.The Texas Energy Report

May 15, 2023 – The Texas Legislature today gave preliminary approval to the Sunset legislation for the Texas Commission on Environmental Quality, an agency criticized for its light touch with corporate polluters at the expense of vulnerable people.

Senate Bill 1397 renews the TCEQ for another 12 years. The bill, which already cleared the state Senate, received initial approval from the Texas House today. Adrian Shelley, Texas director of Public Citizen, issued the following statement:

“Communities across Texas live with polluted air and water and the threat of chemical spills – or worse. During the past year, members of these communities pleaded with their elected officials to overhaul the TCEQ and finally protect their health. Lawmakers ignored the pleas, preferring the status quo in Texas — protection of polluters over people. Legislators passed on a once-in-a-decade opportunity to address a wide range of issues with a TCEQ that many say is not merely a reluctant regulator but a broken agency.

“Though the Legislature could have done more, the bright spots of the legislation that people in fenceline communities pushed for will now offer a little more protection to all Texans.”

A Public Citizen analysis identified the following favorable provisions in SB 1397:

• An increase in the maximum daily fine from $25,000 to $40,000
• Permit applications are posted online, and the comment period following a public meeting increased to 36 hours
• Compliance history review or permit suspension of a facility based on exigent circumstances.

Favorable improvements that the Legislature chose not to adopt include:

• Directing the TCEQ to consider the cumulative effects on health of approving multiple air permits in the same neighborhoods
• Removing “economic development” from the agency’s mission statement, which has led the agency to protect industry interests over public health
• Requiring the agency to consider environmental justice in permitting and enforcement.

May 15, 2023 — One person has died after a fire at the Marathon Petroleum Galveston Bay refinery in Texas City southeast of Houston.

It started about 9:30 Monday morning with fire crews arriving quickly and immediately spraying down the fire, according to one witness, who added the fire appeared to be under control within a couple of hours.

The blaze sent black smoke rising from the plant but officials did not call for nearby residents to shelter in place.

There are no details on the cause of the fire or the circumstances involving the one death, no have Texas City police said whether there were others injured — and of course officials have not released the identity of the person killed.

KHOU’s Gerald Harris said this afternoon that there are two people described as contract workers “undergoing evaluation” as a result of the fire.

So far air monitors have reported no danger to those nearby.

The statement this afternoon from Marathon Petroleum:

“We are deeply saddened to report that a Marathon employee has passed away as a result of the fire today at Marathon Petroleum’s Galveston Bay refinery.

“We extend our deepest sympathies to our employee’s family, friends and co-workers, and our thoughts are with them as we all mourn his passing.

“The safety of our workers and the community is our top priority, and a full investigation will be conducted to determine the cause of the incident.”

May 11, 2023 — Today, the Biden administration’s Environmental Protection Agency (EPA) released new rules for coal and natural gas-fired power plants mandating that they must cut or capture nearly all their carbon …

May 10, 2023 — The Railroad Commission of Texas issued a total of 607 original drilling permits in April 2023. The total includes 525 to drill new oil or gas wells, 6 to re-enter plugged wellbores and 69 for re-completions of existing wellbores.

The breakdown of well types for total original drilling permits in April 2023 is: 139 oil, 36 gas, 396 oil and gas, 35 injection, and one other permit.

In April 2023, Commission staff processed 747 oil, 192 gas and 222 injection completions for new drills, re-entries and re-completions….
 

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 …

Amplify Energy

• • Achieved average total production of 19.4 MBoepd
  • Generated net cash provided by operating activities of $90.3 million and net income of $352.8 million
  • Delivered Adjusted EBITDA of $25.8 million
  • Generated $11.4 million of free cash flow
  • Reduced debt outstanding by $65 million
• Announced the appointments of Dan Furbee, as the Company’s Senior Vice President and Chief Operating Officer, and Jim Frew, as the Company’s Senior Vice President and Chief Financial Officer
• As of April 30, 2023, net debt was $109 million, consisting of $125 million outstanding under the revolving credit facility and $16 million of cash on hand
  • Net Debt to Last Twelve Months (“LTM”) Adjusted EBITDA of 1.1x¹
• Reaffirmed our full-year 2023 guidance

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APA

• Reported production of 394,000 barrels of oil equivalent (BOE) per day; adjusted production, which excludes Egypt noncontrolling interest and tax barrels, was 318,000 BOE per day; 
• Generated net cash from operating activities of $335 million, adjusted EBITDAX of $1.3 billion, and free cash flow (FCF) of $272 million;
• Strong operational execution drove higher-than-expected 1Q adjusted oil production; 
• Returned 81% of first quarter FCF to shareholders, reiterating commitment to minimum 60% capital return framework; and 
• Announced reduction in 2023 capital investment by $100 million in response to lower Permian Basin natural gas prices; full-year capital budget now set at $1.9- to $2.0 billion.

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Archrock Inc.

• Revenue for the first quarter of 2023 was $229.8 million compared to $197.2 million in the first quarter of 2022.
• Net income for the first quarter of 2023 was $16.5 million compared to $1.7 million in the first quarter of 2022.
• Adjusted EBITDA (a non-GAAP measure defined below) for the first quarter of 2023 was $97.2 million compared to $81.4 million in the first quarter of 2022.
• Declared a quarterly dividend of $0.15 per common share for the first quarter of 2023, resulting in dividend coverage of 2.0x, and announced a $50 million share repurchase authorization.
• Achieved record period-end utilization of 94% for the first quarter of 2023 compared to 84% in the first quarter of 2022.
• Trending toward the high-end of 2023 Adjusted EBITDA guidance range of $400 million to $430 million.

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Atmos

• Earnings per diluted share was $4.40 for the six months ended March 31, 2023; $2.48 per diluted share for the second fiscal quarter.
• Consolidated net income was $629.5 million for the six months ended March 31, 2023; $357.7 million for the second fiscal quarter.
• Capital expenditures totaled $1,415.3 million for the six months ended March 31, 2023, with approximately 86 percent of capital spending related to system safety and reliability investments.

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Baker Hughes

• Orders of $7.6 billion for the quarter, up 12% year-over-year.
• Revenue of $5.7 billion for the quarter, up 18% year-over-year.
• GAAP operating income of $438 million for the quarter, up $160 million year-over-year.
• Adjusted operating income (a non-GAAP measure) of $512 million for the quarter, up 47% year-over-year.
• Adjusted EBITDA* (a non-GAAP measure) of $782 million for the quarter, up 25% year-over-year.
• GAAP diluted earnings per share of $0.57 for the quarter which included $0.28 per share of adjusting items. Adjusted diluted earnings per share (a non-GAAP measure) was $0.28.
• Cash flows generated from operating activities were $461 million for the quarter. Free cash flow (a non-GAAP measure) for the quarter was $197 million.

…
 

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 …