.The Texas Energy Report

In the US Energy Information Administration’s recently released Short-Term Energy Outlook (STEO), we forecast that U.S. liquefied natural gas (LNG) exports will continue to lead growth in U.S. natural gas trade as three LNG export projects currently under construction start operations and ramp up to full production by the end of 2025. We also forecast increased natural gas exports by pipeline, mainly to Mexico. In our STEO forecast, net exports of U.S. natural gas (exports minus imports) grow 6% to 13.6 billion cubic feet per day (Bcf/d) in 2024 compared with 2023. In 2025, net exports increase another 20% to 16.4 Bcf/d.

We forecast that U.S. LNG exports increase 2% in 2024 to average 12.2 Bcf/d. In 2025, we forecast that LNG exports grow by an additional 18% (2.1 Bcf/d). We forecast U.S. natural gas exports by pipeline to grow by 3% (0.3 Bcf/d) in 2024 and by 4% in 2025. We expect pipeline imports to decline by 0.4 Bcf/d in 2024 and then increase slightly (0.1 Bcf/d) in 2025.

In 2024–25, we forecast that existing U.S. LNG export facilities will run at similar utilization rates as in 2023. Annual maintenance typically occurs in the spring and fall, when global LNG demand is lower and temperatures are mild. In April and May 2024, we expect LNG exports to decline while two of the three trains at the Freeport LNG export facility undergo annual maintenance. Later in 2024, we expect that Plaquemines LNG Phase I and Corpus Christi Stage 3 will begin…
 

By Alex Mills

Energy production in the U.S. set records in 2023 and 2024 looks even better.

The U.S. produced more crude oil than in any country in history at 13 million barrels per day (b/d). Natural gas, wind and solar had a record-setting year, too.

Investors are taking notice.

Oil company stocks, which were dismal mid-year 2023, began to reverse in January.  The stock of both of the U.S. based intergraded oil companies have increased. ExxonMobil opened at $100 in January and closed at $119 April 2, and Chevron is up 7% from $149 to $159.

Many independent exploration-and-production (E&P) companies also have increased stock values this year. Marathon Oil Corp. and Diamondback Energy are leading the group jumping 39% and 29%, respectively. Marathon opened the year at $152 per share and rose to $211 on April 2. Diamondback went from $155 to $200.

Other E&P companies showing double-digit increases are Pioneer Natural Resources at 17%, Devon 13%, ConocoPhillips 12%, and…
 

April 3, 2024 — Twelve of 13 refineries operated by San Antonio-based Valero Energy were part of a World War Two effort by the Roosevelt administration to produce fuel for the military effort, but as a side effect hazardous wastes were produced that have since leaked into the surrounding environments.

In the years since, a number of Valero affiliates have gone to court to ask that the federal government shoulder at least some of the financial burden for cleaning up the waste, because the government effectively operated those refineries as part of their extensive oversight at the time — and now the issue is before the US Supreme Court.

A Michigan federal district court agreed with Valero that the feds should hold some responsibility, including payouts of up to $50 million per refinery for cleanup, but as an analysis…
 

By Alex Mills

Crude oil prices in the U.S. and internationally moved upward as fighting in the Middle East increased uncertainty about oil supplies.

Brent crude oil traded on the international exchange reached $86 per barrel and West Texas Intermediate (WTI) rose to $81 on March 27.

“While demand uncertainty persists, geopolitics risk, a weakening dollar, and OPEC+ supply cuts have moved prices higher,” OilPrice.com reported.

Ukraine drone strikes on Russian refineries and the fighting in the Middle East have resulted in hedge funds increasing long positions held on the New York Mercantile Exchange WTI rise by 50 million barrels and ICE Brent net longs increased by almost 55 million barrels, the biggest positioning move of the year so far, according to OilPrice.com.

The Federal Reserve Bank of Dallas released its quarterly survey of oil company executives this week and a majority expects WTI oil price to average $80 at year-end 2024.

Activity in the oil and gas sector was relatively unchanged in the first quarter of 2024, according to oil and gas executives responding to the Dallas Fed Energy Survey.

“The business activity index, the survey’s broadest measure of conditions energy firms in the Eleventh District face, was 2.0 in the first quarter, suggesting little to no growth…
 

The collapse of the Francis Scott Key Bridge into the Patapsco River on March 26 has temporarily halted all shipping traffic from the Port of Baltimore. In this article for the US Energy Information Administration, we examine implications for energy-related trade.

The port is the second-largest exporting hub for coal in the United States, accounting for 28% of total coal exports in 2023, according to Census Bureau data. It is second only to Norfolk, Virginia, also known as Hampton Roads.

How much coal moves through the Port of Baltimore?

In three of the past five years, annual coal exports from the Port of Baltimore totaled around 20 million short tons, with the only exception occurring in 2020 when the reaction to the COVID-19 pandemic dampened coal demand worldwide.

Exports from Baltimore surged to 28 million short tons in 2023, mainly because of growing demand for U.S. coal in Asia. Even before the port’s closure, we were expecting much slower growth in total U.S. coal exports…
 

March 27, 2024 — GVEC, a progressive cooperative serving over 120,000 consumers in south central Texas, is proud to announce a collaboration with Enphase Energy, a global energy technology company and the world’s leading supplier of microinverter-based solar and battery systems.

The partnership will provide GVEC’s members the opportunity to participate in a trailblazing battery storage-based demand response program, Peak-Time Payback (PTP).

One of the first of its kind in the state, the program is just one step in GVEC’s strategic plans to help keep rates fair and competitive for members as well as support the overall resiliency and sustainability of the Texas electrical grid year-round.

GVEC members with Enphase IQ batteries are incentivized to join the program with one initial bill credit upon registration and an on-going annual bill credit based on the capacity rating of their system.

During times of high demand throughout the year, GVEC, working in conjunction with Parsons (formerly IPKeys Power Partners) and Enphase, can access up to 70% of the total capacity of each battery system to discharge back into the home reducing or eliminating the home’s reliance on the grid….
 

March 25, 2024 — The Speaker of the Texas House, Dade Phelan (R-Beaumont), has formed a select committee to look at the President’s recent pause on future LNG export permits.

It’s to be led by Representative Jared Patterson (R-Frisco); other members include Rep. Christian Manuel (D-Beaumont), Rep. Brooks Landgraf (R-Odessa), Rep. Mary Ann Perez (D-Houston) and Rep. Cody Vasut (R-Angleton).

The committee is tasked with “analyzing the federal government’s legal authority to take such action; assessing the potential economic, environmental…
 

By Alex Mills

The U.S. House of Representatives focused on a number of energy issues last week during Energy Week to increase access to America’s oil and natural gas resources, strengthen energy infrastructure, and repeal taxes on energy production that weaken U.S. security.

The House passed the Protecting American Energy Production Act by a vote of 229-118, which would block a moratorium on hydraulic fracturing. The bill specifically limits executive power and states that “the President may not declare a moratorium on the use of hydraulic fracturing unless such moratorium is authorized by an Act of Congress.”

The House also passed “Restoring American Energy Dominance Act,” sponsored by Rep. Lauren Boebert, R-Colo. The bill would stop the Bureau of Land Management from increasing royalty rates charged to companies drilling on public lands.

The House also has plans to take up several other energy-related bills and resolutions against President Joe Biden’s “radical, anti-energy agenda.”

Legislation on the agenda would repeal the greenhouse gas reduction fund, make it easier to build energy projects in wetlands and curb legal challenges from environmental groups.

House Speaker Mike Johnson and Majority Leader Steve Scalise, both Republicans from Louisiana, were among the leaders in putting together Energy Week, and both said they want to protect American energy dominance.

In announcing Energy Week Scalise declared that “people know they are paying too much because of the far-left agenda.”

“We’re bringing bills on the House floor…
 

March 24, 2024 — A new study of summer weather in Texas finds the heat index — an indicator of how hot it feels outside — is rising much faster than the temperature.

The reason, scientists say, is that warming is leading to a rise in humidity. Historically in Texas, the relative humidity would fall when the temperature rose, making it possible to cool off by sweating.

But now Texas is seeing high heat and high humidity together.

On hot, muggy days, the air is so saturated with water that sweat sticks to the skin rather than evaporating.

As a result, the weather feels much…
 

March 24, 2024 — High winds expected in Texas and New Mexico, coupled with dry conditions [and recent blame on power companies for some wildfires] may cause Xcel Energy to “de-energize” some power lines on Sunday, the company said, and as a worst case, power could be out for a while.

The Minneapolis-based power company emphasized that should electricity be interrupted in any one area, it could be localized and caused by downed tree branches or other problems; it doesn’t necessarily mean it’s a deliberate outage.

Southwest winds up to 45 miles per hour with gusts up to 65 mph are expected in some areas of the Texas panhandle and portions of New Mexico, according to the National Weather Service, with a High Wind Warning in effect from 11 am until 10 pm on Sunday.

“In certain limited areas, Xcel Energy may de-energize power lines on Sunday as a last resort measure to reduce the risk of a wildfire and ensure public safety,” including concerns about damage to electrical equipment, the regulated electric utility and natural gas delivery company said in…
 

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

Click on the name of the company for more information about the quarterly earnings report, usually from the company’s own press release

AEP

American Electric Power (Nasdaq: AEP) today reported fourth-quarter 2023 earnings, prepared in accordance with Generally Accepted Accounting Principles (GAAP), of $336 million or $0.64 per share, compared with GAAP earnings of $384 million or $0.75 per share in fourth-quarter 2022. Operating earnings for fourth-quarter 2023 were $647 million or $1.23 per share, compared with operating earnings of $540 million or $1.05 per share in fourth-quarter 2022. Operating earnings is a non-GAAP measure representing GAAP earnings excluding special items.

Year-end 2023 GAAP earnings were $2.2 billion or $4.26 per share, compared with GAAP earnings of $2.3 billion or $4.51 per share for year-end 2022. Year-end 2023 operating earnings were $2.7 billion or $5.25 per share, compared with operating earnings of $2.6 billion or $5.09 per share for year-end 2022.

The difference between GAAP and operating earnings for the fourth quarter and year-end 2023 was largely due to the disallowance of recovery of certain deferred fuel costs in West Virginia, the probable disallowance of certain capitalized costs associated with the Turk Plant, and the mark-to-market impact of economic hedging activities.

__________________________

Amplify Energy

• Achieved average total production of 20.8 MBoepd
• Generated net cash provided by operating activities of $28.4 million and net income of $43.6 million
• Delivered Adjusted EBITDA of $25.2 million
• Generated $14.4 million of free cash flow

__________________________

APA

During the fourth-quarter 2023, APA reported net income attributable to common stock of $1.8 billion, or $5.78 per share on a fully diluted basis. When adjusted for certain items that impact the comparability of results, APA’s fourth-quarter earnings totaled $352 million or $1.15 on a diluted share basis.

Reported fourth-quarter production was 414,000 BOE per day; adjusted production, which excludes Egypt noncontrolling interest and tax barrels, was 341,000 BOE per day. Net cash provided by operating activities in the fourth quarter was $1.0 billion, and adjusted EBITDAX was $1.4 billion.

For the full-year 2023, APA reported net income of $2.9 billion, or $9.25 per diluted common share. On an adjusted basis, APA’s 2023 earnings totaled $1.4 billion or $4.53 per diluted common share.

__________________________

Archrock Inc.

• Revenue for the fourth quarter of 2023 was $259.6 million compared to $218.9 million in the fourth quarter of 2022. Revenue for 2023 was $990.3 million compared to $845.6 million in 2022.
• Net income for the fourth quarter of 2023 was $33.0 million compared to $10.5 million in the fourth quarter of 2022. Net income for 2023 was $105.0 million compared to $44.3 million in 2022.
• Adjusted EBITDA (a non-GAAP measure defined below) for the fourth quarter of 2023 was $120.3 million compared to $89.0 million in the fourth quarter of 2022. Adjusted EBITDA for 2023 was $450.4 million compared to $363.3 million in 2022.
• Leverage ratio at the end of the fourth quarter of 2023 was 3.5x compared to 4.4x at the end of the fourth quarter of 2022.

__________________________

Atmos

Fiscal 2023:

• Earnings per diluted share was $6.10 for the year ended September 30, 2023; $0.80 per diluted share for the fourth fiscal quarter.
• Consolidated net income was…
   

March 21, 2024 — The Energy Information Administration said on Thursday, “We increased our forecast prices for crude oil and petroleum products for the remainder of 2024 in our March Short-Term Energy Outlook (STEO) following the announcement that OPEC+ will extend the existing voluntary production cuts through the second quarter of 2024. We now forecast significantly less global oil production than world oil consumption through the first half of 2024, requiring draws on world petroleum stocks (inventory). Stock draws tend to increase oil prices.

“We reduced our forecast for world oil production in the second quarter of 2024 (2Q24) to 101.3 million barrels per day (b/d) in the March STEO in response to OPEC+ extending its cuts. That results in global oil production that is 0.9 million b/d less than our forecast of 102.2 million b/d for world oil consumption. Although we expected some OPEC+ countries to continue to restrict production, we expect the March 3 announcement to result in larger cuts to production than we had previously assumed. The announcement includes an additional voluntary production cut from Russia.

“The current OPEC+ agreement includes two types of production cuts. The first type is officially stated production targets, and the second type is additional voluntary cuts pledged by certain OPEC+ countries. Although our previous forecast assumed that some OPEC+ members would maintain voluntary cuts—which had been set to expire after 1Q24—through 2Q24, this new announcement pledges that cuts will be continued for all member countries through the first half of 2024. Because OPEC+ did not…
 

March 19, 2024 — The Railroad Commission of Texas assessed $3,141,077 in fines involving 775 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.

Ninety-one dockets involved $1,217,351.30 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…
 

By Alex Mills

The battle over the future of America’s petroleum industry continues to rage as “President Biden has used every weapon and every tool available to him to make producing American energy more difficult,” as one Texas Congressman said.

Rep. August Pfluger (R-Tx), who chairs the House Energy Action Team, pointed to two new regulations proposed by Washington bureaucrats creating more restrictions on exports of liquefied natural gas (LNG) from the U.S. and requires the industry to begin reporting greenhouse gas emissions.

Pfluger introduced a bill to amend the Natural Gas Act repealing restriction on the import and export of natural gas, and it passed by a vote of 224-200 in the House of Representatives.

Additionally, a group of nine Democrats from Texas have joined with the Texas Republicans in signing a letter to Biden asking him to stop implementing restrictions on LNG exports.

“Your continued prioritization of LNG exports ensures a future marked by affordable, accessible, and sustainable energy resources that foster global stability and propel the energy transition,” the members of Congress wrote in a letter. “We firmly believe that LNG exports hold significant benefits for the U.S. economy, energy security, and bolstering our alliances with U.S. partners across the world. As the United States continues to lead in global stability and energy resources, the export of U.S. LNG is a linchpin for fostering strong international partnerships, diversifying energy supplies, and reducing dependence on volatile regions. The Administration’s support for U.S. LNG is not only a boon for America but a beacon for the world’s pursuit of cleaner, more sustainable energy sources.”

The decision to ban exports creates uncertainty and discourages investments that would otherwise create jobs and expand the supply of natural gas, Pfluger said.

The Securities and Exchange Commission recently issued new greenhouse reporting requirement for the oil and gas industry, and several states and industry groups sued to stop the regulations.

The suit states Congress did not authorize the SEC to demand that companies report environmental or any other controversial issues completely unrelated to finance.

Meanwhile, the price of natural gas has dropped, closing in mid-week at $1.66 per million British thermal units (MMBtu) because of large oversupply, according to the Energy Information Administration (EIA).

“We expect the Henry Hub spot price to remain below $2 per MMBtu in 2Q24 (second quarter 2024) as the winter heating season ends with natural gas inventories 37% above the five-year average,” EIA stated. “The Henry Hub spot price averaged $1.72/MMBtu in February…
 

The United States produced more crude oil than any nation at any time, according to our International Energy Statistics, for the past six years in a row. Crude oil production in the United States, including condensate, averaged 12.9 million barrels per day (b/d) in 2023, breaking the previous U.S. and global record of 12.3 million b/d, set in 2019. Average monthly U.S. crude oil production established a monthly record high in December 2023 at more than 13.3 million b/d.

The crude oil production record in the United States in 2023 is unlikely to be broken in any other country in the near term because no other country has reached production capacity of 13.0 million b/d. Saudi Arabia’s state-owned Saudi Aramco recently scrapped plans to increase production capacity to 13.0 million b/d by 2027.

Together, the United States, Russia, and Saudi Arabia accounted for 40% (32.8 million b/d) of global oil production in 2023. These three countries have produced more oil than any others since 1971 (counting production in the Russian Federation of the Soviet Union prior…
 

March 11, 2024 – The Public Utility Commission of Texas is pleased to welcome Jeff McDonald to his new role as the Director of the Independent Market Monitor (IMM) for the Electric Reliability Council of Texas (ERCOT) market.

As IMM Director, McDonald will collaborate with the PUCT to detect and prevent market manipulation and identify potential design improvements for the ERCOT market.

“Jeff is uniquely qualified for this role, having led market monitoring efforts in major wholesale electricity markets across the country,” said PUCT Interim Executive Director Connie Corona. “His experience working with other large grid operators around the country will give us an expert perspective on the ERCOT region and how we can continue to improve reliability and affordability for Texas energy customers.”

Created by statute in 2005, the IMM plays a critical role in the operation and design of the ERCOT wholesale electricity market.

The IMM works with PUCT staff to monitor the ERCOT market, identify areas for improvement, and protect against market manipulation or other activity that could hurt Texas consumers.

Potomac Economics has served as the ERCOT IMM for nearly 20 years and was recently re-awarded the IMM contract following a required competitive bidding process.

“We are very proud to continue serving the State of Texas and the ERCOT market in this important role,” said Dr. David Patton, president of Potomac Economics.

“Jeff’s deep expertise and decades of experience make him the perfect person to lead the IMM team in Texas and ensure the market is operating efficiently, fairly, and competitively.”

McDonald has worked in the monitoring of wholesale electricity markets for more than 20 years. He has served as the Vice President and Head of Internal Market Monitoring Unit at Independent System Operator (ISO) New England and Senior Manager of the Market Monitoring Unit at the California ISO.

Prior to joining Potomac Economics, McDonald was Vice President of Concentric Energy Advisors and Principal of Libertas Market Analysis.

McDonald has a Ph.D. in Economics from the University of California, Davis, a Master of Science in Natural Resource Economics from the University of Massachusetts, Amherst, and a Bachelor of Science in Agricultural and Managerial Economics from the University of California, Davis.

By Alex Mills

Increased efficiency and the development of new technology by America’s oil industry resulted in record oil production last year, according to a study by the Energy Information Administration (EIA).

“U.S. crude oil production has increased to record highs since 2010 and has risen even more quickly in recent months. These record highs have come despite declining U.S. drilling activity because the new wells are more efficient,” EIA stated in its Petroleum Supply Monthly report issued this week.

Since first surpassing the previous record in August 2023, U.S. crude oil production has increased another 2%, exceeding the pre-pandemic November 2019 peak by 0.3 million b/d. U.S. oil industry produced 13.3 million b/d in December 2023.

EIA noted the number of new wells brought on line by drilling activity has historically been the key determinant of whether crude oil production increases or decreases. However, advances in horizontal drilling and hydraulic fracturing technologies have increased well productivity, enabling U.S. producers to extract more crude oil from new wells drilled while maintaining production from legacy wells.

“Our Drilling Productivity Report (DPR) shows more production from a combination of increasing new well production and higher sustained legacy well production,” EIA stated in the report. “We define new well production as crude oil extracted during the first 12 months…
 

March 3, 2024 — The Texas state comptroller says tax income from oil production was down last month by 7% while natural gas income dropped 39% when compared year-over-year.

The oil production tax income was $458 million, according to Comptroller Glenn Hegar‘s latest month-end statement of revenues, while natural gas tax income was $186 million.

Motor fuel taxes dropped 1% to $302 million when compared to February 2023, while motor vehicle sales and rental taxes drew $586 million, up 8%.

Overall state sales tax revenue totaled $3.69 billion in February, half a percent more than in February 2023.

The majority of February sales tax revenue is…
 

By Alex Mills

Twenty years ago the United States imported more than half of the oil we consumed each day. Today, primarily through innovative technology developed by the American oil and natural gas industry, the U.S. exports more oil than it imports.

In 2004, the U.S. imported 13.7 million barrels of oil per day (b/d) while producing 5.2 million b/d, resulting in a negative 8.5 million b/d.

Currently, the U.S. imports just 6 million b/d while producing 13.3 million b/d, resulting in the U.S. becoming a net exporter of oil.

Natural gas also has become a net exporter with liquefied natural gas (LNG) traveling to Japan to the west and Europe to the east and many other countries.

The industry began experimenting with new technology in the 1990s that involved drilling vertically into shale formations and then drilling horizontally and then hydraulic fracturing the shale to free the oil and gas to flow to the surface. Around 2008 the rush to drill using this new technology took off.

However, some of the politicians in Washington, D.C. are using the regulatory weapon against the oil and gas industry.

President Joe Biden has used his power in an attempt to make it more difficult and expensive for the oil industry. The Biden administration recently implemented a complicated new methane tax, proposed new emission standards for vehicles, limited exploration on public lands, and proposed limiting LNG exports.

The American Petroleum Institute (API) this week released a new national poll demonstrating widespread concern over Washington’s approach on energy policy.

The poll, conducted Feb. 9-13 of 1,132 registered voters, found 86% believe producing oil and natural gas here in America helps make our country more secure against action by countries such as China and Russia.

Also, the survey found 84% believe producing more oil and natural gas in the U.S. could help lower energy costs for American consumers and …
 

By Alex Mills

Even though electric vehicle and hybrids sales grew in 2023, a variety of issues have emerged to cause some automakers to modify future manufacturing targets.

The Energy Information Administration (EIA) reported recently sales of hybrid, plug-in hybrids, and battery-electric vehicles in the U.S. rose to 17.7% of new light-duty vehicle sales in the third-quarter 2023.

Additionally, sales accounted for 16% of all new light-duty vehicle sales in the U.S. in 2023 compared to 12.6% in 2022.

EIA attributed the increase in battery-electric vehicles (BEV) to a 5% reduction in the average transaction price in the third quarter to $50,283, bringing the price 24% lower than at the price peak in the second quarter of 2022. “BEV prices are now within $3,000 of the overall industry average transaction price for light-duty vehicles,” EIA stated.

However, recent news indicates the BEV industry hit a few speed bumps that include a decline in consumer buying interest, investors taking a second look at charging companies, resale value, and reliability.

“As a result, electric cars and trucks are piling up on dealer lots, causing auto companies to reassess their investment plans,” the Wall Street Journal reported. “It takes a dealership around three weeks longer to sell a BEV than a gasoline vehicle, according to data from car-shopping website Edmunds. A year ago…