Democrats remain eerily silent on the oil bust. Donald Trump is actually bragging about low prices. And U.S. senator Ted Cruz is on self-quarantine after possibly being exposed to the new coronavirus.

 

 

E&E News – March 10, 2020

Daniel Raimi, a senior research associate at Resources for the Future, said the recent oil price drop is not likely to alter the long-term climate commitments of major oil and gas companies, who are already anticipating declines in future oil revenue.

Smaller companies, however, will have tighter budgets because of the downturn, he said.

“There will probably be less appetite for deploying technologies to reduce the environmental footprint of their activities,” Raimi said of the non-majors. “If we think about something like rules for methane emissions, one could imagine that broadly speaking — across the industry — lower oil prices means less money available to invest in methane reduction, which means that firms are likely to be less open to policies that require such reductions.”

Related: Coronavirus-led demand slump could hit oil & gas giants’ clean energy plans: IEA

 

Utilities

 

S&P Global Platts – March 10, 2020

US utilities, grid operators form plans to power through potential pandemic

Electric utilities may be affected by the outbreak of novel coronavirus in the U.S. and should prepare to operate with up to 40% of their workforce out sick or quarantined, according to a recent Edison Electric Institute report advising the industry on pandemic plans. That figure raises questions about whether power plant and grid employees will have to risk exposure to continue service, especially given that power is essential to other institutions strained by the outbreak, such as hospitals.

Domestic utilities and grid operators contacted by S&P Global Market Intelligence said they would address local outbreaks on a case-by-case basis, evacuate and disinfect workplaces exposed to the virus, and restrict access to critical areas. Travel restrictions are quickly spreading: PJM Interconnection, the country’s largest grid operator, has limited employee travel and canceled an upcoming seminar for operators.

 

 

Houston Chronicle – March 10, 2020

CenterPoint gave former CEO millions in cash and stock

Former CenterPoint Energy Chief Executive Officer Scott M. Prochazka left the company with a $7.3 million severance payment and almost 450,000 shares of stock worth about $8.1 million.

CenterPoint, the Houston-based regulated utility that distributes most of the electricity in the area, told investors about the deal less than three weeks after Prochazka was replaced Feb. 19 by interim President and CEO John W. Somerhalder II.

Prochazka’s departure came after CenterPoint took a public beating as it sought to increase rates and profit margin. The company agreed to a deal — approved by the Public Utility Commission — that cut its profit margin to 9.4 percent from 10 percent and slashed its rate increase to $13 million instead of the $161 million it had sought. The company’s stock, meanwhile, lagged behind broader indexes.

 

 

JD Supra – March 2, 2020

Texas Supreme Court Reaffirms Validity and Scope of General Easements

Friday, February 28th, in Southwestern Electric Power Company v. Lynch et al., the Texas Supreme Court decided a hotly contested case regarding the interpretation of “general easements.” In Texas, the term “general easement” (sometimes referred to as a “blanket easement”) is often used to describe an easement without a fixed width. In Friday’s ruling, the Court held that “[t]he use of a general easement without a fixed width is a strategic decision that does not render an easement ambiguous or require a court to supply the missing term.” (Southwestern Electric Power Company v. Lynch, No. 18-0768, at 20 (Tex. February 28, 2020)).

This is a significant decision, as general easements have historically been used widely by electric utilities, pipeline companies, and other entities as tools that allow flexibility to account for future growth, innovation, and development.

 

 

KFDA (Amarillo) – March 10, 2020

New $9 million Xcel Energy substation to boost power grid in west Amarillo

Xcel Energy is set to build a new substation at 45th and South Western Street adding capacity for new businesses and residential growth through west Amarillo.

The $9 million upgrade involves construction of the new substation and directing existing and new feeder lines into this new power source.

The foundation has already been poured and equipment is being delivered in anticipation of June 1 being the first day of service.

 

 

Microgrid Knowledge – March 10, 2020

ERCOT Warns of Tight Summer Conditions in Texas. Microgrid Opportunity?

While California is today’s hub of microgrid opportunity, the Texas market bears watching as its grid operator, ERCOT, warns that this summer could bring record electricity use.

At the same time the state is seeing rapid retirement of conventional power plants, coal in particular, which are not being replaced with like generators. Instead most new large-scale generation is renewable, which is variable in its production. Since renewable energy does not produce power if the wind isn’t blowing or sun shining, it presents more risky supply options during periods of high demand. Add to that the higher risk of power outages due to equipment failures when the system is working hard, and periods of peak demand become nail biters.

These are scenarios where microgrids provide value, creating reliable on-site energy for commercial and industrial (C&I) businesses and a means for them to leverage market conditions with price management and demand response participation.

 

 

KLBK (Lubbock) – March 10, 2020

South Plains Electric Co-op helping teachers with $500 mini-grants

On Tuesday, South Plains Electric Cooperative, Inc. announced they will select 10 teachers from around the area to receive $500 mini-grants to help fund student-based projects or educational field trips in the 2020-2021 school year.

The grants will be available to kindergarten through 12th grade reading or social studies teachers from qualifying schools, according to their website.

 

Alternatives & Renewables

 

Houston Chronicle – March 9, 2020

Richard Parker: Greed is good, as investors wake up to climate change peril and pressure oil and gas firms to go green

There is a new secret weapon in the war to save the planet from climate change: Greed.

And it just might work. From the windy fields of the Permian Basin to the gleaming corporate headquarters of Houston, the world is awash in oil and gas. The supply is huge, but the price is small. The demand is falling as the global economy cools. So, what energy producers need is the one thing they’re having a hard time getting: Money.

That’s because now the world’s biggest investors, bankers in their own gleaming towers in New York, Boston and London, have new terms. And with West Texas crude at measly $47 per barrel, they have the upper hand. So, they are conditioning investment on, among many other things, cutting carbon emissions. Investors as big as Black Rock and State Street have warned companies: No progress on climate change, no money.

With this, the fake argument over man-made climate change is over.

 

Regulatory

 

Dallas Morning News – March 9, 2020

Amid coronavirus fears, Texas Legislature delays its work

Amid fears of the virus spread, Texas lawmakers cancelled several high-profile committee meetings on gun policy and public education this week. The Senate Committee on Transportation even delayed a hearing set to take place in late April, citing COVID-19.

“In light of recent concern for the public’s health due to the CoronaVirus and to ensure the greatest amount of participation in policy issues to be studied by the Committee this interim, these charges will be taken up at a later date,” said a notice on the state Legislature’s website.

The postponements came with a blessing from legislative leaders. Though depending on how long delays last, state lawmakers could lose precious time used to hear public and expert testimony on key issues before the next session begins in 2021.

 

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The Texas Energy Report NewsClips – March 10, 2020

Click on each headline to read more of the story at the source.
Asterisk * following headline indicates news content may be limited or unavailable at the source because it’s password protected.

 

Lead Stories

 

Reuters/CNBC – March 10, 2020

Oil jumps more than 6% following worst day since 1991

Oil prices jumped in the afternoon of Asian trading hours on Tuesday following Monday’s more than 20% plunge, which saw US. West Texas Intermediate crude and international benchmark Brent crude post their worst declines since 1991.

International benchmark Brent crude futures rose 7.13% to $36.81 per barrel while U.S. West Texas Intermediate futures jumped 6.55% to $33.17 per barrel.

The moves came following a tumble in oil prices in the previous trading session. WTI and Brent dropped 24.59% and 24.1%, respectively, sinking to more than 4-year lows. ….

On Monday the U.S. Department of Energy said the Trump administration is monitoring the situation following oil’s steep slide.

“These attempts by state actors to manipulate and shock oil markets reinforce the importance of the role of the United States as a reliable energy supplier to partners and allies around the world. The United States, as the world’s largest producer of oil and gas, can and will withstand this volatility. The growth of the unconventional oil and gas industry in the United States has led to a more secure, resilient and flexible market,” the statement said.

 

 

CNN – March 9, 2020

Oil crashes by most since 1991 as Saudi Arabia launches price war

Oil prices suffered an historic collapse Monday after Saudi Arabia shocked the market by launching a price war against onetime ally Russia.

US oil prices crashed as much as 34% to a four-year low of $27.34 a barrel as traders brace for Saudi Arabia to flood the market with crude in a bid to recapture market share.

Crude finished with a staggering loss of nearly 26% to settle at $31.13 a barrel. Brent crude, the global benchmark, plunged 24% to close at $33.36 a barrel. Both oil contracts suffered their worst day since 1991, according to Refinitiv. And they are both now at four-year lows.

Also: How will collapsing oil prices affect Texas? It depends on these two factors, experts say.

 

 

Yahoo! News – March 9, 2020

Shale Drillers Are Staring Down Barrel at Worst Oil Bust Yet

America’s shale drillers have never faced an oil bust quite like this.

The split between Russia and its one-time OPEC allies last week has ignited an all-out price war. U.S. crude prices plunged the most since the 1990s, falling to less than $28 a barrel and rendering vast swathes of the U.S. oil industry unprofitable. Shares and bonds of shale producers plunged Monday, with the S&P 500 Energy Index posting its worst intraday decline on record.

It’s a disaster for U.S. frackers including Chesapeake Energy Corp. and Whiting Petroleum Corp., who were already trading at distressed levels — and makes more defaults and bankruptcies all but certain. After burning through hundreds of billions of dollars in cash over the past decade, the industry has consistently disappointed investors while accumulating huge debts. It now finds itself backed into a corner, increasingly shut out of capital markets. Banks were already poised to cut credit lines after writing off as much as $1 billion in shale loans last year, more than they have in 30 years of making them.

Also: High-Yield Bonds Are Sinking as Bankruptcy Fears Hit the Oil Patch

 

 

The Street – March 9, 2020

Tesla Drops as Electric Vehicles Less Appealing Amid Plunge in Oil Prices

Shares of Tesla (TSLA) plunged Monday as the appeal of electric cars has been dented by the plunge in oil prices. ….

Tesla’s stock was down 10.54% to $629.36 Monday. To be sure, the overall stock market’s plummet hasn’t spared conventional car companies either. General Motors’ (GM) – Get Report was down 10.46% Monday to $25.69.

Many investors and analysts have argued for several years that Tesla was overvalued as it burns through cash and has suffered some production problems. Tesla’s short ratio, or the number of shares held short divided by average daily trading volume, totaled a whopping 0.76 as of Feb. 14, according to Yahoo Finance.

 

 

Austin American Statesman – March 9, 2020

Koch super PAC launches digital ad campaign for Cornyn*

Americans for Prosperity Action, a super PAC from the conservative political network affiliated with billionaire Charles Koch, has launched a digital ad campaign focused on reelecting U.S. Sen. John Cornyn, R-Texas.

The $500,000 digital ad buy is running on Facebook, YouTube and DirectTV platforms, according to a spokeswoman for the group. Americans for Prosperity Action is promoting two ads, one on health care and one called “Beautiful Texas,” which features shots of the state with a voice talking about Cornyn’s time in office.

“Thanks to our Sen. John Cornyn, our economy is booming,” the ad says. “John Cornyn led the way for the Tax Cuts and Jobs Act, more money in your pocket, more businesses, more jobs, more reasons to love Texas.”

The group began the ad campaign one day after the Super Tuesday primaries. Cornyn easily defeated four little-known rivals in the Republican primary.

 

Oil & Gas

 

Live Mint – March 9, 2020

In a first since 2009, IEA estimates fall in global oil demand

In what can exacerbate the fall in energy prices, Paris-based International Energy Agency (IEA) on Monday revised lower global demand for the first time since 2009 in the backdrop of alarming spread of COVID-19, or the novel coronavirus.

The world’s premier energy monitor expects a 90,000 barrels a day decline in demand when compared with 2019, thereby reducing global oil consumption estimate to 99.9 million barrels a day in 2020.

“This is a sharp downgrade from the IEA’s forecast in February, which predicted global oil demand would grow by 825,000 barrels a day in 2020,” the Paris-based agency said in its forecast.

 

 

Bloomberg News – March 9, 2020

Mark Gongloff: That’s Just What We Need Right Now, an Oil War

The Saudis said, fine, you want lower oil prices, you got ’em, and slashed prices dramatically to punish Russia, hoping to force it to play ball. Brent crude prices cratered this morning in response.

But Saudi Arabia had better be prepared for a long slog, writes Julian Lee. Russia is kind of infamous for not being easy to push around, especially when directly challenged like this, writes Mohamed El-Erian. And Saudi Arabia has big disadvantages in this fight, including the fact that it needs high oil prices to finance its government and the operations of state-owned Saudi Aramco, David Fickling notes. A lot of Saudi investors cajoled into buying the Aramco IPO will soon be unhappy, writes Ellen Wald.

On the plus side, dirt-cheap oil will provide desperately needed economic stimulus to China, one of Saudi Arabia’s biggest customers, Ellen notes. It should also help out American drivers. But it will also lay waste to a whole bunch of American frackers, notes Liam Denning. That’s a feature, not a bug, for the Saudis. Americans, starting with President Donald Trump, may feel differently. …

Most importantly, oil’s crash feeds the sense the entire world is becoming Japanified, with permanently negative interest rates and outright deflation, writes Brian Chappatta. For years, U.S. government bonds have yielded more than those of the rest of the world because America’s economy has been stronger, and Corporate America’s credit seemed rock-solid for the same reason. That’s all in doubt now, and Treasury yields are collapsing toward zero. This is nothing less significant than the end of an era of American dominance of financial markets, writes John Authers. Until we figure out what new order will replace the old order, there will be turmoil.

Related: Why U.S. shale oil producers are the real target in the Saudi-Russia price war

 

 

Oil & Gas 360 – March 9, 2020

Plunging oil prices might be just what U.S. gas drillers needed

As the collapse of OPEC+ talks on production cuts sent energy stocks into a tailspin, one corner of the industry defied the rout: U.S. natural gas drillers.

Shares of gas producers including Cabot Oil & Gas Corp., Southwestern Energy Co., Range Resources Corp. and EQT Corp. climbed on speculation that the nosedive in crude prices will force oil explorers in the Permian Basin of West Texas and New Mexico to pull back. Soaring gas output from the basin, where the fuel is extracted as a byproduct of oil drilling, has contributed to a massive glut.

“The collapse in the crude market is going to create a more constructive gas setting,” said Matthew Portillo, managing director of exploration and production research at Tudor, Pickering, Holt & Co. “Slowing U.S. growth is going to significantly affect associated gas production.”

 

 

Corpus Christi Caller Times – March 9, 2020

Coronavirus fears could impact Texas’ state budget as oil prices plummet worldwide

State health officials said Monday the number of confirmed cases of the coronavirus in Texas reached 12 over the weekend with the four most recent cases related to people returning from a cruise on the Nile River in Egypt.

“Public health departments are working to identify any close contacts of the patients while they were sick so they can be isolated and monitored for symptoms and quickly tested, if needed,” the Department of State Health Services said in a message posted on its coronavirus web page. ….

Dale Craymer, president of the nonpartisan Texas Taxpayers and Research Association, said state coffers should not suffer in the near term because of conservative spending decisions made by lawmakers last year and because the state’s economy was booming in the months before coronavirus fears escalated.

“We do have a cushion,” said Craymer, whose organization advocates for restrained taxation while providing “necessary services to the public that are not available from the private sector.”

 

 

Financial Times – March 9, 2020

Saudi oil gamble threatens crown prince’s modernisation plan*

The state oil company’s stocks dropped below their initial public offering price for the first time on Sunday — three months after its listing was hailed by Saudi officials as a historic success for Prince Mohammed. The sense of uncertainty in Saudi Arabia has been exacerbated by a sweeping crackdown that coincided with the oil meeting and targeted senior royals in what many view as part of the 34-year-old crown prince’s attempt to neutralise potential rivals.

“He [Prince Mohammed] is feeling the pressure on all fronts,” said an executive in the kingdom. Government departments have already been told to cut spending, two people familiar with the matter said. On Monday, government advisers were canvassing the opinions of bankers as they discussed policy options.

For many Saudis, it will rekindle painful memories of the last oil slump in 2014. The then-oil minister, Ali al-Naimi, pursued a similar strategy of ramping up production in the hope that volume would offset price declines. The policy failed as the economy careered towards eventual recession. A budget surplus became a $98bn deficit in 2015. Hundreds of projects were halted and tens of billions of dollars owed to government contractors went unpaid, a legacy that still weighs on business today.

 

 

Bloomberg News/Yahoo! News – March 9, 2020

Saudi Arabia and Russia Dig In for a Long, Bitter Oil-Price War

If there was any doubt that the collapse of last week’s OPEC+ talks created a lasting rupture between the world’s top crude exporters, Russia dispelled it on Monday. Its largest producer will pump significantly more oil next month and Energy Minister Alexander Novak said the country’s share of export markets — under attack from Saudi Aramco’s steep price cuts — will be preserved.

The Kremlin didn’t flinch despite the conflict’s devastating toll: the biggest price plunge since the end of the 1991 Gulf War; hundreds of billions wiped off oil-company valuations; soaring bond yields in resource-dependent nations.

That was just day one. A prolonged struggle between the two powers — with each seeking to maximize the price pain for their foe by pumping as much as possible — could inflict lasting damage on the industry that produces the world’s most important commodity.

“Playing Russian roulette in oil markets may well have grave consequences,” said Fatih Birol, the executive director of the International Energy Agency.

 

 

The Hill – March 9, 2020

Trump pitches tax cut to ease panic

President Trump on Monday took his biggest step to address the economic fallout of the coronavirus, saying he will ask Congress to approve a payroll tax cut and relief for hourly workers.

Trump called for the tax cut during an appearance at the White House briefing room, where Vice President Pence tried to reassure the public that the risk for the average person remains low.

Fears that coronavirus represents a major threat to both public health and the economy grew dramatically Monday amid school closures, lawmakers quarantining themselves and a growing number of U.S. cases.

 

 

Associated Press/Dallas Morning News – March 9, 2020

Fort Worth’s Basic Energy buys NexTier production operations

Basic Energy Services Inc. reported a loss of $87.8 million in its fourth quarter on Monday.

On a per-share basis, the Fort Worth-based wellsite services company said it had a loss of $3.52. Losses, adjusted to account for discontinued operations, were $1.30 per share.

The oil and gas field service company posted revenue of $121.9 million in the period.

Basic Energy Services also announced Monday that it has acquired Houston-based NexTier Oilfield Solutions Inc.’s Well Support Services group for approximately $94 million in cash and notes.

The NexTier production operations, known as C&J Well Services, were originally established in San Angelo in 1948 by Frank Pool, founder of Pool Well Servicing.

 

 

S&P Global Platts – March 9, 2020

US’ Tellurian said to have cut almost two-fifths of workforce to keep Driftwood LNG alive

Tellurian shed 38% of its workforce as part of a cost-cutting move designed to give the developer a lifeline as it struggles to secure the remaining partnership agreements it needs to finance construction of its Driftwood LNG export project in Louisiana, a person familiar with the decision said Monday.

The cuts amount to about 70 jobs, said the source, who spoke to S&P Global Platts on condition of anonymity. They were disclosed as Tellurian made changes to its executive leadership team, with a renewed emphasis on boosting marketing efforts.

The company is not providing updated guidance on when it will make a final investment decision, the source said. There has been no specific discussion inside the company about the length of any potential delay, said a second person familiar with internal deliberations.

 

 

Reuters – March 9, 2020

Parsley Energy cuts drilling activity as crude prices collapse

U.S. oil and gas producer Parsley Energy Inc said it plans to drop to 12 rigs and reduced its drilling activity pace for this year following the collapse in crude prices on Monday.

The company also said it was revising its baseline capital budget assumption to a $30-$35 U.S. West Texas Intermediate (WTI) oil price from a $50 WTI oil price for the remainder of 2020.

 

 

March 9, 2020

Dallas Morning News: Dallas will pay more for its gas drilling mistakes than it ever raked in*

Anyone following along at home could have predicted the outcome in the case of Trinity East Energy vs. Dallas. After the city took millions of dollars from Trinity East for the right to drill on city property, then refused to issue drilling permits, even those of us whose legal training amounts to watching Judge Judy expected a costly lawsuit.

And that’s what happened. Late last month, Judge Craig Smith ruled the city must repay the company more than twice what it got from Trinity East for the drilling opportunity: $44 million. What a sad, wasteful lesson on the cost of poor leadership.

Back in 2008, fracking was a new term for most people in North Texas, but the boom was on. Cities, neighborhoods, churches, schools, DFW International Airport and individual landowners were getting windfalls for leasing their mineral rights to natural gas companies, and, in many cases, rich bonuses for allowing the companies to drill on their land.

 

 

Houston Chronicle – March 9, 2020

Drilling Down: Independents keep Permian Basin activity going*

Companies that focus only on extracting oil and gas are keeping drilling activity alive in the Permian Basin at a time when the coronavirus outbreak has some oil majors planning to scale back operations.

Over the past two weeks, Irving-based Exxon Mobil filed for 18 drilling permits. Then on March 5 it abruptly announced plans to cut Permian Basin production growth by 10 percent over the next two years in response to the coronavirus-induced slump in crude prices.

During that same two-week period, eight independent oil companies — those that only focus on exploration and production activities — filed a combined 127 horizontal drilling permits for projects across the West Texas shale play. Fort Worth oil company Double Eagle Development led the pack with 25 drilling permits for horizontal wells targeting the Spraberry field in Midland and Upton counties.

 

 

The Guardian – March 9, 2020

World Bank accused over ExxonMobil plans to tap Guyana oil rush

The World Bank is to pay for Guyana’s oil laws to be rewritten by a legal firm that has regularly worked for ExxonMobil, just as the US producer prepares to extract as much as 8bn barrels of oil off the country’s coast.

The World Bank has pledged not to fund fossil fuel extraction directly, but it is giving Guyana millions of dollars to develop governance in its burgeoning oil sector, as the south American country prepares for an oil rush led by ExxonMobil and its partners.

Guyana’s government was in charge of hiring US law firm Hunton Andrews Kurth to revise its Petroleum (Exploration and Production) Act, the environment and rights campaign group Urgewald found.

 

Utilities

 

El Paso Times – March 9, 2020

US Nuclear Regulatory Commission approval moves El Paso Electric sale closer to completion

El Paso Electric’s pending sale moved another step toward becoming a done deal after U.S. Nuclear Regulatory Commission staff approved transferring a nuclear-plant license to the utility’s buyer.

The NRC approval, issued March 5, leaves approvals from only two other regulatory agencies needed for the $4.3 billion sale to be completed.

However, a national consumer advocacy group official believes the NRC staff approval might not be the agency’s final order because the agency’s commissioners still must decide if a hearing will be held in the case.

The JPMorgan Chase-tied Infrastructure Investments Fund, or IIF, agreed in June to buy the 117-year-old electric utility, now owned by holders of the company’s stock sold on the New York Stock Exchange.

 

 

Defense News – March 9, 2020

Pentagon awards contracts to design mobile nuclear reactor

The Pentagon on Monday issued three contracts to start design work on mobile, small nuclear reactors, as part of a two-step plan towards achieving nuclear power for American forces at home and abroad.

The department awarded contracts to BWX Technologies, Inc. of Virginia, for $13.5 million; Westinghouse Government Services of Washington, D.C. for $11.9 million; and X-energy, LLC of Maryland, for $14.3 million, to begin a two-year engineering design competition for a small nuclear microreactor designed to potentially be forward deployed with forces outside the continental United States.

The combined $39.7 million in contracts are from “Project Pele,” a project run through the Strategic Capabilities Office (SCO), located within the department’s research and engineering side. The prototype is looking at a 1-5 megawatt (MWe) power range. The Department of Energy has been supporting the project at its Idaho National Laboratory.

 

 

Plugboats – March 4, 2020

New glass battery could recharge 23,000 times

A new glass battery developed by John Goodenough, one of the winners of the 2019 Nobel Prize for the invention of the lithium ion battery, is moving into the commercialization stage of development with Canadian electric utility Hydro-Quebec.

The new glass battery was developed by Goodenough – who is 97 years old and still an active professor at the University of Texas – and Maria Helena Braga, professor of engineering at the University of Porto in Portugal.

Professor Goodenough told the IEEE Spectrum (Institute of Electrical and Electronics Engineers) that “the lithium- or sodium-glass battery has three times the energy storage capacity of a comparable lithium-ion battery.” The paper he and his team published about the technology in 2018 claims “a charge/discharge cycle life of over 23,000 cycles” and Professor Braga has said it charges in “minutes rather than hours”. (For comparison, the claim for the million mile Tesla battery making a lot of news is that it can go through 4,000 cycles while retaining 90% of its efficiency.)

 

Alternatives & Renewables

 

The Verge – March 9, 2020

Cadillac cancels Lyriq EV debut because of the coronavirus outbreak

Cadillac has canceled the April 2nd debut of the Lyriq, the first electric SUV being built on parent company General Motors’ newly unveiled EV platform, as large public gatherings continue to be discouraged amid the new coronavirus outbreak. No replacement date has been chosen.

GM only just announced the Lyriq last week at an “EV Day” event in Warren, Michigan, that showcased a new modular electric vehicle platform meant to power a wide range of the company’s EVs in the coming years. The Lyriq is supposed to be the first electric luxury SUV from Cadillac, with a sedan — the Celestiq — to follow. An early version showed off at the EV Day featured a 34-inch pillar-to-pillar screen, power doors, a long wheelbase, and lots of high-end materials.

 

 

PV Tech – March 9, 2020

FERC: US to see nearly 50GW of green energy additions in three years

Renewables will soon cover one-quarter of total electricity capacity in the US as an influx of nearly 50GW comes online within three years, according to recent analysis of government data by Sun Day Campaign.

The Virginia-based campaigner group pointed at figures published by federal energy watchdog FERC last Thursday, showing that the lion’s share of net capacity additions in the US by the end of 2022 will be wind (26.4GW), solar (19.973GW) and natural gas (21.09GW)

The statistics show that net installed capacity for coal, nuclear and oil will shrivel over the next three years, with respective drops of 18,857MW, 3,391MW and 3,085MW forecast. As of 31 December 2019, only one new oil generator was being developed in the US and there were no coal plants under construction.

 

Regulatory

 

Beaumont Enterprise – March 9, 2020

TCEQ sends more TPC air quality violations to Attorney General

The Texas attorney general’s lawsuit against TPC Group may soon get more evidence to prove its claim that last year’s explosions and fires at the company’s Port Neches plant could have been prevented.

The Texas Commission on Environmental Quality, the state agency tasked with regulating clean air and water, late last month remanded eight more alleged air quality violations, which were expected to be discussed at a meeting this week, to the executive director’s office.

They have since been sent to the Attorney General’s office, bringing the number of air quality violations that preceded the Thanksgiving explosion recently forwarded to the Attorney General to 16.

 

______________________________

 

The Texas Energy Report NewsClips – March 9, 2020

Click on each headline to read more of the story at the source.
Asterisk * following headline indicates news content may be limited or unavailable at the source because it’s password protected.

 

Lead Stories

 

CNN – March 9, 2020

Oil crashes by most since 1991 as Saudi Arabia launches price war

Oil prices suffered an historic collapse overnight after Saudi Arabia shocked the market by launching a price war against onetime ally Russia.

US oil prices crashed as much as 34% to a four-year low of $27.34 a barrel as traders brace for Saudi Arabia to flood the market with crude in a bid to recapture market share.

Crude was recently trading down 27% to $30.04 a barrel. Brent crude, the global benchmark, plunged 26% to $33.49 a barrel. Both oil contracts are on track for their worst day since 1991, according to Refinitiv.

The shock to oil also rattled equity markets, which were already in a panic because of the novel coronavirus outbreak. Stocks in Asia plunged during Monday trading hours, while US futures recorded massive declines.

Analysts said that Russia’s refusal to cut production amounted to a slap to US shale oil producers, many of which need higher oil prices to survive.

“Russia has been dropping hints that the real target is the US shale oil producers, because it is fed up with cutting output and just leaving them with space,” analysts at energy consulting firm FGE wrote in a note to clients Sunday. “Such an attack may be doomed to failure unless prices remain low for a long time.”

 

 

Reuters – March 8, 2020

Clyde Russell: As Saudi Arabia blows up crude oil market, stand by for fallout

Saudi Arabia has detonated a metaphorical nuclear weapon in the global oil market, blowing up prices and trade relationships with its decision to slash the cost of its own crude while ramping up output.

The Saudi move was no shot across the bows aimed at Russia’s reluctance to extend and boost a deal to curb production. Instead, it was a full-on declaration of war.

Saudi Aramco aims to lift its output above 10 million barrels per day (bpd) in April, possibly as high as 11 million bpd, two people with knowledge of the matter told Reuters on March 8.

Given its current output is around 9.7 million bpd, this means as much as an extra 1.3 million bpd could flood the market next month – just as demand is taking a major hit from the economic fallout of the global coronavirus epidemic.

But pumping more oil was only one of the two barrels fired by the Saudis. The other was a massive cut to their official selling prices (OSPs) for April.

Related: Aramco shares plunge below IPO price for first time

 

 

Bloomberg News/Houston Chronicle – March 8, 2020

Plunging oil prices might be just what U.S. gas drillers needed*

As the collapse of OPEC+ talks on production cuts sent energy stocks into a tailspin, one corner of the industry defied the rout: U.S. natural gas drillers.

Shares of gas producers including Cabot Oil & Gas Corp., Southwestern Energy Co., Range Resources Corp. and EQT Corp. climbed on speculation that the nosedive in crude prices will force oil explorers in the Permian Basin of West Texas and New Mexico to pull back. Soaring gas output from the basin, where the fuel is extracted as a byproduct of oil drilling, has contributed to a massive glut.

“The collapse in the crude market is going to create a more constructive gas setting,” said Matthew Portillo, managing director of exploration and production research at Tudor, Pickering, Holt & Co. “Slowing U.S. growth is going to significantly affect associated gas production.”

 

 

Reuters – March 6, 2020

The oil and gas industry is canceling key networking events and academic and technical meetings, shifting some to virtual conferences, due to concerns about the coronavirus and its fast-growing toll of more than 100,000 cases worldwide.

A major energy conference planned by investment firm Scotia Howard Weil in New Orleans in late March may go virtual, a spokesperson for the company said on Friday, suggesting speakers could present via webcast. No official decision had been made, she added.

That conference, which would feature presentations from major firms like Schlumberger and Occidental Petroleum Corp, is typically a chance for energy companies to discuss quarterly earnings and their outlook for the year.

Oil & Gas

 

Wall Street Journal – March 8, 2020

OPEC, R.I.P.

Turning 60 this year and suffering from pre-existing conditions, a once-feared oil cartel is on its deathbed. The shock of a coronavirus-induced collapse in demand may be what pushes it into irrelevance, but the Organization of the Petroleum Exporting Countries was already living on borrowed time.

Since 2016, when oil prices last bottomed, OPEC’s influence has depended on the inclusion of other producers, chiefly Russia, to bend the oil market to its will as an unwieldy “OPEC+.” Back in the early 1970s, on the eve of the Arab Oil Embargo that caused the first oil-price shock, OPEC’s market share topped 50%. Its meetings became big events, but the sudden quadrupling of prices sparked oil exploration all over the world.

Today OPEC is a fractious group with just a third of the world market and enough sense not to plunge the world into recession like it did 47 years ago. On Friday, a Saudi-led effort to respond to a swoon in energy demand sparked by the coronavirus epidemic was torpedoed by Russia, which appears to have had enough. Since the first OPEC+ agreement in 2016, U.S. oil output has grown by close to 4 million barrels a day. Now the onetime allies are flooding the market simultaneously in a game of chicken.

 

Bloomberg News – March 5, 2020

China’s Top Natural Gas Buyer Cancels Imports After Epidemic Hurts Demand*

China National Petroleum Corp. has issued a force majeure on prompt natural gas imports, according to people with knowledge of the situation, the second Chinese buyer to refuse shipments in a sign that global commodity flows may face a sustained impact from the coronavirus fight.

CNPC, the nation’s biggest gas supplier, is taking the extreme step after initially working with sellers to reschedule shipments, and plans to cancel contracted deliveries both as liquefied natural gas and via pipelines in the short-term, said the people, who asked not to be identified as the information isn’t public. At least one LNG seller had been notified, the people said. CNPC, the parent company of PetroChina Co., declined to comment.

Related: ‘Force Majeure’ — but the Chinese companies may be in for a ‘rude awakening’

 

 

Houston Chronicle – March 5, 2020

Houston could lose thousands of jobs if oil fails to recover*

Though there is almost no oil drilling in the Houston area, the region employs the technical experts, office workers and equipment manufacturers. Metal shops, fabricators and equipment manufacturers will be the sector to watch, Gilmer said.

“That’s where jobs will be lost first,” he added. …

The 14 OPEC countries sought to cut production by 1.5 million barrels a day, with nonmember allies such as Russia absorbing 500,000 barrels of that cut. Russia, however, refused, and OPEC officials adjourned their meeting Friday.

In the meantime, U.S. oil production has grown to more than 13 million barrels per day, with the Permian Basin in West Texas and eastern New Mexico pumping out about 4.8 million barrels each day, according to the Energy Department. Irving-based Exxon Mobil’s discovery off the coast of Guyana is expected to add 750,000 barrels per day starting in 2025.

OPEC’s failure to cut production combined with slumping global demand caused by the coronavirus outbreak is a “double whammy” for the industry, said Ann-Louise Hittle, of energy research firm Wood Mackenzie.

 

 

S&P Global Platts – March 6, 2020

With Permian flaring on the rise, regulation remains uncertain

“Regardless of a Democrat or a Republican winning a Texas Railroad Commission seat, flaring regulations would not change dramatically in the short term,” said Rene Santos, an analyst with S&P Global Platts Analytics. “The long term is more difficult to predict, but some tightening of the regulations is likely.”

In the fourth quarter of 2019, flaring from Permian wellheads averaged 583,490 Mcf/d, down from a high of 683,410 Mcf/d in the third quarter of 2019, according to Rystad Energy. Permian wellhead flaring averaged 616,590 Mcf/d in 2019, up from 232,080 Mcf/d in 2017, according to Rystad.

Lynn Helms, director of the North Dakota Department of Mineral Resources, has told S&P Global Platts previously that oil output growth will slow significantly as the state steps up its flaring enforcement efforts.

“The public sentiment around flaring is changing and the public perception of it on a state and national level is that it has to decrease,” Helms said in an interview. Similar regulation in Texas would force operators to gradually adapt in the Permian, said Artem Abramov, head of shale research at Rystad Energy.

 

 

KVUE (Austin) – March 5, 2020

Austin, other Texas cities can now test for coronavirus, Gov. Abbott says

As a part of Texas’ Laboratory Response Network, a Texas Department of State Health Services lab in Austin is now able to test for the novel coronavirus, according to a press conference Gov. Greg Abbott held on Thursday.

The network includes 10 public health labs throughout the state, according to Gov. Abbott. Besides the location in Austin, there are also labs in Lubbock, Forth Worth, Dallas, Tyler, El Paso, San Antonio, Houston, Harlingen and Corpus Christi, Texas.

Gov. Abbott said in the conference that of these locations, the labs in Austin, Houston, Dallas Fort Worth, El Paso and Lubbock are currently open and able to test for the virus.

The rest of the labs are expected to be online by the end of the month, according to Gov. Abbott.

Related: Texas coronavirus cases lead to cancellation of SXSW

 

 

Midland Reporter Telegram – March 6, 2020

RRC: Midland district accounts for nearly half of new permits

The Midland district accounted for nearly half of the permits to drill new oil/gas holes in Texas during the month of January.

The Railroad Commission of Texas reported that the Midland region – District 8 – accounted for 520 of the 1,041 permits to drill new oil-gas holes across the state. The next most for any region was 137 in the San Antonio area (District 1).

The Midland district also dominated the new oil completions and new gas completions. The region accounted for about 36 percent of the 822 new oil completions reported in January and 46 percent of the new gas completions. The San Angelo area (District 7C) reported the second most new oil completions –167 compared to Midland’s 296 — and the San Antonio area was second in new gas completions — 38 compared to 97 in the Midland region.

 

 

KMID (Midland-Odessa) – March 7, 2020

Concerned Big Spring residents speak out against oil well drilling

Some residents in Big Spring are speaking out. Many are organizing a petition to oppose an oil company from drilling two wells right in their neighborhood.

Sinclair Oil and Gas Company received its permit from the city on Friday. It was permitted to actually drill by the Railroad Commission in 2019. While the piece of land is owned by the company, that is not stopping upset residents from voicing their concerns.

“Crime is going to go up; it always does,” explained resident, Brian Taft. “My house value is going to go down. Of course, I’m mad about losing money.”

Homeowners like Taft are speaking out against what they call unjust. For many, it is not only about their property value, but also about the safety of their young children. Mother, Whitney Lewis, has five young children who catch the bus at the corner of Hearn Street and Parkway Road every weekday.

 

 

Midland Reporter Telegram – March 5, 2020

Gas driller pulls out of talks in $5M suit against resident

One of Pennsylvania’s largest gas drillers pulled out of settlement talks aimed at resolving its $5 million lawsuit against a resident whose drinking water was contaminated and who has spent years bashing the energy industry.

Houston-based Cabot Oil & Gas Corp. sued Dimock resident Ray Kemble and his former lawyers in 2017, claiming they tried to extort the company through frivolous litigation. Cabot also claims Kemble violated a 2012 settlement agreement by repeatedly “spouting lies” about the company in public.

Kemble, a high-profile fracking opponent who has traveled the country talking about his experiences with the gas industry, charges that Cabot is trying to shut him up.

 

 

Associated Press/New Haven Register – March 6, 2020

New Mexico brings in over $108M in oil, gas royalty payments

Oil and natural gas royalty payments for development on state trust lands netted nearly $109 million for New Mexico in one month.

Land Commissioner Stephanie Garcia Richard announced the record revenues Friday, saying the State Land Office is on track to raise another $1 billion this year for public schools, hospitals and other beneficiaries.

Much of drilling activity is happening in the Permian Basin, which straddles parts of southeastern New Mexico and West Texas.

 

 

S&P Global Platts – March 6, 2020

Shell explores sale of two US refineries as downstream cutbacks continue

Shell aims to sell two US refineries, in Mobile, Alabama, and Anacortes in Washington state, as a seemingly relentless drive by European majors to reduce their refining footprints continues.

In a statement Thursday the company said the sales would fit with its plans to “reshape its refining portfolio globally to leverage Shell’s natural strengths and integration opportunities.”

The process could take months and “may or may not result in a finalized sales transaction. Shell may elect to discontinue the marketing process for one or both assets at any time. If the marketing process does not result in a finalized sales transaction, Shell plans to continue operating the refineries,” it said.

 

 

The Guardian (UK) – March 6, 2020

Australia to sign petrol and oil deal with US to boost emergency stockpile

The federal government will sign a new agreement with the United States to boost Australia’s emergency fuel stockpiles.

The energy minister, Angus Taylor, will sign a deal in Washington to secure access to the US petrol and crude oil supply.

Australia has an international obligation to have 90 days worth of supply, but in August it had only enough petrol and crude oil to last 28 days.

Australian car and truck drivers criticised the flagged deal with the US in August. They said any emergency supplies needed to be in Australia.

 

Utilities

 

Battleboro Reformer (VT) March 2, 2020

NorthStar granted more time for Texas radioactive shipments

The owner of the Vermont Yankee nuclear power plant has received approval from federal regulators for a more relaxed time schedule for shipping low-level radioactive waste to Texas because the company has run into weeks-long delays.

NorthStar Nuclear Decommissioning Co. asked for permission from the Nuclear Regulatory Commission for an exemption from the requirement that the waste get to the Texas waste disposal facility within 20 days since it had several shipments that exceeded federal requirements.

The exemption was necessary because the waste was often put on rail sidings for days at a time to wait to resume its trip to west Texas.

According to a letter NorthStar wrote to federal regulators, two shipments last year were delayed for 24 and 22 days during their trip to the Waste Control Specialists disposal facility in Andrews, Texas.

 

 

Wall Street Journal – March 8, 2020

This Old Metal Hook Could Determine Whether PG&E Committed a Crime*

A 3-inch hook purchased for 56 cents around the end of World War I could help determine whether PG&E Corp. PCG -5.37% faces criminal charges for starting the deadliest wildfire in California history.

Known as a “C-hook,” the badly worn piece of metal broke on Nov. 8, 2018, dropping a high-voltage electric line that sparked the Camp Fire, destroying the town of Paradise and killing 85 people.

PG&E has hundreds of thousands of hooks, manufactured by a number of companies, holding up power lines in its 70,000 square-mile-territory, but the utility doesn’t have good data on how old they are, and is trying to replace many of them.

 

Alternatives & Renewables

 

Think Geoenergy – March 5, 2020

Building an innovation ecosystem for geothermal at and beyond the University of Texas

The newly founded Geothermal Entrepreneurship Organization (GEO) at the University of Texas at Austin is looking at building an innovation ecosystem for geothermal in Texas, wrapping in the oil and gas industry.

A new initiative is pushing entrepreneurship in geothermal energy at the University of Texas at Austin. In an interview published in National Driller, Jamie Beard, Executive Director of GEO, and Eric van Oort, a professor in the Hildebrand Department of Petroleum and Geosystems Engineering and a co-investigator for the group share their view and perspective on this initiative.

The concept driving the new Geothermal Entrepreneurship Organization (GEO) in the Cockrell School of Engineering at The University of Texas at Austin, is to create a green energy future with an “army of drillers from the oil and gas industry”.

 

 

Associated Press/Houston Chronicle – March 6, 2020

Shipments begin arriving for massive New Mexico wind farm*

The components needed for a massive wind farm under development in eastern New Mexico have started to arrive by rail.

Xcel Energy said Friday that the wind turbine parts for the Sagamore Wind Project are rolling into a railhead north of Hobbs and will be transported to the construction site in Roosevelt County starting in April.

The utility estimates it will take 1,920 shipments to deliver all of the components over a six-month period. The parts include lower sections, blades and generators. The delivery trucks will travel the nearly 100-mile (161-kilometer) route by way of New Mexico Highway 18 to Lovington and then north along State Highway 206 to various turnoffs.

 

Regulatory

Reuters/Successful Farming – March 6, 2020

Major oil lobbies split over biofuel waiver debate

U.S. oil industry associations were split on Friday over the Trump administration’s approach to biofuel policies, a rare public fracturing for the groups that more often find themselves at odds with corn growers than each other.

A major trade association representing smaller refiners welcomed the Trump Administration’s plan to appeal a federal court ruling that would curtail exemptions given to small refiners from blending biofuels into gasoline. By contrast, one of the largest U.S. oil and gas lobby groups, the American Petroleum Institute (API), criticized the move to appeal.

 

 

Houston Chronicle – March 5, 2020

Texas High-Speed Train may begin construction before the end of 2020*

David Hagy with Texas Central said The Texas High-Speed Rail, a 240-mile high-speed rail line meant to make a 90-minute commute from Houston to Dallas, is expected to complete its Economic Impact Statement and safety guidelines by this summer. The train travels 200 mph between destinations, with 30-minute wait times for rides during peak times. A map on the Texas Central website shows the rail’s alignment running through northwest Harris County roughly along U.S. 290 and heads north after Hockley.

Hagy, regional vice president of external affairs for Texas Central, gave a presentation about the high-speed rail to the Government and Transportation committee of the Cy-Fair Houston Chamber of Commerce on March 5. …

As for land acquisition, Hagy assured that the Texas Central team is attempting to avoid going through private property as much as possible while offering to buy land above its appraised value. Texas Central already has a preferred route with roughly 30 percent of parcels needed purchased.

 

 

Politico – March 4, 2020

The next big state on the primary calendar is looking dicey for Sanders.

Super Tuesday weakened Bernie Sanders. Michigan may break him.

It was Michigan where Sanders engineered a primary day miracle four years ago, upsetting Hillary Clinton and imprinting his populist agenda on the industrial Midwest.

The result not only presaged Clinton’s inability to win over white, working-class voters in the general election, but underpinned Sanders’ argument that, in running again, he could succeed where Clinton failed in a race against Donald Trump.

One week from now, Sanders may not even win the state.

Even before Sanders’ woebegone Tuesday — marked by losses to Joe Biden throughout the South and in Massachusetts and Minnesota — a Detroit News/WDIV-TV poll put Biden ahead of Sanders by nearly 7 percentage points in Michigan.

Related: Warren ends presidential campaign, centering race on 2 men

 

___________________________

 

The Texas Energy Report NewsClips – March 6, 2020

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Lead Stories

 

Associated Press/US News – March 5, 2020

Exxon to Cut Activity in Permian Basin as Oil Prices Plummet

Exxon Mobil said Thursday it plans to reduce the number of oil rigs operating in an oil-rich region in the Southwest and may cut planned capital expenditures as the spreading coronavirus saps energy demand.

The price of a barrel of oil has fallen more than 25% since the start of the year, and 8% in the last month, with energy demand expected to shrink as the outbreak drags on the global economy.

Oil prices were already under pressure due to signs of a slowing economy in the U.S. and abroad. Energy demand dropped dramatically as flights to and from China were halted and factories slowed production.

 

 

Houston Chronicle – March 5, 2020

ConocoPhillips sells oil leases in Permian Basin, DJ Basin*

Houston oil major ConocoPhillips is exiting the DJ Basin of Colorado and has sold its Waddell Ranch lease in the Permian Basin of West Texas, the company said in a Thursday morning statement.

Financial terms and the buyers were not disclosed.

The Waddell Ranch lease included the company’s only vertical oil wells in the Permian Basin. ConocoPhillips still owns numerous leases in the West Texas shale play where it continues to use horizontal drilling and hydraulic fracturing.

At the time of the sale, the company’s DJ Basin wells were producing only 11,000 barrels of oil equivalent per day while the Waddell Ranch wells were producing just 4,000 barrels of oil equivalent per day.

 

 

S&P Global Platts – March 5, 2020

Texas power grid operator expects record peak demand, tight conditions

The Electric Reliability Council of Texas has forecast a new record peak demand of 76,696 MW in the summer of 2020, and tight conditions, with just 82,417 MW of resources likely to be able to meet that demand, a report released Thursday showed.

The Preliminary Seasonal Assessment of Resource Adequacy’s forecast peakload for the summer period of June-September 2020 rose from ERCOT’s record peakload of 74,820 MW, set August 12, but was the same as forecast in December’s biennial Capacity, Demand and Reserves report.

“ERCOT has added new electric supply resources, and strong economic growth continues to push up demand in ERCOT,” ERCOT President and CEO Bill Magness said. “We expect grid operations to be very similar to last summer.”

 

 

Reuters – March 5, 2020

Backed by industry, several U.S. states propose blocking cities from banning natural gas

Lawmakers in at least five U.S. states have proposed bills since mid-February to prevent cities from banning natural gas as an energy source in new buildings, marking an escalation in the national battle over the fuel’s role in fighting climate change.

The new bills, backed by business and utility interests, come as a growing number of cities in California and the Northeast vote to electrify their building sectors to avoid gas, a fossil fuel that contributes to global warming but which the drilling industry says is cleaner than alternatives like coal.

The stakes for the gas industry are huge: Direct gas consumption by residential and commercial buildings amounted to about 8.45 trillion cubic feet in 2018, rivaling the 10.63 tcf used by utilities to power the grid, according to the U.S. Energy Information Administration (EIA).

 

Oil & Gas

 

Reuters/CNBC – March 6, 2020

Oil slips amid demand concern, fears over OPEC+ deal for deeper output cuts

Oil slid nearly 1% on Friday as worries about global oil demand and economic growth slowdown caused by the coronavirus outbreak were heightened by concern over non-OPEC crude producers not yet having agreed to cut output further to support prices.

Brent crude fell 48 cents, or 0.96%, to $49.51 per barrel by 0337 GMT, while U.S. West Texas Intermediate (WTI) was down 38 cents, or 0.83%, at $45.52 per barrel.

The Organization of the Petroleum Exporting Countries (OPEC) on Thursday pushed for crude output by OPEC and associated producers — a group known as OPEC+ — to be cut by an extra 1.5 million barrels per day (bpd) in total until the end of 2020. The call came ahead of an OPEC+ meeting scheduled for Friday in Vienna.

 

 

Bloomberg News/Houston Chronicle – March 5, 2020

IEA plans to revise down oil demand forecasts due to virus*

The International Energy Agency plans to revise down its oil-demand forecasts next week because of the spreading coronavirus.

“I am going to announce it Monday morning in Paris,” IEA chief Fatih Birol told a Congressional hearing in Washington on Thursday. “The impacts are already severe mainly because the transport sector is heavily affected.”

Last month, the Paris-based adviser to industrialized nations warned that the virus could curb annual growth in oil consumption to the lowest since 2011, but still called for 800,000 barrels a day of growth. Other analysts are now estimating that demand will contract, with Goldman Sachs Group Inc. predicting that consumption could shrink this year for only the fourth time in almost 40 years.

 

 

Texas Tribune – March 6, 2020

Experts say COVID-19 could hurt Texas trade and border economy

Economists monitoring the potential effects of the coronavirus on Texas’ international trade are adopting the tone of health officials: Be prepared, be prudent, but don’t panic. But they believe it’s only a matter of time before a major disruption in the global supply chain impacts the state’s economy.

Texas, which has the world’s 10th-largest economy, should brace for a hit, said state Rep. Rafael Anchia, D-Dallas, the chairman of the Texas House Committee on International Relations and Economic Development.

“About 1 million jobs in the Texas economy are dependent on international trade,” Anchia said. “It is impossible to contemplate that there could be no impacts and further, more dramatic impacts.”

 

 

Houston Chronicle – March 5, 2020

Freeport LNG gets green light for second export dock*

Houston liquefied natural company Freeport LNG got the green light from federal regulators to put a second dock at its Brazoria County export terminal into service.

In a Thursday morning order, the Federal Energy Regulatory Commission gave Freeport LNG permission to place the company’s second export dock into service.

Freeport LNG, about 60 miles south of Houston, is permitted to build three production units that will make a combined 15 million metric tons of LNG per year. The second dock will allow more LNG tanker activity at the export terminal.

 

 

S&P Global Platts – March 5, 2020

US LNG development picture cloudier on raft of uncertainties: analysts

Policy analysts on Thursday honed in on the uncertainties restraining investment and buyer confidence needed to back additional US LNG export terminals despite potential long-term demand growth.

The conversation, at a Washington forum on supporting US LNG exports through global investment in natural gas infrastructure, comes at a challenging time for LNG markets, as the analysts acknowledged.

“It’s a little more than the perfect storm. It may be the perfect typhoon or the perfect hurricane,” said Christopher Goncalves, chair and managing director of the energy practice at consultancy BRG, pointing to a deceleration in demand in Asia, layered with tariffs and the US-China trade dispute, the coronavirus outbreak and a steady flow of US LNG coming to market.

 

 

Texas Observer – March 5, 2020

Off the Texas Gulf Coast, Tugboat Crews Are Stuck on Their Boats Without Pay

They haven’t drawn a paycheck in months. Some haven’t set foot on dry land since January. But at least 10 crew members stuck aboard three tugboats near the Texas Gulf Coast aren’t any closer to going home—and their employer and the U.S. government are exacerbating the problem.

The trouble started in November, when crews of three articulated tug-barges—tugboats designed to hook into barges that carry crude oil, gasoline, and other cargo—were told they couldn’t come to shore in Texas after voyages to Florida and Pennsylvania. Their employer, New York-based Bouchard Transportation, hadn’t paid for the barges to dock and be reloaded with cargo. So they waited. And waited. Meanwhile, their employer stopped sending paychecks.

 

 

Dallas Morning News – March 5, 2020

Rice University professor pokes Houston’s energy elite with climate change warnings*

It’s all at risk in the next big storm. Nearby, there are about 4,400 giant storage tanks holding oil and hazardous chemicals, alongside refineries pumping out 2.2 million barrels of fuel per day. Many complexes here are only designed to withstand a 15-foot storm surge. One estimate says a 25-foot surge would inundate half of the area’s storage tanks and spill more than 100 million gallons into the channel and bay. It would take a weak Category 4 hurricane to produce a 25-foot-high surge, and that would be smaller than the three Category 5 hurricanes that hit the Caribbean recently — Irma and Maria, in 2017, and Dorian in 2019.

“If this storm comes, this will be the worst environmental disaster in U.S. history,” [Jim] Blackburn said. He’s not alone in that assessment. “This is a very real threat,” said Bob Harvey, president and CEO of Greater Houston Partnership, the region’s main business organization. “We need to be doing something. We need to be doing it now.”

A barrier down on the coast isn’t enough to prevent it, according to models from Rice University’s Severe Storm Prediction, Education, and Evacuation from Disasters, or SSPEED, Center, of which Blackburn is co-director. A hurricane could create an unprecedented surge within the bay even if you block water from the Gulf. What’s needed, Blackburn said, is another barrier in Galveston Bay — a string of new islands, created by dredging, that would absorb a storm surge while creating acres of nature and parkland.

 

 

Midland Reporter Telegram – March 5, 2020

Railroad commissioner’s defeat surprises industry

The Republican primary loss of incumbent Railroad Commissioner Ryan Sitton surprised some in the oil and gas industry.

Instead, Jim Wright, a rancher and owner of an oilfield service company in Orange Grove, will be advancing to the November election. He received 55 percent of the vote Tuesday, compared to Sitton’s 45 percent. Neither Wright nor Sitton could be reached for comment Wednesday.

“The outcome was surprising to many, but West Texas voters ultimately favored Jim Wright’s candidacy,” Ed Longanecker, president of the Texas Independent Producers and Royalty Owners Association, told the Reporter-Telegram by email. …

Todd Staples, president of the Texas Oil & Gas Association, told the Reporter-Telegram by email, “We appreciate Commissioner Sitton’s dedication to public service and to moving Texas forward. The Texas Oil & Gas Association stands ready to work with the next Railroad Commissioner to promote a robust oil and natural gas industry and to ensure that sound, science-based policies and free-market principles guide the decisions made by the Commission.”

 

 

Midland Reporter Telegram – March 5, 2020

U.S. Senate considers legislation to advance carbon capture technology

A bipartisan energy bill introduced by two Republicans and two Democrats is now before the U.S. Senate.

The LEADING – Launching Energy Advancement and Development through Innovations for Natural Gas – Act, introduced by Sens. John Cornyn, R-Texas, Bill Cassidy, R-Louisiana, Chris Coons, D-Delaware, and Kyrsten Sinema, D-Arizona, was included in the Senate Energy & Natural Resources Committee’s American Energy Innovation Act. The language in the bill is now a provision in the American Energy Innovation Act, making it law if the AEI Act passes and is signed into law.

The LEADING Act aims to incentivize research and development of carbon capture technology for natural gas and promote the continued use of natural gas. The bill has drawn praise from industry associations.

“I commend Sen. Cornyn for his leadership in advancing creative and effective ways to promote development and use of environmentally sound technologies utilizing natural gas,” Ben Shepperd, president of the Permian Basin Petroleum Association, told the Reporter-Telegram by email. “Establishing a research program at DOE to pursue innovative use of carbon-capture that holds promise for the future – as the LEADING Act does – is an important step toward providing the certainty of economic growth and security for the citizens of Texas and the nation. PBPA looks forward to working with Sen. Cornyn and others to make this legislation a reality.”

 

 

S&P Global Platts – February 24, 2020

Analysis: Saudi Arabia unlikely to become gas exporter even with $110 billion Jafurah field investment

Saudi Arabia is unlikely to start exporting gas despite plans to invest $110 billion to develop its biggest unconventional gas field, although the asset could help wean the kingdom off burning crude for power generation, according to analysts.

Saudi energy minister Prince Abdulaziz bin Salman has previously said the kingdom will be able to become a gas exporter in the near future, and over the weekend plans were announced to develop the Jafurah field, which is estimated to hold 200 trillion cubic feet of gas.

State-owned company Aramco, whose gas reserves stood at 233.8 Tcf at the end of 2018, said it plans to start production from Jafurah in 2024 and reach 2.2 Bcf/d of sales gas by 2036.

 

 

Reuters – March 1, 2020

Citgo, Aruba reach deal to transfer control of refinery to island government

U.S. refiner Citgo has reached an agreement with Aruba to transfer control of the San Nicolas refinery to the island’s government, Citgo said late on Saturday, after the two parties last year suspended a contract to overhaul the facility.

Citgo, a unit of Venezuelan state oil company Petroleos de Venezuela [PDVSA.UL], has been under the control of the South American country’s opposition for more than a year after Washington slapped sanctions on PDVSA in a bid to oust socialist President Nicolas Maduro.

That transition left the future of the 209,000 barrel-per-day refinery uncertain. Citgo and Aruba in 2016 reached a 25-year, $685 million deal to refurbish and reopen the facility, which had been idled since 2012, but little progress has been made.

 

 

Yahoo! News – February 23, 2020

UAE’s Latest Natural Gas Discovery Is A Gamechanger

Despite its impressive production capacity, the UAE remains strongly dependent on imported natural gas to meet domestic demand. A third of the country’s gas is provided by neighboring Qatar. The majority is exported through the Dolphin pipeline. The fraught political relations between Qatar and the UAE due the latter’s support of the Saudi-led blockade create an awkward commercial relationship.

Therefore, the discovery of a massive gas field on the border of Dubai and Abu Dhabi could become a significant game-changer. Becoming self-sufficient improves the country’s energy security and potentially transforms the regional geopolitical environment.

 

 

Texas Observer – February 21, 2020

‘Trans Pecos’ Is a Beautiful Plea to Protect West Texas

“To be part of this land,” rancher Pilar Pedersen says early on in Trans Pecos, “it’s just ephemeral. Nobody owns this land.” ….

Pedersen is one of several activists featured in Trans Pecos: The Story of Stolen Land and the Loss of America’s Last Frontier, a new documentary premiering in Austin on Sunday and in Marfa next Friday. The activists, mostly volunteers with the Big Bend Conservation Alliance, made up one wing of the opposition to the Trans-Pecos Pipeline in far West Texas. Energy Transfer Partners (ETP) started construction on the natural gas pipeline in 2015 and unleashed a wave of resistance in the area over the next two years. Protesters were unable to stop the 148-mile pipeline, which was completed in 2017 and runs from Fort Stockton to Presidio. The film’s director, longtime nature photographer Nicol Ragland, tells a tale of loss and unease as the pipeline tramples on land rights through eminent domain and endangers West Texas residents.

 

 

Wall Street Journal – February 28, 2020

‘Anointed With Oil’ Review: The Crude Versus the Refined — Book Review*

Notre Dame historian Darren Dochuk tells this story in “Anointed With Oil: How Christianity and Crude Made Modern America”—one of the most original and insightful accounts of recent American history to appear in many years….

Mr. Dochuk’s obituary for the oil industry gives the book’s close a somewhat dated feel. The shale revolution, which he does not analyze, has once again shaken up the American oil industry. Not only has that revolution made the United States once again the world’s largest oil producer; the development of the industry saw a replay of the rivalries between the wildcat prospectors and the established oil companies. One wants to know what connections if any Mr. Dochuk sees between the rise of shale and the rise of the oil-friendly, evangelical-friendly Trump administration. In any case, what Mr. Dochuk has given us, even with the loose ends, is a major step forward in our understanding of the American past and of the ways that energy, business, faith and politics intertwined to shape the country we live in today.

 

Utilities

 

Bloomberg News – March 4, 2020

Banks finally start to spend big on giant batteries

Big batteries have long been touted as the future of the electrical grid. But when entrepreneur David Cieminis sought financing for a storage project in California, a state desperate to wean itself off of fossil fuels, he couldn’t reel in a bank.

“A month or two ago, I wouldn’t have thought that they would have been interested,” says Cieminis, co-founder and chief commercial officer of Able Grid Energy Solutions. Like other battery startups, the company wound up relying on more expensive private equity for the project. …

Able Grid launched in 2017 to go after two large renewables markets: sunny California and windy Texas. It focused first on project development. Cieminis approached banks early last year about a 50MW project in the Lone Star State, but there were no takers. The banks said the Texas project lacked a long-term revenue stream, and that the company’s 11MW project in California was too small. The lenders’ most common refrain about the California project: “I don’t want to write a check for $10 million,” Cieminis says he was told. By October, he gave up trying, and found an alternative funding source.

 

 

Power Magazine – March 2, 2020

Driving Change on the Grid—The Impact of EV Adoption

Utilities and other power generators need to prepare now for increased loads as the electrification of transportation grows. As with any challenge, opportunities exist for those willing to invest in electric vehicle (EV) infrastructure and customer engagement.

The global market for electric vehicles (EVs) is growing. A McKinsey report from 2019 says worldwide sales of EVs reached 2.1 million in 2018, with a growth rate of about 60% year-over-year. The International Energy Agency (IEA) has said the global EV fleet will reach about 130 million by 2030, a sharp rise from just more than 5.1 million in 2018.

 

Alternatives & Renewables

 

San Antonio Express News – March 4, 2020

Matt Welch, Conservative Texans for Energy Innovation: Here comes the Texas sun*

A new Texas energy source is figuratively (and literally) just over the horizon.

We are all too familiar with the hot Texas sun that can easily fry an egg on the sidewalk and sends us running into air conditioning. But that heat is energy, and with it comes the ability to generate the same electricity needed to drive those air conditioners we rely on to stay sane. And Texas sure has a lot of heat.

Given its massive solar resource, Texas has been somewhat slow — but catching up fast — to the game as we have opted to develop our oil, gas and wind resources first, but that is about to change. We won’t stop developing those other energy sources, but a new source of energy is coming as demand growth is driven by a healthy economy.

 

 

Los Angeles Times – March 3, 2020

Giant batteries, key to solar and wind power plans, start to get bank backing

Big batteries have long been touted as the future of the electrical grid and a key to unlocking solar and wind power. But when entrepreneur David Cieminis sought financing for a storage project in California, a state desperate to wean itself off of fossil fuels, he couldn’t reel in a bank.

“A month or two ago, I wouldn’t have thought that they would have been interested,” says Cieminis, co-founder and chief commercial officer of Able Grid Energy Solutions. Like other battery startups, the company wound up relying on more expensive private equity for the project.

Little energy storage exists on the world’s electrical grids. The U.S. has about 1,400 megawatts of battery storage — equivalent to the output of two natural-gas-fired power plants — with most of it on the country’s electrical grids. Banks’ reluctance to finance such projects has contributed to the limited storage. But batteries are considered essential if states such as California want to rid their power grids of carbon emissions in the next three decades.

 

Regulatory

 

Houston Chronicle – March 5, 2020

John Nielsen-Gammon, Margaret Spellings: New Texas A&M study shows climate change will impact Texas economy by 2036 bicentennial*

Data can make hard conversations easier, and few conversations have been as difficult as the one around climate.

It was important to us — as, respectively, Texas’ state climatologist and the CEO of a non-profit organization focused on Texas’ future — to bring a new lens to this issue. We wanted to take a data-driven look at extreme weather trends to get insight into the future that Texans need to prepare for.

The data shows that Texas’ climate has been changing. That’s the conclusion of a scientific report by Texas A&M University researchers, funded in part by Texas 2036, that observed and analyzed historical meteorological and climate data for Texas.

If, as expected, current trends continue, our changing climate will pose more challenges to Texans living here in 2036 — the year Texas turns 200 — than today in several ways:

The number of 100-degree days will double over the next couple of decades.

The expected average temperature in 2036 will be about 3 degrees warmer than the average over the last half of the last century.

Also: A&M study: The future of Texas depends on climate preparedness

 

_____________________________

 

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Lead Stories

 

Houston Chronicle – March 4, 2020

Historic drop in oil demand is underway*

The largest drop in oil demand in history is underway due to the coronavirus outbreak, even worse than that experienced during the 2008 financial crisis, analysts at the research firm IHS Markit said Wednesday.

With economic activity in China sharply falling in February, the firm is predicting oil demand will decline by 3.8 million barrels per day over the first three months of 2020. “This is a sudden, instant demand shock—and the scale of the decline is unprecedented,” said Jim Burkhard, vice president and head of oil markets at IHS. ….

Even as OPEC production sits at a 17-year low in a bid to prop up oil prices, it is not equal to the fall in demand from coronavirus, resulting in a surge in oil inventories worldwide, IHS said.

 

 

S&P Global Platts – March 4, 2020

Kinder Morgan exec expresses uncertainty over future of Permian Pass natural gas pipeline proposal

Kinder Morgan cannot be sure its proposal to build a third natural gas pipeline serving the Permian Basin will move forward amid challenges securing commercial support and volatile energy markets, a company executive said Wednesday.

During an investor presentation, Chief Strategy Officer Dax Sanders said that while conversations with potential shippers continue for Permian Pass, no contracts have been signed to date. He said the project will not be sanctioned without solid take-or-pay contracts that carry terms of at least 10 years.

“That could be something that potentially gets FID’d this year, assuming the market comes together,” Sanders said at a Credit Suisse energy summit in Vail, Colorado, that was webcast. He quickly added, “If it comes together, it does. If it doesn’t, it doesn’t.”

 

 

Austin American Statesman – March 4, 2020

Did Jim Wright pull an upset on Tuesday because of his name?*

As for his name, [James “Jim” Wright] said: As a kid, he would be asked “Jim Wright: Are you kin to him?” [The former US House majority leader and speaker from Texas, Jim Wright]

“There’s an even mix of people who liked that guy, and didn’t like him,” he said. “I want to believe that the message I put out, that people are ready to see change, good change, got me elected.”

Wright said his priorities include ensuring voices of landowners are heard alongside those in the oil and gas industry….

The Sitton defeat had precedent. In 2010, Victor Carrillo, chairman of the commission, was defeated in the Republican primary by little-known Midland accountant David Porter. Carrillo, who had been appointed to the position by Gov. Rick Perry, complained he lost because of a Hispanic surname. …

“Ryan Sitton is a very bright young man and very driven and I was very surprised he lost,” said Alex Mills, the former president of the Texas Alliance of Energy Producers. “He never campaigned hard. I never saw any literature through the mail, on social media, or on TV. He never came up here to Wichita Falls. I don’t know what his logic was.”

 

 

Forbes – March 1, 2020

Kenneth Rapoza: Coronavirus Could Be The End Of China As A Global Manufacturing Hub

The coronavirus is China’s swan song. There is no way it can be the low-cost, world manufacturer anymore. Those days are coming to an end. If Trump wins re-election, it will only speed up this process as companies will fear what happens if the phase two trade deal fails.

Picking a new country, or countries, is not easy. No country has the logistic set up like China has. Few big countries have the tax rates that China has. Brazil surely doesn’t. India does. But it has terrible logistics.

Then came the newly signed U.S. Mexico Canada Agreement, signed by Trump into law last year. Mexico is the biggest beneficiary.

It’s Mexico’s Turn?

 

 

Houston Chronicle – March 4, 2020

Chris Tomlinson: San Antonio edging out Houston in electric grid transformation

Houston may claim the title of oil and gas capital of the world, but San Antonio is leading the way to build the energy grid of the future.

The key to the Alamo City’s success was a decision made decades ago to keep its municipally-owned utility rather than adopt a competitive retail electricity market. CPS Energy, the largest community-owned electric and gas utility in the nation, is proving nimbler than private competitors.

More than 20 years ago, the Texas Legislature voted to introduce competition into the electricity market managed by the Electric Reliability Council of Texas. Private companies would compete to produce the cheapest power, a state-managed utility would manage transmission lines, and retail businesses would sell kilowatts to customers.

 

Oil & Gas

 

Reuters/CNBC – March 5, 2020

Oil rises more than 1% ahead of OPEC meeting to discuss supply cuts

Oil prices rose more than 1% on Thursday ahead of an OPEC meeting in which Saudi Arabia is expected to push the group and its allies including Russia to agree to further output cuts to support the market.

Prices were also supported by a lower-than-expected rise in crude oil inventories in the United States, alleviating some concerns of oversupply in the world’s biggest oil consumer.

Brent crude rose by 67 cents, or 1.3%, to $51.80 per barrel by 0436 GMT, while U.S. West Texas Intermediate (WTI) was up by 55 cents, or 1.2%, at $47.33 per barrel.

“Crude oil prices were boosted by a broad positive sentiment overnight, and a much lower-than-expected … crude oil inventory data,” said Margaret Yang, a market analyst at CMC Markets.

 

 

Wall Street Journal – March 4, 2020

Russia Opposes Saudi Plan for Drastic Oil Cuts*

Russia on Wednesday opposed a Saudi plan that would ask OPEC and its allies to make drastic crude-production cuts, people familiar with the matter said, as the coronavirus outbreak further erodes demand amid a global oil glut.

Saudi Arabia, OPEC’s de facto leader, is pushing for the cartel and its allies including Russia to reduce collective output by 1.2 million barrels a day, the people said. But Russia is resisting a reduction of that amount, proposing at a meeting in Vienna that the group maintain current quotas through the second quarter, the people said.

The Organization of the Petroleum Exporting Countries and its allies are trying to reach a 23-nation consensus on oil production cuts at a gathering this week in Vienna, where coronavirus’ impact on oil demand will be a key point of discussion.

 

 

Panola Watchman – March 4, 2020

State Rep. Chris Paddie re-elected in Texas House District 9 race

State Rep. Chris Paddie, R-Marshall, was re-elected to the Texas House of Representatives on Tuesday night with 78 percent of the votes.

Paddie garnered 19,651 votes compared to challenger Mark Williams’s 5,612 — or 22 percent — in results from Panola, Harrison, Sabine, Cass, Shelby and Marion Counties combined.

Calling from his watch party at the Ginnocchio Hotel in Marshall on Tuesday night, Paddie said he was pleased with the results. At the time, both Harrison and Shelby Counties still had not reported final tallies.

 

 

Austin American Statesman – March 4, 2020

With votes finally tallied, Hegar and West advance to Senate runoff*

Roughly three hours after polls closed Tuesday night, it became clear that Hegar had secured a berth in the runoff, but the results of a tight race for second place between West and Austin-based activist and organizer Cristina Tzintzún Ramirez didn’t come into focus until much later.

West pulled ahead when results from Dallas County, where West is best known, trickled into the Texas secretary of state’s website on Wednesday afternoon.

“I believe we are well-positioned to win the runoff,” West said in a statement. “The runoff is a brand new day.”

Shortly after 4:30 p.m., Tzintzún Ramirez conceded the race on Twitter and in an email to supporters.

 

 

San Antonio Express News – March 4, 2020

Stan Bates, Uresti co-defendant, loses appeal of prison sentence*

Stan Bates, the one-time San Antonio oil-field services company executive who was charged with now-former state Sen. Carlos Uresti for defrauding investors, has lost his bid to get his 15-year prison sentence overturned.

Bates, the former FourWinds Logistics CEO who masterminded a Ponzi scheme and pleaded guilty to eight felonies, had asked the 5th U.S. Circuit Court of Appeals to set aside his sentence and to direct the U.S. District Court in San Antonio to resentence him.

The federal appeals court in New Orleans upheld Bates’ sentence Tuesday.

 

 

Reuters – March 4, 2020

Texas grand jury opposes felony charges for protesters who shut Houston Ship Channel

A Texas grand jury on Wednesday declined to issue felony indictments against a group of Greenpeace USA activists who closed a key oil export waterway for 18 hours last year by tying themselves to a Houston bridge and dangling over the water.

Felony charges had been brought against 31 activists involved in the September 2019 protest. The indictments, sought by the Harris County District Attorney’s Office, were under Texas’ new critical infrastructure law, which makes it a felony to interfere with oil and gas pipelines and ports, and other “critical infrastructure.”

The Harris County jurors opted instead for 25 misdemeanor indictments for obstructing a highway or other passageway. Six cases were dismissed before submission and 22 people still face separate a federal misdemeanor charge for blocking a navigable waterway.

 

 

Houston Business Journal – March 4, 2020

Kansas co. to take over operations at Houston terminal, hire after layoffs*

When Gulf Stream Marine ceases its operations at a terminal along the Houston Ship Channel on April 1 and lays off its employees at the site, Watco Companies LLC will take over, hiring many of the employees that Gulf Stream plans to let go.

Kansas-based Watco plans to hire about 105 people when it takes over at the site, called Industrial Terminal, said Gary Freaux, a Watco senior vice president. Watco purchased an adjacent terminal, Greensport, in 2010, and the company started renting Industrial Terminal in 2018. Watco is taking over the operations that Gulf Stream handles right now as a way of integrating the site under one company.

Watco already employs 340 people at the site, before hiring any of the employees it will need to to take over dock-work operations at Industrial Terminal, Freaux said.

 

 

S&P Global Platts – March 4, 2020

Analysis: Haynesville glimpses new Gulf Coast market access in 2021, 2023

Producers operating in the Haynesville Shale should see improved access to US Gulf Coast markets following the recent announcement of a final investment decision on the CJ Express project.

Last week, Midcoast Energy said it would proceed with the addition of up to 150 miles of 36-inch diameter greenfield pipeline at multiple locations along the operator’s existing East Texas system.

The expansion will increase gathering capacity in the Shelby Trough area of the Haynesville and boost transmission capacity on Midcoast’s Clarity Pipeline system by 1 Bcf/d – improving deliverability to export and industrial markets along the Texas and Louisiana Gulf Coast.

 

 

Business & Industry Connection Magazine – March 4, 2020

Enterprise begins service at two new Texas plants

Enterprise Products Partners LP’s Mentone cryogenic natural gas processing plant in Loving County, Texas, and isobutane dehydrogenation (iBDH) plant in Mont Belvieu, Texas, were both recently placed in service.

The cryogenic natural gas processing plant has the capacity to process 300 MMcf/d of natural gas, and extract more than 40,000 bpd of NGLs. Supported by a long-term acreage dedication agreement, the new plant facilitates the continued growth of natural gas and NGLs from the Delaware Basin.

 

 

Bloomberg News – March 4, 2020

The Energy Elite Have Started Listening to Their Enemy No. 1 in Houston*

Many Houstonians still feel like they’re in a standoff with environmentalists who would love to put the Oil and Gas Capital of the World out of business. And anyway the city is booming, with cranes as common as traffic jams on its ever-widening highways. With a population up 11% since 2010, Houston is destined to overtake Chicago as the U.S.’s third-largest city—unless something goes horribly wrong.

Something horrible like the worst environmental disaster in American history, which is just one of the looming catastrophes that Jim Blackburn won’t shut up about. The environmental lawyer and Rice University professor shows up everywhere in Houston—at society events, on the radio, in op-eds and at government hearings—and blurts out what the city’s elite, its oil and gas executives, only whisper in their board rooms: Climate change is an existential threat to Houston, putting in real danger both its physical survival and its economic future.

 

 

S&P Global Platts – March 4, 2020

US natural gas infrastructure investment increasingly risky: report

Investors may be underestimating the risks associated with rapid US power sector natural gas infrastructure build-out that could be incompatible with long-term shareholder and societal well-being, according to report released Wednesday that was refuted by gas proponents.

The report, “Natural Gas: A Bridge to Climate Breakdown,” was produced by shareholder advocacy group, As You Sow, and nonpartisan policy think-tank, Energy Innovation.

“Renewables like wind and solar, complemented by flexible zero-carbon resources like storage and demand response, are already providing the same reliability services and energy as new natural gas plants at lower cost,” Mike O’Boyle, director of electricity policy at Energy Innovation, said in a statement.

 

 

Reuters – March 4, 2020

Corrosion caused 2018 Enbridge gas pipeline blast: Canadian agency

An explosion and fire in 2018 along an Enbridge Inc natural gas pipeline in northern British Columbia was caused by corrosion, Canada’s Transportation Safety Board (TSB) said on Wednesday.

The pipeline operated by Enbridge subsidiary Westcoast Energy Inc ruptured on Oct. 9, 2018, in a forested area near Prince George, British Columbia. No one was injured, but the blast led to the evacuation of 125 people, including from the Lheidli T’enneh First Nation.

Police photos from a helicopter showed a nine-meter-deep crater and dozens of scorched evergreen trees at the site.

 

 

Wall Street Journal – March 4, 2020

Coronavirus Is Devastating the Conference Circuit

Leaders of Austin’s South by Southwest festival reassured the public this week that the Texas tech, film and music event would still kick off as planned March 13, despite concerns over the coronavirus epidemic.

But behind the scenes, Austin politicians, public health officials and others were meeting with organizers to decide whether the show should go on—and if so, how—as more than 40,000 people signed an online petition calling for its cancellation and Facebook Inc. and Twitter Inc. said their employees wouldn’t attend.

“At this point there’s no evidence to suggest that cancelling South by Southwest makes the community safer,” Austin Mayor Steve Adler said Wednesday. “That question is being reevaluated and reconsidered multiple times every day.”

Meanwhile, a local health official said at least one person in the Austin area was being tested for the novel coronavirus and undergoing monitoring as officials awaited results.

 

Utilities

 

S&P Global Platts – March 4, 2020

SPP tracker: Power prices fall on lower gas, wind continues to displace coal

Weakening spot natural gas prices pulled down Southwest Power Pool wholesale power prices nearly 31% year on year in February, as wind generation continued to displace coal-fired power for a second straight month.

SPP peakload dropped 3.6% year on year to average 33,165 MW in February as wind-powered generation has averaged more than 32% of the total fuel mix so far this year, compared to coal at 28.7%, according to SPP data. In contrast, five years ago coal accounted for 58% of the fuel mix in Q1 2015 compared to wind at 12.6%

This is not the first time wind has surpassed coal in a month, but it is the first time wind has remained above the coal share for multiple months. Wind was the lead fuel source for the first time in April and then again in October.

 

 

Houston Chronicle – March 4, 2020

Power companies have many brands to satisfy many types of customers*

Electricity is a commodity, flowing on and off the power grid with nothing to differentiate one electron from another. But retail electricity sellers typically sell a variety of brands, a marketing strategy that means they can offer something for everyone. …

Retail electric providers discussed their offerings this week at the Energy Marketing Conference in Houston.

NRG Energy, for example, owns Green Mountain Energy, which appeals to the environmentally inclined, and Discount Power, which speaks to budget conscious shoppers. NRG also owns Reliant Energy, Cirro Energy and Stream Energy. …

A company with a green plan in its portfolio can offer their own climate-friendly offering as an option, said Lindsey Margiotta, senior director at Spark Energy, a retail electric provider based in Houston. Spark offers a variety of plans including fixed rate offerings that promise “no more bill shock” and green energy options.

“I can still keep that customer,” Margiotta said.

 

Alternatives & Renewables

 

Houston Chronicle – March 4, 2020

Atul Arya, IHS Markit’s chief energy strategist, on CERA Week, renewables and the coronavirus effect*

IHS Markit Chief Energy Strategist Atul Arya talked to the Houston Chronicle about the effect of the coronavirus on oil prices, the march to renewables and the resilience of fossil fuels. His edited remarks follow.

Q: Where are we when it comes to battery technology connected to wind and solar facilities?

A: Batteries for power storage are yet to come. Let’s be honest about that. Anything you can store for more for eight hours, which the industry feels is the cut-off point, is still in the early days. And it may not necessarily be a battery. It may be some other kind of storage like compressed air or pump hydro, where you pump water up a hill and release it to generate energy. And the supply chain for batteries is a big issue because a lot of the minerals we need are concentrated in a few countries, and that can be a challenge.

Q: When you refer to the eight-hour threshold of battery life, is that what the industry wants to see?

A: For stationary storage, yes. If you need to store wind or solar power and use it at a different time to power your home or your buildings or your factory, the storage you need is much bigger. The battery we have today won’t be able to cut it, which is why we need much larger-scale storage . It’s there in some places, but more as an experiment rather than as a new business, which we need.

 

 

Wall Street Journal – March 4, 2020

GM Aims to Convince Wall Street Skeptics Its Future Is Electric*

General Motors Co. GM 3.31% is renewing its push to convince Wall Street that it is the auto maker to bet on for electric cars, as a decadeslong effort to sell the technology to customers has gained little traction.

In a presentation Wednesday at the company’s engineering center near Detroit, GM executives detailed their electric-vehicle strategy in the coming years, including plans for new battery-technology that will allow its vehicles to travel up to 400 miles on a single charge—topping today’s competitors.

The company said it will spend $20 billion to develop electric and autonomous vehicles, quantifying for the first time its bet on these burgeoning technologies.

 

Regulatory

 

Dallas Morning News – March 4, 2020

Who pays attention to the Railroad Commission? Republican upstart shocks in Tuesday primary*

The race for Railroad Commission typically draws little attention. And Sitton, a well-funded incumbent endorsed by Republican Gov. Greg Abbott, seemed poised to coast to an easy victory in the two-way GOP primary. So, what happened?

Sitton cleaned up in the Houston-area, pulling over 66% of the vote in Harris County, which is home to many major oil and gas companies. But Wright of Robstown posted big returns across rural Texas that helped propel him to a 10-point victory, according to unofficial results.

“Harris County is the epicenter of oil and gas activity, they liked Sitton and backed him, but that’s not enough in a primary where there are lots of competing other interests,” said Brandon Rottinghaus, a political science professor at the University of Houston. “This is a race where a less well known and underfunded candidate can sneak up on a flat-footed incumbent who isn’t ready for that battle.” …

Wright won in all but two dozen counties, unofficial returns show.

 

 

The Hill – March 2, 2020

Steve Ellis, Taxpayers for Common Sense: It’s time to bring outdated oil and gas leasing policies into the 21st century

Taxpayers deserve a fair return on the resources we all own. Giving away publicly owned assets at rock bottom prices costs taxpayers billions in revenue in the short term and leads to significant liabilities in the long term.

This is why Taxpayers for Common Sense is focused on reforming oil and gas leasing on federal lands. This year marks the 100 th anniversary of the passage of the Mineral Leasing Act of 1920, which created the current system of leasing to drill for oil and gas. Unfortunately, many aspects of the process Congress created during President Woodrow Wilson’s administration have not changed. Congress has not updated these policies even as millions of acres of federal lands across the country are being locked up for $2 an acre or less, and oil and gas companies are paying the same low royalty rate – the percentage of profits owed to taxpayers – they paid in 1920.

That is not good value for taxpayers. Thankfully, Sens. Tom Udall (D-N.M.) and Chuck Grassley (R-Iowa) are taking action to fix the broken onshore oil and gas leasing system by introducing legislation to strengthen protections for these valuable assets and to bring the public lands leasing system into the modern era.

 

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The Texas Energy Report NewsClips – March 4, 2020

Click on each headline to read more of the story at the source.
Asterisk * following headline indicates news content may be limited or unavailable at the source because it’s password protected.

 

Lead Stories

 

Texas Tribune – March 4, 2020

Railroad Commissioner Ryan Sitton concedes Republican primary in surprising upset

In a surprising upset, incumbent Railroad Commissioner Ryan Sitton has conceded to challenger Jim Wright in Tuesday’s Republican primary for a seat on the board overseeing Texas’ oil and gas industry.

Sitton, elected in 2014 to the three-member board, had the support of top state leaders including Gov. Greg Abbott, Lt. Gov. Dan Patrick and both of the state’s Republican U.S. senators. In their most recent campaign finance disclosures, Sitton had $2.2 million cash on hand and Wright had less than $13,000.

“Congratulations to Jim Wright,” Sitton tweeted Tuesday night. “It’s been an honor and incredibly rewarding to put my experience to work for Texas. I appreciate everyone who voted for me and all of my incredible supporters and I look forward to what God has in store next!”

 

 

Reuters – March 3, 2020

U.S. natgas glut swells, prices turn negative at Texas Waha hub

Natural gas prices at the Waha hub in the Permian basin in West Texas fell into negative territory, forcing some producers to pay other parties to take their gas.

The first swing to negative spot prices in almost seven months occurred due to pipeline constraints and as mild weather cut heating demand. Prices in the forward market have been trading below zero for weeks on expectations there will not be enough pipelines to transport record amounts of gas from the region’s shale oil fields.

That gas that comes from oil wells, called associated gas in the industry, helped propel U.S. gas output to record highs, driving prices to their lowest in years as production outpaces demand for the fuel. Analysts expect gas prices in 2020 to fall to their lowest since 1999.

 

 

Associated Press/KVIA – March 3, 2020

Exxon outlines its steps to reduce harmful methane emissions

Exxon Mobil on Tuesday outlined how it is reducing the methane its operations release into the atmosphere, detailing its efforts as governments around the globe write new rules to regulate the harmful greenhouse gas.

The oil and gas giant is seeking to influence the way those rules are written, hoping companies and regulators adopt the procedures Exxon says helped reduce methane emissions by 20% in some of its U.S. drilling operations over the past two years.

“Our industry has developed high-tech advances to curb emissions, and we also hope this framework will be helpful for governments as they develop new regulations,” said Darren Woods, chairman and CEO of Exxon, in a statement accompanying a document outlining Exxon’s procedures for reducing methane emissions.

 

 

Financial Times – March 2, 2020

Energy’s stranded assets are a cause of financial stability concern

Analysis by the Financial Times’ Lex team concluded that meeting the terms of the UN’s Paris Agreement — to limit global warming to 2C — would leave 29 per cent of oil reserves stranded and wipe about $360bn from the value of the top 13 international oil companies by reserves.

That is well over a sixth of their total enterprise value. Meeting a stricter warming target of 1.5C would more than double the figures to nearly $890bn. Financial regulators are most worried about the exposure of banks, which provided about $654bn in financing to fossil fuel companies in 2018, according to the latest data available from the Rainforest Action Network.

The pressure for change is not just coming from regulators. Sir Christopher Hohn, founder of $28bn activist hedge fund firm TCI, has written to the chairmen of Barclays, HSBC and Standard Chartered warning them of a possible legal challenge if the trio do not stop lending money to coal mining companies. Barclays has also faced pressure from some of its shareholders to stop financing fossil fuel companies. It is expected to pledge significant cuts in an appeasement effort.

 

Oil & Gas

 

Reuters/New York Times – March 4, 2020

Oil prices jumped 1.5% on Wednesday on hopes that major producers have made progress towards sealing an agreement to implement deeper output cuts aimed at offsetting the slump in demand caused by the global coronavirus outbreak.

Brent crude rose by 78 cents, or 1.50%, to $52.64 a barrel at 0502 GMT, after settling down 4 cents in the previous session. U.S. West Texas Intermediate (WTI) futures rose by 72 cents, or 1.53%, to $47.90 a barrel, up for a third session.

A panel of the Organization of Petroleum Exporting Countries (OPEC) and its allies, a grouping known as OPEC+, recommended cutting oil output by an extra 1 million barrels per day (bpd) on Tuesday. The recommendation may mean that Russia and Saudi Arabia, the two biggest producers in the OPEC+ group, are close to a deal to support prices.

 

 

Texas Tribune – March 4, 2020

U.S. Reps. Kay Granger and Henry Cuellar claim victory in congressional primary races

After a brutal primary fight, U.S. Rep. Kay Granger of Fort Worth secured a 13th term in Congress, cementing her status as one of the most powerful women on Capitol Hill. …

Her fellow Appropriations Committee member, Democratic U.S. Rep. Henry Cuellar of Laredo, was still fighting a primary challenge from attorney Jessica Cisneros on Tuesday night. As of early Wednesday morning, Cuellar garnered 51.6% of the vote to Cisneros’ 48.4%, with incomplete returns.

The Cuellar victory is a setback for a massive coalition of Democratic allied groups, ranging from the Justice Democrats to EMILY’s List to the League of Conservation Voters. Had she won the race, Cisneros, 26, would have been the youngest woman ever elected to Congress.

His victory, along with that of Granger, will protect Texas’ seniority on the House Appropriations Committee for another two years.

 

 

Texas Tribune – March 4, 2020

Joe Biden wins Texas primary in a stunning turnaround

Former Vice President Joe Biden has won the Texas presidential primary, continuing a stunning revival of his once-struggling campaign that has helped him solidify himself as one of the two leading contenders in the broader race for the Democratic nomination.

Despite early voting returns putting U.S. Sen. Bernie Sanders ahead of the former vice president, election day voters propelled Biden to victory here. Biden’s lead was growing late into the night Tuesday as election day votes continued to trickle in.

Michael Bloomberg, the New York City billionaire, was a distant third, followed by Sen. Elizabeth Warren of Massachusetts.

 

 

Texas Tribune – March 4, 2020

Longtime Texas state Sen. Eddie Lucio Jr. heads to a runoff

Longtime Texas state Sen. Eddie Lucio Jr. is headed into a primary runoff election against attorney Sara Stapleton Barrera in the Democratic race for his Rio Grande Valley seat. Lucio was just shy of the majority of votes needed in Tuesday’s primary election to move on to November’s general election unimpeded.

With all polling locations reporting Wednesday morning, he had about 49.8% of the total votes. He needed 50%. Stapleton Barrera had the second most votes with about 35%.

The race for Lucio’s seat was the most competitive of the primary elections for the 31-member Texas Senate, where Republicans are expected to keep their majority after the November general election.

 

 

Texas Tribune – March 3, 2020

Did Pierce Bush’s family name doom his congressional run, or did his campaigning?

Pierce Bush, the grandson of the late President George H.W. Bush, failed to make the cut Tuesday in his bid for the Republican nomination in Texas’ 22nd Congressional District.

Incomplete results indicated the nonprofit executive was headed to either a third- or fourth-place finish in a 15-way primary race to represent the suburban Houston district, which had become a national Democratic target even before U.S. Rep. Pete Olson, R-Sugar Land, announced his retirement last July. The top two vote-getters in the race, Fort Bend County Sheriff Troy Nehls and technology consultant Kathaleen Wall, will face off in a May runoff election.

Top Houston political scientists said the outcome may be an indicator of the Bush family’s waning clout as its signature “compassionate conservatism” has gone out of style in the Republican Party. But they said it is equally suggestive of Bush’s overall political strategy, including his decision to forego running in another congressional district where his family’s political legacy was far stronger.

 

 

Wall Street Journal – March 3, 2020

Coronavirus Hits Once-Isolated U.S. Natural Gas Market

Fears that the new coronavirus might slow the global economy have sent already-depressed natural gas prices tumbling to their lowest level in years.

The virus marks the latest force of nature to slam U.S. gas producers, who were already contending with abnormally mild winter weather across the Northern Hemisphere. And it shows how tightly tied to overseas economic activity the U.S. gas market has become after functioning in isolation for decades.

Natural gas futures for April delivery closed at $1.756 per million British thermal units on Monday. Even after gaining 4.3% on Monday in a broad rebound in raw materials, natural gas is trading at its lowest price since March 2016.

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Houston Chronicle – March 3, 2020

Halliburton restricts global, noncritical travel amid coronavirus outbreak*Houston oilfield service giant Halliburton has restricted global, noncritical business travel amid growing concerns about the coronavirus outbreak.

Halliburton, the world’s second largest oilfield service company with about 55,000 employees in 80 countries, announced the travel restrictions in a Tuesday morning statement, adding:

“We are monitoring the evolving coronavirus (COVID-19) situation closely and following guidance from the Centers for Disease Control and Prevention (CDC), the World Health Organization (WHO) as well as internal health experts to help protect our employees.”

 

Houston Chronicle – March 3, 2020

Houston tourism industry could lose millions with CERAWeek cancellation, travel restrictions*

The cancellation of one of the world’s premier energy conferences over concerns about the coronavirus and the possible cancellations of other events in Houston could mean millions of dollars in losses for local businesses that rely on the city’s spring conference season to drive revenues.

Organizers of CERAWeek by IHS Markit said Sunday that the spread of the global pandemic forced them to cancel the conference — which attracts the most powerful and influential people in the energy industry — about a week before the conference was scheduled to begin. IHS Markit, a research and consulting firm, said it would also cancel its conferences in New Orleans and Long Beach, Calif. because of the coronavirus.

IHS Markit estimates the one-time loss in revenue for all three cities is about $50 million.

 

 

S&P Global Platts – March 3, 2020

Chevron ups Permian Basin resource estimate to over 21 billion boe, double 2017 estimate

Chevron has upped its Permian Basin resource estimate to more than 21 billion barrels of oil equivalent, more than double the company’s estimate just three years ago, its top executives said Tuesday.

The company’s 2017 resource estimate for the basin, the largest source of oil output in the US and a significant source of natural gas, was 9 million boe, Jay Johnson, Chevron’s executive vice president of exploration and production, said in webcast remarks at the company’s annual Security Analyst Meeting in New York.

And the major expects to take final investment decisions on two 2018 deepwater discoveries in 2021 and 2022, Johnson said.

 

 

Houston Chronicle – March 3, 2020

Chevron leans on Permian to shower $80 billion on investors

Chevron Corp. plans as much as $80 billion in dividends and share buybacks over the next five years, boosting distributions by 20 percent compared with the most recent pace of payouts as the U.S. oil giant ramps up production and returns from the Permian Basin.

Mike Wirth, who took over as chief executive officer little more than two years ago, promised shareholders a mix of cost-cutting and measured production growth to offer attractive financial returns even as customers and policymakers demand lower-carbon fuels. Production from the Permian in Texas and New Mexico will double over the next five years and eventually account for a third of its global output.

 

 

Rigzone – March 3, 2020

Latest Gamble by Souki Hits the Skids

Over the course of his colorful career, Charif Souki has been an investment banker, a restaurateur, a wildcatter and now a U.S. natural gas export pioneer. His latest business bet may be the costliest one yet.

Tellurian Inc., the company Souki co-founded four years ago to build a $29 billion liquefied natural gas export plant in Louisiana, has been thrown into turmoil by a slump in the international market for the fuel and concern the project won’t secure the necessary backing. And now the fast-spreading coronavirus is stifling demand for LNG, making a massive global glut even worse.

Souki’s career has been characterized by reinvention, a skill that may prove useful as Tellurian struggles to right itself. Born in Cairo in 1953 and raised in Beirut, he got his start as an investment banker focusing on the oil and gas industry.

 

 

Midland Reporter Telegram – March 3, 2020

Gov. Abbott Says ‘The entire world needs the products you’re producing’

“We embrace the oil and gas sector in Texas,” [Gov. Greg Abbott told the Texas Economic Development Corp.’s Regional Business Summit]. “We want you here, we want you to produce here. We also see the tremendous stewardship of the industry. Companies are working not just on producing oil and gas but on the next generation of producing oil and gas while also protecting the environment. We know you’re good business leaders, good stewards. The entire world needs the products you’re producing.”

He said state officials also want to promote the industry, providing the resources and partnerships needed to succeed. One example is the $600 million coming to the Permian Basin for road infrastructure, and Abbott said that is on top of the billions headed the region’s way. He said state officials are seeing the impact the oil and gas industry’s growth has had on the area’s infrastructure, especially roads, and the adverse impact that has had on quality of life. Not only will the additional funding improve infrastructure and quality of life but improve safety, he said, citing the rise in vehicle wrecks and fatalities in recent years.

 

 

Waco Tribune-Herald – February 27, 2020

Todd Staples: Texas oil & gas industry keeps taxes low for rest of us

The Texas oil and natural gas industry is breaking records left and right and every Texan is benefitting. Beyond the massive production that is securing our energy future, state and local taxes and state royalties paid by the oil and natural gas industry last year reached the highest total in Texas history — a whopping $16.3 billion. These funds directly support public education, roads, universities, first responders, health care and more. In fact, every aspect of life in Texas positively benefits from a robust oil and natural gas industry, whether you live near the oil patch or not.

Since 2007, the Texas oil and natural gas industry has paid more than $149 billion in state and local taxes and state royalties — a figure that doesn’t include the economic impact of oil and natural gas payrolls or real estate taxes paid on office buildings. Here’s a look at how Texas puts oil and natural gas tax and royalty revenue to good use for Texans:

 

Utilities

 

Rivard Report – March 3, 2020

First-of-its-Kind Committee Charged with Studying CPS Energy Rates

CPS Energy is moving ahead with plans to create a first-ever committee of volunteers that will examine the structure of its electricity and gas rates.

At its March meeting Monday, CPS Energy’s board of trustees approved a resolution calling for the development of a rate advisory committee. Similar to the San Antonio Water System’s Rate Advisory Committee, the CPS Energy version would take a thorough look at how the utility’s rates are designed and how they affect different types of customers.

Some, including Mayor Ron Nirenberg, see rate structure changes as a way to help CPS Energy transition away from coal and natural gas more quickly while keeping utility bills affordable. Nirenberg started pushing for such a committee earlier this year and garnered support from most of City Council.

 

 

Brownwood Bulletin – February 28, 2020

Xcel announces progress in carbon-free electricity goal

Xcel Energy this week announced it hit a significant milestone in its quest to deliver 100% carbon-free electricity to customers by 2050.

The company recorded its largest single- year drop in emissions in 2019, cutting carbon by 5.6 million tons, a more than 10% reduction in one year, according to statement from Xcel.

Since 2005, the company has reduced carbon emissions by 44% as it leads the nation’s clean energy transition.

“We’re making tremendous progress on our clean energy journey. Our 2019 carbon results demonstrate our ability to transition to low-carbon energy resources while keeping service reliable and customer bills low,” said Ben Fowke, chairman, president and CEO of Xcel Energy.

 

 

Bloomberg News/Houston Chronicle – March 3, 2020

Trump’s best shot at saving coal is an obscure power market*

In the past three months, regulators appointed by President Donald Trump have disrupted ambitious plans to combat climate change in electric grids serving 85 million people in the U.S., from Chicago to New York to Washington.

It was easy: An agency just rewrote some obscure pricing rules.

With that, the Federal Energy Regulatory Commission cranked up to a new boil the simmering debate over whether the U.S. should get its electricity from fossil fuels or sources that don’t spew carbon. The commission’s Republican majority decided the playing field should be leveled so no one generator gets special treatment. “They’re taking these markets in a totally different direction than states want to go,” said Ari Peskoe, director of the Electricity Law Initiative at Harvard Law School. “It could backfire quickly.”

 

 

E&E News – March 3, 2020

Only now are state agencies and private research firms putting a price on the immense scale of building out renewables across the nation to decarbonize the grid (Energywire, Feb. 19). Any serious efforts to integrate high levels of renewables also would have to be implemented through utility plans in much of the country.

Under Trump, the Obama-era Clean Power Plan to slash power-sector emissions was never enacted and utilities were left to more or less forge their own paths, along with states. The Edison Electric Institute, which represents U.S. investor-owned utility companies, says its members are on a collective path to reduce carbon emissions 50% by 2030 and 80% by 2050 compared with 2005 levels.

Travis Miller, an equity strategist for energy and utilities with Morningstar Research Services LLC, said cutting carbon emissions and investing in environmentally friendly projects can be “mutually beneficial” for shareholders and customers.

 

 

Motley Fool – February 29, 2020

U.S. Coal-Fired Power Plants Just Had Their Worst Year Since the 1970s

In 2007, the U.S. generated a record amount of electricity from coal-fired power plants at an estimated 2,016 terawatt-hours, according to data compiled by the U.S. Energy Information Administration (EIA). Last year, the nation’s fleet generated an estimated 966 terawatt-hours. That’s less than half the all-time peak from just 12 years ago and the lowest output since the late 1970s.

The overnight abandonment of coal-fired power plants has created an opportunity for other power sources to gain market share while decarbonizing the country’s power sector. In 2019, the United States generated record amounts of electricity from each natural gas, nuclear, wind, and solar. ….

The sudden collapse of coal-fired electricity production is unprecedented. No energy source (including power, heating, and transportation) has experienced a 50% decline in output in a 12-year period dating back to the country’s founding in 1776, according to the EIA.

Power generators are turning away from coal assets primarily due to economic factors. Coal-fired power plants have become more expensive to fuel and maintain than newer natural gas-fired power plants in much of the country. Onshore wind farms in the Midwest and West Texas have also forced many coal-fired power plants into an early retirement.

 

Alternatives & Renewables

 

Investable Universe – March 2, 2020

Power Play: Could Renewables Shift Affect Utility Sector’s Dividend Darlings?

A powerful transformer: the global transition away from fossil fuels and toward low-carbon renewable energy sources means power providers face sweeping change to traditional pricing and revenue models. What could industry disruption mean for the staid-and-stalwart utility companies?

Consumer electricity—produced from burning carbon fuels like coal—has traditionally been priced according to rates indexed to volumetric usage. Consumers typically pay per kilowatt-hour of use, providing a stable revenue base for utility companies to cover production costs and capital expenditure. This has also allowed them to pay out a historically stable dividend to investors.

But as the proportion of renewables generation—sourced from wind and solar, for example—increases, the cost of electrons, which form the commodity portion of electricity services, is falling rapidly. So kilowatt hours are cheap and getting cheaper—in some cases, falling from zero to negative marginal generation cost. This, in turn, is transforming energy into a declining-cost industry—similar to what has been observed in telecommunications—and potentially affecting the utilities’ traditional revenue base.

 

Regulatory

 

The Hill – March 3, 2020

Lawmakers clamor to add provisions to fast-moving energy bill

Lawmakers on both sides of the aisle are seeking to add their bills to a fast-moving bipartisan energy package, which is expected to hit the Senate floor for a vote on Thursday.

The American Energy Innovation Act is sponsored by Sens. Lisa Murkowski (R-Alaska) and Joe Manchin (D-W.Va.), and would spur research and development into renewables as well as technology to ease pollution from fossil fuels.

The 555-page proposal already includes proposals reflecting more than 50 bipartisan bills that have already been forwarded from the Senate Energy and Natural Resource Committee.

 

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The Texas Energy Report NewsClips – March 3, 2020

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Lead Stories

 

Hellenic Shipping News – March 2, 2020

U.S. crude oil output fell in December for first time in 5 months

U.S. crude oil output fell to 12.78 million barrels per day in December from 12.86 million bpd in November, the U.S. Energy Information Administration (EIA) said in a monthly report.

U.S. crude production has soared due to technological advances for production from shale formations. Despite the decline in December, weekly production data from the EIA suggests that crude output has risen in January and February, setting a fresh record of 13 million bpd.

The oil output decline in December came as output in the Gulf of Mexico fell 47,000 bpd and North Dakota production dropped by 40,000 bpd, according to a separate EIA monthly publication, known as the 914 report. with state data released by the EIA Friday. Texas, the top shale producer, saw output rise by 32,000 in the month.

 

 

Bloomberg News/Yahoo! News – March 2, 2020

Exxon, Chevron CEOs Face Wall Street With Returns in Tatters

Exxon Mobil Corp. and Chevron Corp. will face a grilling from Wall Street this week on one metric that used to be their badge of honor: returns on capital.

Back in the early 2000s, the U.S. oil explorers were getting around 20%. Today, it’s less than half that, even with crude prices at a similar level.

A decade of poor returns isn’t the only dark cloud hanging over both companies as they prepare to hold investor meetings in New York. Concerns over climate change and the future of fossil fuels loom large over the energy industry. More immediate still are worries about the impact of the coronavirus, which have pushed Brent oil down to $50 a barrel and sent Exxon’s shares to a 15-year low.

So far, the two U.S. energy giants have staked out diverging strategies. Exxon Chief Executive Office Darren Woods plans to spend his way to a better place through a $35 billion-a-year investment program, while Chevron boss Mike Wirth is trumpeting the virtues of shale oil from the Permian Basin, combined with cutting costs across the business.

 

 

S&P Global Platts – March 2, 2020

Several SCOOP/STACK producers look to scale back oil and gas operations in 2020

Multiple operators in the SCOOP/STACK look to cut capital expenditures and oil and gas production volumes in 2020 as rig counts have plummeted across the Oklahoma plays over the past year.

Most recently, Riviera Resources said in its fourth-quarter earnings report that it currently has no plans to drill any new wells during 2020 barring an uptick in natural gas and crude prices.

“We have judiciously invested capital and in 2019 we drilled two wells in North Louisiana with expected internal rates of return in excess of 100% and six northwest STACK wells with good results,” Riviera CEO David Rottino said during the company’s Q4 2019 earnings report on Monday. “During the fourth quarter of 2019 we did not drill any wells and do not plan to drill any wells in the first quarter of 2020. However, we remain encouraged by the reliability and results of development locations in the Ruston field and may drill up to four additional wells later in 2020 depending on commodity prices.”

 

 

Houston Chronicle – March 2, 2020

Former Andeavor exec launches Tatanka pipeline company with $500M investment*

A former executive with San Antonio refining company Andeavor has launched pipeline company Tatanka Midstream with a half-billion dollars of private equity.

Tatanka, founded last month by Andeavor’s former Executive Vice President Keith Casey, said it acquired a $500 million commitment from private equity firm EnCap Flatrock Midstream.

Tantanka doesn’t have any assets in the field but plans to use the investment to buy and build pipelines and storage terminals that serve the North American energy market.

 

Oil & Gas

 

Reuters/CNBC – March 3, 2020

Oil extends gains as hopes of stimulus, OPEC cuts offset virus

Oil prices rose for a second day on Tuesday on expectations that central banks are likely to enact financial stimulus to offset the impacts of the coronavirus outbreak and growing optimism that OPEC will order deeper output cuts this week.

Brent crude rose $1.26 per barrel, or 2.4%, to $53.16 per barrel by 0410 GMT. U.S. West Texas Intermediate (WTI) rose $1.24, or 2.7%, to $47.99 a barrel.

Brent and WTI have rebounded somewhat over the past two days from a more than 20% drop from their 2020 peak in January that was caused by signs the coronavirus spread has dented fuel demand.

 

 

Houston Chronicle – March 1, 2020

Presidential candidates take aim at Texas oil and gas industry, but reassure workers*

U.S. Sen. Bernie Sanders has made clear he supports the Green New Deal, which would eventually end the nation’s reliance on fossil fuels completely. During a speech in Houston on Sunday, Sanders said the nation’s energy sector has to change.

“We do not have a choice but to go forward and transform our energy system away from fossil fuels to energy-efficient and sustainable energy,” he said.

But on his website, Sanders makes clear he knows there are a lot of jobs at stake. His plan would guarantee five years of a worker’s current salary, housing assistance, job training, health care, pension support, and priority job placement for any displaced workers.

One of Sanders’ top advocates in Texas has been former Agriculture Commissioner Jim Hightower. In an interview, he said the Sanders energy plan would not happen overnight.

 

 

S&P Global Platts – March 2, 2020

Super Tuesday primaries shine light on fracking, exports, power generation

With the Super Tuesday primaries set for [today], the race for the Democratic presidential nomination is shifting into high gear. As the field of potential candidates tightens, the focus on key energy issues grows sharper, particularly in high-delegate-count states holding March 3 primaries.

Voters in states like Colorado, Massachusetts, North Carolina and Virginia will parse the candidates’ positions on hydraulic fracturing, offshore drilling, crude oil exports, power generation mix, climate change and energy infrastructure. The accompanying infographic takes a deep dive into the abundant energy dynamics of the two most delegate-rich states at play on Tuesday – California and Texas.

What follows is a breakdown and analysis of key issues, candidate positions and implications for some of the larger Super Tuesday states.

 

 

San Diego Union-Tribune – February 27, 2020

Sempra CEO says coronavirus concerns not affecting the company’s LNG negotiations

San Diego-based Sempra Energy, which has invested billions in the burgeoning liquefied natural gas export market, said Thursday the coronavirus outbreak that is disrupting energy markets has not affected the company’s negotiations with potential overseas customers, including China.

“Our confidence level in LNG remains the same — a long-term focus,” Sempra CEO Jeff Martin said in a conference call with analysts who reviewed the company’s 2019 earnings.

Sempra owns a majority stake in the $10 billion Cameron LNG facility in Hackberry, Louisiana, that opened last year and will soon make a decision whether to construct another massive project in Port Arthur, Texas. In addition, Sempra’s subsidiary in Mexico, IEnova, is expected to announce whether to add an export component to its already existing LNG facility on the coast of Baja California, near Ensenada. …

LNG production units are called “trains” and Martin said when all three trains at Cameron are up and running, Sempra expects its share of earnings will come to between $400 million to $450 million per year.

Related: Sempra to decide on U.S., Mexican LNG export plants in 2020

 

 

S&P Global Platts – March 2, 2020

Tellurian plans spending cuts as US LNG market turmoil mounts

Tellurian will cut spending and try to extend a loan due in May to give it some breathing room, it said Monday, as it appears unlikely the developer will meet a previous target to build sufficient commercial support by the end of this month to advance its Driftwood LNG project in Louisiana.

The disclosures come as LNG markets are hemorrhaging, amid low international prices spurred by a supply glut, weaker than expected demand in key end-user markets and travel restrictions due to the spread of the coronavirus — the respiratory illness first observed in China in December.

 

 

 

Houston Chronicle – March 2, 2020

Pioneer Energy files for bankruptcy protection*

Pioneer Energy Services, which hasn’t posted a quarterly profit since 2014, is seeking Chapter 11 bankruptcy protection.

The San Antonio oil field services company said it had reached an agreement with key stakeholders for a “comprehensive financial restructuring” that will allow its lenders to swap debt for equity in Pioneer.

With the trade, Pioneer would eliminate $300 million in debt once the company is reorganized. The deal also would include new capital, with noteholders and shareholders injecting up to $125 million and about $75 million of new, senior secured debt. ….

Investors will get a little relief — their company stock won’t be entirely wiped out, as often happens in corporate bankruptcies. They will receive a small percentage of the company’s new stock, equal to 5.75 percent of their current holdings, under the restructuring plan.

 

 

Reuters/Nasdaq – March 2, 2020

Chevron offering U.S. workers buyouts to trim staffing -sources

Chevron Corp CVX.N is offering buyouts to reduce its U.S. oil exploration and production workforce, three sources told Reuters, as the oil major moves to cut costs in the face of sharply lower oil and gas prices.

The No. 2 U.S. oil producer decided to reduce staff after reviewing operations late last year as energy prices fell, the sources said. Chevron confirmed that it was offering buyouts to workers in its shale gas business in the eastern United States but did not comment on any other U.S. job cuts.

Other oil and gas producers and service companies have begun cutting workers as prices have dived on soaring production and tepid demand, which has been made worse by the coronavirus outbreak.

 

 

Bloomberg News – March 2, 2020

Total-Occidental Deal Held Up by Ghana Tax Claim, Minister Says*

A capital gains tax claim for about $500 million is holding up Total SA’s acquisition of Occidental Petroleum Corp.’s​​​​​ assets in Ghana, according to Finance Minister Ken Ofori-Atta.

Occidental is seeking regulatory clearance for the deal and the tax bill is among matters still to be resolved, Ofori-Atta said by phone on Monday. Houston-based Occidental agreed to offload to the French supermajor the African projects acquired in its $37 billion takeover of Anadarko Petroleum Corp. in August.

While Ghana and Occidental haven’t yet reached an agreement on the tax bill, the government expects that the matter will be finalized soon, said Ofori-Atta. Ghana’s tax authority estimates Anadarko will make $2.5 billion in capital gains from the sale of the assets, he said.

 

 

Houston Chronicle – February 27, 2020

Biofuel could save oil companies as more transit goes electric

It took millions of years for the remains of microscopic plants and animals that once covered the floors of ancient oceans to become buried deep underground to form a carbon-rich stew known as petroleum.

Now, in the next big play to manage climate change, engineers are moving to speed and re-engineer that process, taking agriculture and food waste and turning it into low-carbon fuels for trucks, ships and planes.

After years stuck in the doldrums of the American energy industry, biofuels are getting new attention from both established oil companies and a wave of startups that are quickly expanding capacity to produce so-called advanced biofuels as states move to enact low-carbon fuel standards and industries become increasingly cognizant of their carbon footprints.

 

 

Washington Examiner – February 27, 2020

Adam Brandon: The Great Recession recovery wasn’t powered by Obama. It was oil and gas

The economy under Obama averaged 2% gross domestic product growth: the “new normal,” as New York Times opinion columnist Paul Krugman named it. To be fair, assuming office in the middle of a recession is no blessing, but Obama’s attachment to Keynesian economics prolonged the nation’s recovery.

In fact, Obama actively worked to restrict the industry that led the economy as a percentage of GDP growth. Oil and gas development accounted for nearly half of GDP growth, and the fracking boom alone accounted for 9.3 billion jobs, nearly half of the jobs created during his entire presidency. States such as Texas contributed nearly 70% of all jobs created during the Obama administration. Wage growth for workers in the natural gas industry also skyrocketed, with workers in states such as North Dakota seeing their weekly wages increase up to 40% in the post-shale boom. Without oil and gas development, there would have been almost no economic or job growth during the Obama administration.

 

Utilities

 

Houston Chronicle – February 28, 2020

Earnings soar but stock doesn’t. So what’s NRG to do?*

NRG Energy, one of Texas’ biggest generators and sellers of electricity, made a lot of money last year, but it still doesn’t captivate investors and may consider going private as its competitor Calpine did in 2018.

“The company has never been stronger or with a brighter future than it is today,” CEO Mauricio Gutierrez told investors during an earnings conference call Thursday. The company, with headquarters in Houston and Princeton, N.J., strengthened its balance sheet last year, reduced its debt and is on the path to an investment grade rating, he said.

Higher wholesale electricity prices that repeatedly soared to $9,000 per megawatt hour during an August heat wave helped NRG earn $4.4 billion in 2019, a dramatic turnaround from the $268 million it made a year earlier. Revenue increased 3 percent to $9.8 billion from $9.5 billion in 2018.

But NRG’s share price continues to trouble senior executives, who said the company will likely launch another round of stock buybacks in the second half of 2020 if it can’t find sufficient investments for its cash on hand.

 

 

Coin Republic – March 2, 2020

Texas Is Named Best Place For BTC Mining Says Layer1 CEO, Alex Ligle

Alex Ligle, the CEO of Layer1, recently shared that Texas is the best place to start a Bitcoin mining facility in the world, he shared this after his company launched a mining facility in the Texas region which now owns multiple mining enterprise in Texas. The Start-up Layer1 aims to take control of 30% of the world’s Bitcoin Hashrate.

Texas makes the best place for investment in Bitcoin Mining because of the cheap electricity available and ease of access to it, and this prompted Ligle to launch a Bitcoin mining facility in the state.

Texas is a state known for its wind farms able to produce more electricity than many states combined in the USA; Texas is also a state toping in using ecological energy for its native.

 

 

San Antonio Express News – March 2, 2020

CPS Energy finds buyer for historic Villita Assembly Building*

CPS Energy has chosen a buyer for the historic Villita Assembly Building downtown, the longtime setting for proms, public meetings and weddings.

The utility’s board of trustees gave the go-ahead Monday for staff to begin negotiating the sale. However, CPS officials haven’t identified the bidder or the sales price, saying they’ll release details after the transaction is finalized.

Renowned architect O’Neil Ford designed the circular structure at 401 Villita St., which opened in 1959. CPS put the building and several other properties on the market last year to help offset the cost of its new $210 million headquarters.

 

 

Energy Voice – March 2, 2020

Jack Welch, former chairman and CEO of General Electric, dies aged 84

Jack Welch, the champion of corporate efficiency who built General Electric Co. into one of the world’s largest companies and influenced generations of business leaders, has died. He was 84.

His death was reported Monday by CNBC, which cited his wife, Suzy.

The former GE chairman and chief executive officer, whose blunt style and ceaseless cost cutting earned him the sobriquet “Neutron Jack,” mentored proteges who went on to run some of the world’s best-known companies. Named “Manager of the Century” by Fortune magazine in 1999, he presided over a stock surge of almost 3,000% during a two-decade tenure.

 

 

KTXS (Abilene) – February 26, 2020

Abilene considering program that provides long term loans for energy efficient products

Abilene City Manager Robert Hanna called it a “development tool” that they’d like the council to consider.

“Property Assessed Clean Energy (TX-PACE) is a proven financial tool that incentivizes Texas’ property owners to upgrade facility infrastructure with little or no capital outlay.

“Approved by State legislation and established by local governments, TX-PACE programs enable owners to lower their operating costs and use the savings to pay for eligible water conservation, energy efficiency, resiliency, and distributed generation projects.

“Owners gain access to private, affordable, long-term (typically 10-20 years) financing that is not available through traditional funding avenues.”

 

Alternatives & Renewables

 

Smart Energy International – March 2, 2020

US solar jobs grow to 250,000 mark says industry report

The US solar industry employed nearly 250,000 workers in 2019, growing by more than 5,600 jobs (2.3%) in 31 states since 2018, despite import tariffs imposed by President Donald Trump, says the country’s Solar Foundation in it’s 10th annual National Solar Jobs Census.

The upswell marks a resurgence in US solar industry employment following two years of job losses in 2017 and 2018.

In the five-year period between 2014 and 2019, solar employment increased 44%, five times faster than job growth in the overall US economy.

 

Regulatory

 

Townhall – February 27, 2020

Here’s a Devastating, Little-Known Story About Bernie Sanders. Why Haven’t His Rivals Exploited It?

(1) In 1998, then-Rep. Sanders cosponsored a bill that would allow Vermont and Maine to dump their nuclear waste in a poor and largely Latino town in Texas called Sierra Blanca.

(2) A Texas Observer article in 1998 covered protestors from Sierra Blanca confronting Rep. Sanders and being given the stiff arm. The story’s headline was “Sanders to Sierra Blanca: Drop Dead.” Sanders even rebuffed an offer to visit Sierra Blanca, telling its residents, “Absolutely not. I’m gonna be running for re-election in the state of Vermont.”

(3) Liberal hero Paul Wellstone—an actual progressive Democrat—gave a speech on the Senate floor calling this dump “environmental racism.” Former Texas Democratic Rep. Silvestre Reyes called Sanders actions “insanely callous.”

(4) After Congress approved the proposal, environmental regulators rejected the Sierra Blanca site. But a different site in Andrews County, Texas gained approval a few years later and Vermont/Texas maintain an interstate waste agreement.

(5) In 2016, Sanders’ tax returns revealed that as of 2014 Jane Sanders was still drawing a small salary as an alternate commissioner for the Texas Low-Level Radioactive Waste Disposal Compact Commission as part of the agreement with Vermont that her husband pushed.

 

 

Fort Worth Star Telegram – February 28, 2020

Ryan J. Rusak: Democrats, kiss your hard work to turn Texas blue goodbye if Sanders is your nominee*

Texas Democrats have worked for years — and in some cases decades — to put their party in a position to win the state House, flip more congressional seats, and compete statewide. Just in time for their compatriots in other states to throw a big wet blanket over them.

Many are putting on a brave face, but the rise of Bernie Sanders endangers all they’ve toiled for. Sanders as the Democratic presidential nominee will almost certainly halt the party’s progress in Texas.

“[Voters] I’m on the phone with are worried,” said Kim Olson, a leading Democratic candidate in the 24th Congressional District, where Republican Rep. Kenny Marchant is retiring. The district, which runs from Hurst to Addison, is one of the party’s top targets nationwide. Democratic growth there is driven by the kinds of suburban voters repelled by Donald Trump’s excesses.

But many of them are not ready to embrace canceling private health insurance, taxing working people to pay off irresponsible college debt or plunging Texas into a deep recession with a ban on fracking.

 

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The Texas Energy Report NewsClips – March 2, 2020

Click on each headline to read more of the story at the source.
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Lead Stories

 

S&P Global Platts – March 1, 2020

IHS CERAWeek global energy conference canceled due to coronavirus threat

The deepening global crisis over the coronavirus outbreak caused the organizers of the annual IHS CERAWeek energy conference in Houston to cancel the event Sunday.

Delegates from 80 countries were expected at the conference March 9-13

With concern mounting in recent days about the spread of the deadly respiratory illness that was first observed in China in late December, IHS Markit said it had no choice but to cancel. Due to travel restrictions, delegates from China had already been not expected to attend.

 

 

Bloomberg News/Yahoo! News – March 1, 2020

A $30 Oil Price Is the Real Virus Threat to OPEC

It’s finally upon us. The week when ministers from the oil producing countries of OPEC and their allies meet to decide on the future of their latest round of output cuts. Having failed to persuade Russia to bring the meeting forward, Saudi Arabia will now hope to convince its biggest non-OPEC ally of the need to make deeper cuts in the face of a demand slump triggered by the Covid-19 virus. Success is not a foregone conclusion and failure will be costly.

The looming pandemic has already made its mark on oil markets. U.S. West Texas Intermediate crude is now firmly below $50 a barrel and global benchmark Brent briefly followed it on Friday. That is uncomfortable territory for producers everywhere and, without a clear indication of deeper output cuts from this week’s meetings, prices will fall further.

As the virus spreads, locking down Italy’s industrial heartland and prompting Switzerland to ban large gatherings, producers appear to be clinging to overly optimistic demand assessments. OPEC Secretary General Mohammad Barkindo, speaking at a conference in Saudi Arabia last week, said that in spite of the new coronavirus, the world’s “thirst for energy will continue to grow.” While that may be true for energy as a whole, it may not be for oil demand this year if there isn’t a quick rebound.

 

 

HuffPost – February 29, 2020

Green New Deal Backers Go Head-To-Head With Koch Money In Texas Congressional Race

Backers of the Green New Deal are going head-to-head with the right-wing billionaire who bankrolled the modern climate denial movement on the oil industry’s home turf this weekend.

Ahead of next Tuesday’s closely watched primary in Texas’s 28th Congressional District, a progressive group is spending $50,000 on ads attacking Rep. Henry Cuellar (D-Texas) over the support his reelection campaign is getting from GOP megadonor and fossil fuel magnate Charles Koch, HuffPost has learned.

A super PAC founded by Koch told the Federal Election Commission last week it spent $34,000 to support Cuellar, who is facing a tough primary challenge from Jessica Cisneros, a 26-year-old immigration attorney backed by allies of Rep. Alexandria Ocasio-Cortez (D-N.Y.). The spending marked the first time Americans for Prosperity Action campaigned for a congressional Democrat.

 

 

Technology Review – February 27, 2020

How Texas’s wind boom has spawned a Bitcoin mining rush

Is Texas the new promised land for Bitcoin miners? The backers of several big-money projects are betting yes, thanks to the state’s cheap electricity and unique regulatory environment. If their ambitious plans come to fruition, it could lead to a profound shift in the geographic distribution of an essential component of the world’s most popular cryptocurrency network.

Bitcoin mining success depends heavily on how much electricity a given facility can devote to the task, which explains why the announcements of new mining sites often read like announcements of new power plants. A project that went live last week in west Texas has drawn particular attention, thanks to backing by investor Peter Thiel. Layer1 Technology, which recently raised $50 million from Thiel and other venture capitalists, has launched a facility that it says will soon have 100 megawatts of electricity devoted to mining Bitcoin.

 

Oil & Gas

 

Reuters/CNBC – March 2, 2020

Oil bounces from multi-year lows as hopes of OPEC+ cut, stimulus offset virus impact

Oil prices pared losses after earlier hitting multi-year lows on Monday as hopes that a bigger than expected production cut from OPEC and stimulus from central banks could offset economic gloom from the coronavirus outbreak.

Brent crude was at $50.32 a barrel, up 65 cents, or 1.3%, by 0105GMT, after earlier dropping to $48.40, the lowest since July 2017.

U.S. West Texas Intermediate crude hit a 14-month low of $43.32 a barrel, before recovering to $45.23, up 47 cents, or 1.1%.

Flight cancellations and travel bans by countries worldwide sparked fears about the global economy, leading to the biggest weekly stock market rout since the 2008 financial crisis last week. …

On the other hand, there was news Saudi Arabia was pushing for a million barrels per day cut to be agreed this week, while central banks globally were increasingly signalling an appetite to intervene and support markets by cutting interest rates, he said.

“So it’s a balance and it’s going to be pretty volatile.”

 

 

Midland Reporter Telegram – February 28, 2020

Permian Basin gains 2 rigs; Midland County gains 1

Texas’ rig count is back to 400 this week, up three, according to oilfield services company Baker Hughes. The Permian Basin gained two rigs for a total of 411, and Midland County stands at 47, up one.

New Mexico is unchanged at 115 rigs. The New Mexico counties of Eddy and Lea lead the Basin with 60 and 55 rigs, respectively. Eddy lost two rigs, while Lea gained two rigs.

 

 

Houston Chronicle – February 29, 2020

EPIC commissions 30-inch crude pipeline*

Moving crude oil out of the Permian Basin got a bit easier with EPIC Crude Holdings’ commissioning of its 30-inch permanent crude oil pipeline.

The commissioning means the company has stopped its interim oil deliveries from its 24-inch Y-Grade pipeline. The company has now begun the process of cleaning out the Y-Grade pipeline in order to transition it back to natural gas liquids service. The 24-inch Y-Grade NGL pipeline is expected to be back in service in the second quarter of the year, an EPIC spokesperson told the Reporter-Telegram by email.

The 30-inch pipeline has capacity of 600,000 barrels per day, which is expandable to 900,000 barrels per day. It moves crude from the company’s Crane terminal to Robstown.

 

 

Financial World – March 1, 2020

Trafigura forms joint venture with Phillips 66 for Deepwater Texas oil port

Trafigura, the 27-year-old Singaporean multinational commodity trading company, headquartered in Amsterdam, Netherlands, had issued a statement on Friday, the 28th of February 2020, saying that it had joined forces with the Houston, Texas-based American multinational energy company Phillips 66, in order to construct a magnanimous deep-water port in Texas which would be able to load and offload supertankers, while the Singaporean commodity trader had also ditched out its one of its own Texas projects which had been contradicting its joint venture with Phillips 66.

Aside from that, according to Trafigura’s Friday’s (February 28th) statement, the Singaporean commodity trader, the largest US crude exporter in terms of volume handling more than 600,000 barrels per day of US crude or roughly 6 per cent of world’s entire crude supply, had also added that it had postponed a planned Texas Gulf Terminals project, a proposal of which the company had submitted to MARAD ( the US Maritime Administration) back in the July of 2018.

 

 

Houston Chronicle – March 1, 2020

Chris Tomlinson: Coronavirus already hurting Texas economy, could get much worse*

In Texas, though, we are already experiencing slower economic growth due to lower oil and natural gas prices. At the beginning of the year, the price for a barrel of West Texas Intermediate crude hit $64.45. On Friday, WTI settled below $45 a barrel. …

Investment bank Goldman Sachs said it no longer expects oil demand to grow by 1.2 million barrels in 2020 and has revised its forecast growth to only 600,000 barrels. If the economic slowdown persists, that number could drop lower.

Oil companies producing in the Permian Basin do not make money at $55, let alone $44.76 a barrel. Many of these companies barely survived $60 oil by relying on high-interest loans and hope that Saudi Arabia, Russia and other foreign powers would eventually cut production and drive up prices.

 

 

Beaumont Enterprise – March 1, 2020

Transportation company lands new hub in Port Arthur

Growing oil and gas investments in Southeast Texas have attracted a large transportation company to create a new branch at a 10-acre commercial site in Port Arthur.

New Orleans-based Hotard Coaches, a part of All Aboard America Holdings, has signed a seven-year lease for a 26,503-square-foot commercial property on Texas 73 in Port Arthur. The former site of a movie theater and car lot will soon serve as a depot and office for the motor-coach company’s operations in Southeast Texas.

Gary Chetoni, director of business development for Hotard Coaches, said the company has already started work on the site and hopes to have buses transporting workers to industrial sites within the next 30 days.

 

 

Houston Chronicle – March 1, 2020

New Mexico GOP targeting Hispanic voters in oilfields*

New Mexico Republicans are launching a voter registration effort among a Hispanic population in the state often overlooked: oilfield workers.

State Rep. David Gallegos, a Eunice Republican, is leading a project to register to vote Hispanic oilfield workers in the state’s Permian Basin oil boom region, the Hobbs News-Sun reports.

The move is part of a more extensive campaign by New Mexico Republicans to reach out of Latino and Native American voters as they attempt to recapture a Congressional seat currently held by U.S. Rep. Xochitl Torres Small, D-Las Cruces and win an open U.S. Senate seat.

 

 

Reuters/New York Times – February 28, 2020

Media billionaire Michael Bloomberg would allow the United States to keep exporting crude oil overseas if he is elected president, his campaign says, unlike his top Democratic rivals who have pledged to ban oil exports immediately to fight climate change.

The stance could help the former New York City mayor gain votes in states like Texas, New Mexico and Louisiana that have benefited from booming U.S. oil exports since the Obama administration lifted a 40-year ban in 2015.

But it risks upsetting the Democratic party’s progressive wing, which is pushing for sweeping measures to quickly reduce greenhouse gas emissions.

 

Utilities

 

Government Technology – February 28, 2020

USDA Grants Could Bring Broadband to Southeastern Texas

A proposal by the U.S. Department of Agriculture to provide $19 million for rural broadband could help almost 7,000 rural households, 46 farms, 32 pre-subscribed businesses, 19 critical community facilities and 15 educational facilities in Texas,

A large portion of the grant will be provided to MidSouth Electric Co-Op out of Navasota, which serves nearly 25,000 consumers in and around Walker, Grimes, Brazos, Madison, Montgomery and Waller counties. The $6 million grant will be used to deploy fiber across the co-op’s network of utility poles, enhancing electric reliability and opening the door to expanded rural broadband access for MidSouth consumer-members.

The funds are part of the USDA Broadband Reconnect Program, which was created to bridge the digital divide in rural America.

 

 

February 29, 2020

San Antonio Express News: CPS Energy’s refusal a load of garbage

It would be impossible to overstate the success of a 2015 pilot program to provide mandatory trash service to 620 townhomes in Camelot II, an urban area in unincorporated Bexar County.

Children once played in towering mounds of garbage in this Northeast Side neighborhood, but no longer, thanks to an Editorial Board crusade. Alleys were once filled with refuse, leading to infestations and sanitation woes, but now they are clean and clear. …

The main obstacle to progress here is CPS Energy. The city-owned utility has rejected Calvert’s request to include trash service on its bills. This might sound like a small matter, but it’s been a key to success in Camelot II. For whatever reason, when trash service is on the electric bill, people pay it. When it’s not, they often don’t pay their bills, and then garbage starts to pile up.

CPS Energy refused a meeting request about this billing decision, instead choosing to issue a statement that said it will only provide pass-through billing for city trash service. That would rule out private waste haulers and eventually Camelot II when the city-county pilot program ends.

 

 

Forbes – February 28, 2020

Ike Brannon: A Mixed Record For Energy Deregulation

[T]he evidence that retail electricity competition has actually reduced prices is actually somewhat slight. Today’s prices for electricity are not much different, in inflation-adjusted terms, from what they were in the 1990s; while wholesale energy deregulation may have contributed to today’s quiescent prices, its impact has been minimal.

Of course, energy markets have been buffeted by a wide array of forces over the last quarter century—from the oil gluts of the late 1990s, the price spikes after 9-11 and in the mid-2000s, the collapse of Venezuela and the sporadic political unrest in the Middle East and elsewhere, and the advent of fracking and the return of the United States to the top of the ranks of oil and gas producing nations. …

Today, prices in deregulated states are significantly higher than they are in regulated states, which is largely because it was the states with higher utility prices that embraced deregulation to begin with. A better reflection of the relative impact of deregulation is the nearly unvarying spread between prices regulated and deregulated electricity markets over the last twenty years. The difference between retail prices in regulated and deregulated markets has narrowed by just one cent per kilowatt hour.

 

 

Fora – February 28, 2020

‘It’s purely economics’: Meet the man taking charge of getting the electrical grid to smarten up

Houston –[I]t can be tough to follow what exactly is going across the many screens that adorn GridBeyond’s Citywest office. Lines rise and fall across a dizzying array of screens at varying pace.

“It’s a very fast metering system that’s capable of capturing things like power levels, voltage and current in milliseconds,” Michael Phelan, chief executive of the company, explains.

GridBeyond’s machine learning tech reacts to ‘faults’ that happen on the energy grid and switches to a different power source – but that’s just scratching the surface. The company works with grid operators in Ireland and the UK to help them manage their energy consumption, including Irish Water.

 

Alternatives & Renewables

 

Utility Dive – February 28, 2020

Spending more on renewables ‘inappropriate,’ as technology is already viable: DOE Secretary

Department of Energy Secretary Dan Brouillette called federal investments in renewable energy “inappropriate” as he defended President Donald Trump’s proposed energy budget in front of the House Committee on Appropriations on Thursday.

The president’s budget, released Feb. 10, cuts the energy efficiency and renewables budget by 74% and the Office of Science by $1.2 billion. Overall, all non-defense expenditures were reduced 35%, with the total budget reduced 8%.

“Renewable technologies are becoming somewhat mature in the marketplace,” Brouillette told committee members. “So for us, to focus on these technologies that are now commercially available seems … to be inappropriate.”

 

 

Yahoo! News – February 27, 2020

The Real Reason The Middle East Is Pivoting Towards Renewables

The oil-rich Middle East is boosting investments in renewable energy generation at home and abroad.

Just a few years ago, this notion would have raised a few eyebrows. But these days, Persian Gulf companies’ increased investments in solar and wind power in the region and around the world make perfect sense in a world that begins its long energy transition journey and a Middle East suffering from low oil prices. …

Abu Dhabi’s renewable energy company Masdar currently has some three dozen projects and ventures around the world, including two wind farms in New Mexico and Texas, and a 25-percent stake in the Hywind wind farm offshore Scotland, the world’s first floating offshore wind farm. Masdar has just signed an agreement with EDF Group to form a joint venture company to explore and collaborate in solar power generation and energy efficiency projects.

 

Regulatory

 

Houston Chronicle – February 28, 2020

In Houston, job losses would kill support for Green New Deal, poll shows*

Over 60 percent of Houston Democrats said they would oppose the Green New Deal if it means layoffs in the oil and gas industry, according to a new University of Houston poll.

The poll published this week asked Texas Democrats whether they would support the legislation given its potential effects, including the elimination of oil and gas drilling in the U.S. by 2035. While 58.9 percent of Houston Democrats said they would still support the deal if it eliminated oil and gas drilling in Texas, when asked about job losses that support fell to 37.2 percent.

Overall, 52.2 percent of Texas Democrats said they would oppose the deal if it meant a loss of oil and gas jobs.

 

 

World Oil – February 28, 2020

U.S. to sell 12 MMbbl of oil just as virus hits demand

The U.S. will sell up to 12 MMbbl of oil from its emergency government stockpile just as global crude demand takes a hit from the spreading coronavirus.

The crude would be delivered to U.S. Gulf Coast pipelines in April and May, adding incremental barrels to an already oversupplied market at a time when oil demand is expected to slump. The International Energy Agency and the Organization of Petroleum Exporting Countries both expect fuel consumption to contract in the second quarter. OPEC and allied producers will gather in Vienna next week to discuss ways to stabilize oil prices, which have tumbled as supplies swell.

 

 

New Orleans Times Picayune – February 21, 2020

Gov. Edwards’ plan to combat sea level rise in Louisiana? It starts with greenhouse gas emissions

Gov. John Bel Edwards announced Thursday that his administration plans to embark on an ambitious expansion of coastal restoration and flood protection efforts that for the first time will target greenhouse gas emissions by Louisiana industry as a way of reducing future sea level rise.

“Louisiana will not just accept or adapt to climate change impacts,” said Edwards, flanked by top aides, during a news conference at the LSU Center for River Studies in Baton Rouge. “Louisiana will do its part to address climate change.

“Science tells us that rising sea level will become the biggest challenge we face, threatening to overwhelm our best efforts to protect and restore our coast. Science also tells us that sea level rise is being driven by global greenhouse gas emissions.”

 

 

Five Thirty Eight – March 1, 2020

Goodbye To Tom Steyer, The Other Billionaire Whose 2020 Campaign Never Made Much Sense

In a field that included heavyweights such as Joe Biden and Bernie Sanders, perhaps no other Democratic presidential hopeful really had much of a chance in the first place. It sure looks that way right now. But even relative to the other longshots, Tom Steyer, who dropped out of the race on Saturday night after a disappointing finish in the South Carolina primary, was a longshot. Nor was it entirely clear why he was running.

Steyer, a billionaire from his previous career as a hedge fund manager, spent the years before his presidential run pushing two causes in particular: efforts to mitigate climate change and the impeachment of President Trump. But Steyer’s presidential campaign wasn’t particularly focused on either issue — or anything else. He embraced some more liberal ideas (a wealth tax) and opposed others (Medicare for All). He cast himself as a populist while also emphasizing his business experience. He touted his electability and his commitment to fighting climate change, but not in ways that were particularly unique compared to the other candidates.

 

 

NPR – March 1, 2020

Pete Buttigieg Suspends Presidential Bid

Former South Bend, Ind., Mayor Pete Buttigieg has told his campaign staff he’s suspending his campaign for the presidency, a senior campaign aide tells NPR.

Buttigieg will give a speech Sunday night from South Bend.

Known colloquially as “Mayor Pete,” Buttigieg, who’s 38, was one of the youngest Democratic candidates seeking the nomination and the first openly gay candidate to mount a major campaign for the presidency. ….

But Buttigieg also faced scrutiny over his work at consulting firm McKinsey & Co., prompting his release a list of nine of his former clients, including Blue Cross Blue Shield of Michigan, the Environmental Protection Agency, the Defense Department and the U.S. Postal Service.

 

 

Wall Street Journal – February 28, 2020

Push to Roll Back Auto-Emissions Rules Hits a Roadblock*

Two federal agencies are struggling to finish new rules to roll back auto-emissions regulations, according to auto industry lobbyists and government officials with knowledge of the process.

The Environmental Protection Agency and Transportation Department are clashing over the underlying rationale for the new regulations, which are aimed at reducing requirements set under the Obama administration, these people say.

The new rule will set requirements for tailpipe emissions and fuel economy for vehicles built through mid-decade. Administration officials hope to complete the rule by April 1, but are likely to miss that target, the people say. The delays could further prolong uncertainty for the auto industry, which is trying to lock in plans now for new models due out in the coming years.