.The Texas Energy Report

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……
 

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

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

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

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

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

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

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

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

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

By Alex Mills

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

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

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

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

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

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

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

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

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

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

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

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

By Alex Mills

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 
Southwestern Energy

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

…