The TxEnergyUpdate keeps you up to date on the energy sector's latest news and stories
NATIONAL ENERGY NEWS
- "Reality Will Trump Narratives On The Energy Transition Path"
David Blackmon with Forbes argues that there’s a large gap between the narrative and reality when it comes to renewables and electric vehicles (EV). By way of example, Blackmon uses President Biden’s executive order mandating that “50% of U.S. automobiles manufactured by 2030” should be electric. To meet this order would require a 100% increase in lithium mining and other metals for batteries. Now here’s the gap between narrative and reality: “One tungsten mining company CEO I interviewed told me that it takes 7 to 10 years just to permit and kick off operations in a typical tungsten mine.” This shows a major disconnect between politicians and the actual process. Blackmon echoes this by saying “Regardless of how heavily policymakers and governments attempt to intervene in the markets to determine winners and losers in the energy space, supply is going to follow demand, not lead it.” He concludes that renewables and EV technology will improve and have an important role in our future but “What they cannot do, however, is change the way the real world works, regardless of how aggressively policymakers intervene to help them.”
- "Oil Services Firms See Brighter Days Ahead As Energy Demand Returns"
There’s optimism in the oil and gas industry as demand returns. Canary LLC CEO Dan Eberhart says “The UN’s call for the end use of all fossil fuels to combat climate change is a utopian fantasy, and current commodity price strength shows that markets will need more oil and gas for many, many years to come.” This is echoed by the addition of 244 rigs in the U.S. since last August. It doesn’t look like it will slow down either as companies like Haliburton predict “a particularly bullish multi-year outlook that calls for revenue to grow at a “mid-teens” compounded annual growth rate through 2023.”
- "Wind-Turbine Makers Struggle to Profit From Renewable-Energy Boom"
The Wall Street Journal reports that “Top wind-turbine makers are struggling with lower earnings as rising raw- material costs, problems shipping the hulking machines, and uncertainty over the future of U.S. subsidies pressure their businesses.” While demand for wind-turbines is predicted to double in the next decade, “A quadrupling of transportation costs and increases in steel, copper, aluminum and carbon fiber prices will likely drive wind-turbine prices up by 10% over the next 12 to 18 months.” These increases are cutting into operator’s profits: “Siemens Gamesa, whose shares have fallen roughly 25% this year, said it is charging higher prices and taking other measures to offset the increase in raw-material costs.” To help combat future rising costs, operators are hopeful their government subsidies will continue and help boost their margins. But the wind-turbine federal tax credit is set to expire this year. Their only hope is the $3.5 trillion reconciliation bill that we’ve mentioned before. It looks like the wind-turbine industry will have to eat the cost of doing business while they wait for D.C. to set their fate.
STATE & LOCAL ENERGY NEWS
- "Blue Hydrogen Projects Gaining Steam Across Lower 48 Oil, Natural Gas Patch"
Texas’ Gulf Coast will soon have its first carbon-neutral hydrogen facility. Howard Midstream Energy and the Port of Corpus Christi Authority (PCCA) will convert Howard’s Javelina refinery into a hydrogen facility due to its access to natural gas from the Permian Basin and Eagle Ford Shale regions, and potential for capturing carbon emissions. Hydrogen can be a major player in the energy transition due to “its versatility as an emissions-free fuel.” The facility, which already has pipeline connections to all six Port of Corpus Christi refineries, will produce blue hydrogen: “Blue hydrogen refers to splitting hydrogen atoms from natural gas, either by auto-thermal reforming (ATR) or steam methane reformation (SMR), then preventing carbon dioxide (CO2) emissions from being released.” The PCCA which already exports oil and liquified natural gas (LNG) overseas, will look to do the same with hydrogen.
- "Solar panels crop up around Texas, divide rural communities"
The Texas Farm Bureau reports on rifts between rural Texans who want to conserve land for farming and ranching and landowners who see the 20–40-year solar farm leases as “steady income can help smooth out the financial roller coaster of growing crops and raising livestock.” Robert Fleming, a farmer from central Texas who helped stop a solar project that was up for a vote in Troy ISD summarizes the divide well: “I’m not against solar, but when it comes to taking prime farmland and ranchland out of production, that’s where I get concerned.” One of those concerns is how solar farms impact rural Texans infrastructure: “Farm-to-market and county roads built for occasional heavy loads are subjected to an onslaught of heavy machines and loaded gravel trucks. Crop fields and pastures once lush with livestock and new growth are covered with rock and guarded by chain-link fences topped with razor wire.” Solar and other renewables will remain appealing to farmers and ranchers as a passive income stream. But as the energy playing field begins to balance out and subsidies start to disappear, the Texas Farm Bureau is right to “recognize a need to study the cumulative impacts to agricultural land values and electrical markets.”