.The Texas Energy Report

By Alex Mills

Gasoline and diesel prices are declining, and in many locations in Texas gasoline is below $3 per gallon and diesel is under $4.

The Energy Information Administration (EIA), the data collection agency at the U.S. Department of Energy, and AAA, an industry organization that monitors fuel prices at the retail level, both show declines ranging from 18% to 33%.

EIA reported on May 8 the average regular gasoline price in the U.S. was $3.533 per gallon, which is an 18% decline of $0.795 from a year ago of $4.328.

The average price in Texas was $2.993 down $0.994 (25%) from $3.987 a year ago, according to EIA.

AAA reported similar numbers for Abilene ($2.958), Wichita Falls ($3.013), and East Texas ($2.943)…..
 

May 8, 2023 — Oil and gas exploration and production activity slowed in the first quarter 2023, according to the Texas Alliance of Energy Producers Texas Petro Index (TPI). This monthly analysis of the statewide …

May 5, 2023 — Income to the State of Texas from petroleum severance taxes were down significantly in April when compared to the same month last year, according to the comptroller’s office. Natural …

May 5, 2023 — Nine people have undergone medical evaluations and then were released following exposure to heat during a fire that’s now under control at Shell‘s Deer Park Chemicals plant south of Houston.

The fire is said to have been caused by an unspecified leak at an Olefins unit.

There was no explosion, according to witnesses.

The blaze ignited late this afternoon but appears to be dying down as the night wears on, the Harris County Sheriff’s Dept. said.

In a statement Friday night, Shell said, “The ignited product includes cracked heavy gas oil, cracked light gas oil and gasoline,” in an area of the plant that had likely been undergoing routine maintenance at a heat exchanger.

Depressurization has been underway all evening.

“No injuries have been reported, though a small number [9] of contract employees who were exposed to product are undergoing medical evaluation as a precaution,” with any injuries likely caused by heat rather than contact with flames.

And a Harris County Fire Marshal’s spokesperson said the air around the plant is being monitored but there have been no harmful levels of chemicals detected, and a Shell spokesperson said there has been and is no danger to the surrounding community.

The Houston Advanced Research Center is said to be in charge of air monitoring, along with the Shell in-house air monitoring team….
 

Late last year, the Texas House put forth their goals and priorities for consideration during the upcoming legislative session. Included among those priorities was House Interim charge #3, which directed the House to …

May 4, 2023 — A University of Houston research team, the Selva Research Group, is one of seven teams that advanced to the final stage of the U.S. Department of Energy’s Conductivity-enhanced materials for Affordable, Breakthrough Leapfrog Electric and thermal applications Conductor Manufacturing Prize or CABLE Prize.

The three-stage DOE competition has committed up to $4.5 million to accelerate the development of affordable, manufacturable materials that conduct electricity more efficiently and help propel America into a clean energy economy.

The UH team’s “Super Cool Conductor,” a very thin wire, is a rare-earth, high-temperature superconductor that can be manufactured at half the cost of copper cables that are currently used for power transmission in most cities.

The Selva Group won the first stage of the CABLE competition in 2021 by successfully demonstrating its breakthrough conductive material – the UH high-performance superconductor – for electrical and thermal energy applications. In the second stage, the teams had to provide a sample of their material for evaluation by CABLE prize-approved testing labs. The UH conductor successfully competed in the Beat Copper contest and demonstrated the potential to replace copper in motors, cables and generators. In addition, the unique magnetic properties of the superconductor make it well-suited for use in compact fusion power plants and other similar uses according to the DOE website….
 

By Alex Mills

Natural gas production in the U.S. has increased for 23 consecutive months as electric power distribution and liquefied natural gas (LNG) exports continued to rise.

The Energy Information Administration (EIA) stated this week U.S. dry natural gas production in February averaged 101.5 billion cubic feet per day (Bcf/d), which is 7 Bcf/d (7.4%) higher than February 2022, “the highest level for any month since 1973 when we began tracking dry natural gas production.”

EIA also noted gross withdrawals of 123.1 Bcf/d, which is a 6.8% increase over February 2022 of 115.3 Bcf/d, and it is the “highest daily rate of gross withdrawals for any month since 1980, the earliest year in this data set.”

Even though consumption of natural gas for electric power increased 7% over February 2022, consumption declined in residential (13.6%), commercial (8.4%) and industrial (2.6%) categories.

The U.S. exported 20.6 Bcf/d of natural gas to 25 countries in February exceeding imports of 8.7 Bcf/d making the U.S. a net exporter….
 

There will be enough electricity and reliability to power Texas this summer, but the population has grown 24% in 14 years while “on-demand dispatchable power” has only grown 1.5%. ERCOT faces a new reality: Texas has an electricity supply-and-demand problem.

May 3, 2023 –The seasonal overview of grid preparedness for most of the State of Texas as released by the Public Utility Commission of Texas is very good but with a caveat — the grid is losing ground against population increases.

At a news conference Wednesday morning, PUC Chairman Peter Lake said, “The ERCOT grid is ready for this summer, the reliability reforms that were put in place have been tested and continue to work.”

But for the first time in memory, there is a very small possibility (possibly 1% according to ERCOT Chairman Pablo Vegas) that there won’t be enough “dispatchable power” (natural gas) to meet the state’s needs under some conditions, notably in mid-evenings on the hottest days when solar power ends for the day and there isn’t enough wind to augment fossil fuel generation.

Chairman Lake indicated that renewables are crucial to the grid unlike never before……
 

May 3, 2023 — In a rare move, an energy bill has been introduced into the Texas Legislature in May — and it’s getting some quick attention (yes, the 60-day bill filing deadline was March 10th).

The unusual late filing was accepted by the Senate and fast-tracked.

State Sen. Charles Schwertner‘s SB 2627 is aimed at solidifying the funding mechanisms for the self-maintained-fee Texas Energy Fund, to be held by the Texas Treasury Safekeeping Trust Company under the Public Utility Commission of Texas (PUC) control and specifies what money is deposited…
 

Dry natural gas production from the Haynesville shale play in northeastern Texas and northwestern Louisiana reached new highs in March 2023, averaging 14.5 billion cubic feet per day (Bcf/d), 10% more than the 2022 annual average of 13.1 Bcf/d, according to data from Enverus. Haynesville natural gas production currently accounts for about 14% of all U.S. dry natural gas production.

The Haynesville is the third-largest shale gas-producing play in the United States, behind the Marcellus play in the Appalachian Basin and the Permian play in Texas and New Mexico. In 2022, dry natural gas production averaged 25.2 Bcf/d from the Marcellus play (83% of Appalachian Basin production) and 15.4 Bcf/d from the Permian play. The Marcellus, the Permian, and the Haynesville plays combined account for 55% of U.S. dry natural gas production….
 

Halliburton

Reported net income of $651 million, or $0.72 per diluted share, for the first quarter of 2023. This compares to net income for the first quarter of 2022 of $263 million, or $0.29 per diluted share. Halliburton’s total revenue for the first quarter of 2023 was $5.7 billion compared to total revenue of $4.3 billion in the first quarter of 2022. Reported operating income was $977 million in the first quarter of 2023 compared to reported operating income of $511 million and adjusted operating income, excluding impairments and other charges, of $533 million in the first quarter of 2022.

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Helix Energy

Reported a net loss of $5.2 million, or $(0.03) per diluted share, for the first quarter 2023 compared to net income of $2.7 million, or $0.02 per diluted share, for the fourth quarter 2022 and a net loss of $42.0 million, or $(0.28) per diluted share, for the first quarter 2022.

Helix reported adjusted EBITDA¹ of $35.1 million for the first quarter 2023 compared to $49.2 million for the fourth quarter 2022 and $2.5 million for the first quarter 2022. The table below summarizes our results of operations…
 

By Alex Mills

April 27, 2023 — Several key economic indicators for the oil and natural gas industry in the U.S. and Texas show positive signs of continued growth in production and activity.

The Baker Hughes drilling rig count is up, employment is up, and production is up.

The U.S. drilling rig count rose five this week to 753 from 748 a week ago, and it is up 58 from a year ago. Texas reported 377 active rigs (the most of any state), which was an increase of 16 from a year ago. Most of the rig activity occurred in the Permian Basin of West Texas and Southeastern New Mexico with 358 rigs working compared to 334 a year ago.

The Texas Workforce Commission reported this week increases in employment in the upstream oil and gas industry. The Texas oil and gas industry added 1,500 jobs last month to bring the total upstream jobs to 198,700 in March, which is an 11% increase over 2022…..
 

Politicizing electricity markets is no way to build system resilience

By Lynn Kiesling

We need to talk about Texas.

The Texas electricity model, that is – its promise as a fully unbundled, competitive system, its performance during winter stresses like Winter Storm Uri in 2021, and how the Texas legislature is politicizing markets through its attempts to “reform” them by subsidizing natural gas generation and raising costs on renewables.

Some background first, for those of you who don’t eat, sleep, and breathe electricity market design and regulatory economics. In the 1990s when lots of states…
 

April 25, 2023 — A bill to keep Texas local governments from outlawing gasoline and diesel-powered engines or any related specific source of fuel passed the Texas Legislature on Tuesday and will go back to the Senate for review, then on to the Governor.

The bill anticipates cities or municipalities mandating, for example, electric vehicles by outlawing through rules or ordinances any and all other kinds of vehicles.

Senate Bill 1017 filed by state Sen. Brian Birdwell passed 116 to 30….
 

By Michele Lodge April 21, 2023 — It remains to be seen whether a proposed Texas exchange-traded fund will take off. Lone Star state pride aside, what financial advisors really want are ETFs …

By Alex Mills

Today’s oil and natural gas markets must deal with a number of wild cards (climate change mandates, rising inflation, possible recession) but the revival of China’s economy and Russia’s oil and gas production and exports are keeping energy forecasters up late at night.

The International Energy Agency (IEA), which represents 31 different countries that are primarily net importers of oil and gas (the U.S. is the only members that is a net exporter), issued its monthly reports this week and China’s petroleum demand and Russia’s exports were center stage.

World oil demand will climb by 2 million barrels per day (b/d) in 2023 to a record 101.9 million b/d because China’s resurgent economy, which coming out of Covid lockdown, will account for 90% of growth, IEA stated.

Russia, one of largest oil exporters historically, must deal with sanctions placed on its oil and gas sales to other countries….
 

April 20, 2023 — A number of Texas oil & gas bills are continuing to make their way through the Legislature — so far with only a couple of surprises — and with our traditional Texas Energy Report Quick Energy Bill Tracker returning again Friday, we preview the status of several key O&G bills.

Rep. Tom Craddick‘s and Rep. Dustin Burrows‘ HB 450, establishing a cause of action for the bad faith washout of an overriding royalty interest in an O&G lease, passed the House early this month and was the subject of a public hearing in the Senate Administration committee earlier this week.

The bill was released from the committee and is moving quickly, now on the local and uncontested calendar for today (Thursday April 20th) and could be on its way to the governor by the end of the week.

Its companion bill, SB 501 from Sen. Bryan Hughes, spent more than a month in the Senate Natural Resources & Economic Development committee before its public hearing March 29th, but it was out of committee in less than a week and was placed on the local and uncontested calendar until April 12th temporarily.

The House bill picked up speed, the Senate calendar entry was removed and the House will now be dealing with it’s “identical” companion bill, HB 450 (above)….
 

April 19, 2023 — A bill from Sen. Charles Schwertner to create an oversight committee guiding a PUC plan for the ERCOT grid has passed the Texas Senate is now set for public testimony in the House.

Sen. Schwertner said his bill would act as a “guardrail” should the Public Utility Commission of Texas institute its preferred market overhaul called the Performance Credit Mechanism (PCM), which critics fear will pass large portions of ERCOT reliability costs onto consumers to the tune of $5.7 billion each year.

The PCM would require electricity companies to buy “performance credits” from electricity generators, with those generators earning the credits by remaining available to generate power during the highest-demand periods on the ERCOT grid.

Under the PCM plan, generators would receive the credits by complying with PUC requirements and rules based on an evaluation, costs of which could be passed along to consumers.

The PCM blueprint has already been approved by the PUC, with votes of confidence by some electricity providers including Calpine, which said on Tuesday the PCM plan encourages 850 MW of new natural gas-fired power projects….
 

April 18, 2023 — One of several bills that could prevent insurance companies from ESG criteria into account when making investment strategies is now out of the Texas House Insurance committee and is ready to be calendared for discussion in the full House.

HB 1239 from Rep. Dr. Tom Oliverson (along with Rep. Dennis Paul and Rep. Cody Harris) made it to the committee on March 3rd with hearings held March 14th with more hearings on March 28th, at which point a committee substitute was brought in and accepted.

The substitute removed some specific guidelines in establishing rates by insurance companies.

The substitute revises the list of entities specifically included in the bill’s definition of “insurer” by omitting a nonprofit legal services corporation and a risk retention group, which were included in the introduced, the bill analysis notes….
 

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

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

There are about 30 such mines in Texas.

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

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

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