Energy Tomorrow Blog
Posted April 16, 2020
Amid talk in Texas of production quotas (“proration”) and other extreme policies that have been suggested to address the oil demand downturn, API’s Monthly Statistical Report (MSR) shows that supply is responding in real time and that U.S. crude and refined storage capacities have some flexibility to adjust to the COVID-19 driven demand decrease – helping to alleviate the need for blanket policies or government interventions.
Notably, recent federal actions may help provide additional flexibility to the entire energy value chain. For example, the U.S. Department of Energy’s opening of crude oil storage capacity within the Strategic Petroleum Reserve (SPR) to individual companies provides much-needed flexibility. Separately, Federal Reserve measures to either purchase corporate bonds or provide loans may perform additional triage for the energy industry and across the broader economy.
Posted April 14, 2020
Some points and data that help frame EPA’s proposed rule on National Ambient Air Quality Standards (NAAQS) for particulate matter (PM), which would retain all six of the current standards:Annual concentrations of PM2.5 have dropped 39% since 2000, and the U.S. has reduced emissions that can contribute to PM – including an 84% drop in sulfur dioxide (SO2), and a 54% decrease in nitrogen oxide (NOx) – since 2000. Fuel switching to clean natural gas in the power sector played an important role in those reductions. This progress can be helped by continued implementation of existing regulations.
Also: Retaining the current PM NAAQS is supported by the absence of compelling new evidence to lower the existing standards. Another NAAQS review was completed in 2015, and at that time an economic analysis indicated there could be a significant impact on the income of families and potential job losses if a lower NAAQS option was selected.
And: EPA’s proposal is consistent with the recommendation of the agency’s independent Clean Air Scientific Advisory Committee, which voted 5-1 to keep the current standards.
Posted April 13, 2020
We understand the oil demand-side circumstances that have led to calls for artificial market interventions such as tariffs and quotas – including a proposal before natural gas and oil regulators in Texas to mandate oil production cuts in the United States’ No. 1 oil-producing state.
Tough market conditions are no reason to implement bad remedies, such as the Texas proposal, which is problematic at best.
That’s not just an API view. Economics and history argue strongly against veering from the principle of markets dictating production levels, which is a core principle of our industry.
Posted April 8, 2020
Some thoughts on the preliminary data from the Environmental Defense Fund’s (EDF) methane mapping project in the Permian Basin.
First, our industry welcomes new information that helps identify ways operators can further decrease methane emissions from production. The data must be verified (more on this below), and potentially could add to the knowledge base around the objective of reducing emissions.
Toward that objective, U.S. natural gas and oil companies launched The Environmental Partnership in 2017 with a focus on finding technologies, best practices and innovations that would capture as much methane as possible – since methane is the chief component in the natural gas our industry delivers to consumers. The Partnership, whose 75 members include 33 of the top 40 U.S. natural gas producers, is one of a number of industry-led initiatives that seek to further reduce methane emissions.
Posted April 6, 2020
OPEC+ members continue to discuss a meeting, reportedly Thursday, to address the price war between leading members Russia and Saudi Arabia, whose production increases amid a significant decrease in demand are deepening the crisis for the global oil industry.
There’s speculation the United States will be asked to participate in a deal with additional production cuts beyond what U.S. producers have already implemented in response to the marketplace, which we addressed in this post. In a new interview with CNN, API President and CEO Mike Sommers reiterated that markets should dictate production decisions, not government interventions, and that Russia and Saudi Arabia should change their production policies.
Posted April 5, 2020
Although OPEC+ has delayed a planned meeting Monday to address differences between leading members Russia and Saudi Arabia, there were encouraging signals from the White House after the president’s meeting with a number of natural gas and oil industry leaders, including API President and CEO Mike Sommers.
The continuing oil price war between Russia and Saudi Arabia, which has the two nations increasing production amid a slump in world oil demand, is broadly concerning. The administration is correct to focus strong diplomacy on finding a resolution, the urgency of which is underscored by the postponement of Monday’s OPEC+ meeting.
The best message from the White House is what’s not on the table: additional U.S. production cuts. As the president said, the global oversupply problem has been worsened by the Russian and Saudi production increases, and those countries bear the responsibility of changing their policies.
Posted April 3, 2020
The natural gas and oil industry’s commitment to accelerate the reduction of methane emissions is being advanced on a number of fronts. The Environmental Partnership, whose 75 members include 33 of the top 40 U.S. producers of natural gas, is in its third year of sharing of knowledge and technologies to further reduce emissions. This week, the Texas Methane & Flaring Coalition, whose members represent nearly 80% of oil production in the state, was launched to work on flaring.
The coalition’s key initiatives include: developing best practices and opportunities to minimize methane emissions and flaring, improving accuracy and consistency in the reporting of vented and flared volumes and increasing public understanding of the safety and environmental reasons for flaring.
Posted April 2, 2020
The health and safety of workers, communities and the environment is always a priority for the natural gas and oil industry, and never more so during a global pandemic. That’s why API requested temporary relief for non-essential compliance requirements from the White House and several federal agencies, including the Environmental Protection Agency (EPA).
Sadly, reasonable efforts to contain the spread of the novel coronavirus (COVID-19) among the energy workforce have been misconstrued by some as “regulatory rollbacks.” This blatantly political narrative is misleading, not to mention inconsistent with public health recommendations. As businesses and regulators adapt to changing circumstances – and implement physical distancing and stay-at-home policies – there may be limited personnel to manage the full scope of some non-essential requirements, but the commitment to safety and sustainability remains unchanged.
Posted April 2, 2020
TC Energy’s announcement that it will proceed with building the Keystone XL crude oil pipeline is a big deal in terms of vital energy for America, jobs, economic growth and North American security. The 1,210-mile pipeline – able to safely deliver 830,000 barrels per day from Canada’s oil sands region in Alberta to the U.S. heartland – figures to be a significant, long-awaited progress toward helping secure this country’s future energy needs.
I say “long-awaited” because my first API writing assignment was about the KXL – nearly nine years ago!
Over that time the pipeline became a political football – a debate in which the basic facts were mostly incontestable: thousands of good jobs during KXL’s construction, tens of millions of dollars in property and income tax revenues to different levels of government and no significant effect on the climate or environment, according to the U.S. State Department, which conducted six comprehensive scientific reviews.
Posted March 31, 2020
Despite challenging public health, geopolitical and economic circumstances, the U.S. energy industry remains positioned at the leading edge of technology and innovation. Historically, America’s natural gas and oil companies have overcome unexpected and uncertain events with safe, reliable and resilient operations – and gone on to play an important role in rebuilding the domestic economy and strengthening national security.
And there’s evidence this will happen again. That’s why we’ve said, don’t bet against this industry.Mark Mills, a senior fellow at the Manhattan Institute, wrote recently that today’s industrial digital technologies could help us weather this market downturn and eventually access more of our abundant energy resources.