The TxEnergyUpdate keeps you up to date on the energy sector's latest news and stories
INTERNATIONAL & NATIONAL ENERGY NEWS
Chevron will increase its investment in low carbon technologies from $3 billion to $10 billion by 2028. This includes investments in biofuel, hydrogen, carbon capture, and other technologies. Chevron’s CEO, Mike Werth, says the decision to triple down on low carbon is due to Chevron reaching “a point where we’ve got enough knowledge of the technologies.” With this knowledge Chevron expects double digits returns immediately and up to $1 billion by 2030.
The Wall Street Journal reports that The Energy Department’s “Solar Futures Study,” estimates that the U.S. could get 44% of its energy from solar by 2050. This would be accomplished in two steps. The first is by infusing $562 billion dollars from the public and private sector into solar infrastructure including transmission lines, storage batteries, and research and development between 2020-2050. The second is removing all fossil fuels as an energy resource for the United States. Energy Secretary Jennifer Granholm defended the price tag and study by saying it “illuminates the fact that solar, our cheapest and fastest-growing source of clean energy, could produce enough electricity to power all of the homes in the U.S. by 2035 and employ as many as 1.5 million people in the process.”
However, Evercore ISI, an investment bank, conducted their own study showing that a massive solar investment "would require the nation to double the amount of solar installed every year over the next four years.” This investment seems unlikely as it would require rapid innovation in making solar harvesting more reliable, and manufacturers becoming independent from foreign countries for precious metals.
Britain is leaning on its few remaining coal plants to relieve record high energy prices as natural gas prices surge, and wind turbines stop turning. Recently, many coal plants have been closed to help the UK reach its “net zero” emission goals. But as winter approaches, and with it even higher prices for energy, it appears the UK will fire up some of its remaining coal plants to help meet energy demand. Joe Camish, an analyst at Cornwall Insight, said: “If we have any situations similar to today where there is very low renewables output and margins remain tight, we will have to probably rely upon older thermal assets to help ease those margins.”
The situation puts focus on the country’s energy resilience as the UK continues to move more of its energy output from oil, coal, and gas to renewables like solar and wind. But it is clear that it will take a portfolio of different energy sources to meet the UK’s short- and long-term energy needs. Andrew Crossland, a fellow at Durham Energy Institute, summarized the point well, saying “We can’t install enough wind to meet our needs. We’re going to need something else. I really think that debate needs to be not that coal is going away, but what and how are we going to replace it with, what mix of solutions?”
The American Petroleum Institute (API) organized a letter protesting a proposed fee for methane gas emissions. Democrats in Congress proposed the fee as a tool to help pay for their $3.5 trillion reconciliation bill. While there are specifics on the fee, it could be based on Senator Sheldon White Houses’ legislation, which puts an $1,800 fee per ton of methane gas released. The API letter argued that the proposal “would levy an unreasonable, punitive fee on methane emissions only from oil and natural gas facilities that could jeopardize affordable and reliable energy with likely little reduction in greenhouse gas emissions.”
The United States warns that Europe will struggle to meet energy demand this winter as natural gas stockpiles run low. While in Poland, Amos Hochstein, the U.S.’s Special Envoy and Coordinator for International Energy Affairs voiced his concern saying, “I worry because I don’t think we should ever be in a position knowing that if it’s a cold winter, there’s not enough supply.” Typically, Norway and Russia feed most of Europe’s gas supply but Norway’s production is limited due to maintenance and Russia is in a current gas drought.
In the U.S., gas suppliers are unable to increase exports of liquified natural gas (LNG) to Europe during hurricane season. European gas stockpiles are at a ten-year low and gas futures are hitting record highs. A report from Goldman Sachs summarizes how these higher prices will hurt industrial production trying to recover from Covid: “If supply were to disappoint further and winter weather turns out colder than normal, European gas and power prices may have to rise further to ration demand and thus curb energy-intensive industrial production.”
From the Wall Street Journal, Holman Jenkins Jr. says the media missed the important chunks from the United Nations Intergovernmental Panel on Climate Change (IPCC) report released a few weeks ago. He highlights that the media pushed an urgent need to change course using the “code red for humanity,” quote, a quote that isn’t in the actual report. In actuality, the media failed to report that emissions aren’t as bad as once thought. For the last few decades, the IPCC pushed that the Earth’s surface will rise 6.1 degrees Celsius leading to immediate and dire consequences. They’ve walked this back. The latest report suggests the worst case might be a rise of 4 degrees Celsius, which eliminates most of the IPCCs Armageddon theories.
Mr. Jenkins notes that “If the latest in a 40-year succession of climate forecasts differs from its predecessors in finding temperature change and emissions not as bad as previously projected, this would qualify as news. That is, to a media not wedded to the senseless assumption that climate science can only produce a succession of ever more dire discoveries.”
In its monthly report, the Organization of the Petroleum Exporting Countries (OPEC) predicts that next year’s oil demand will exceed pre-pandemic levels. OPEC predicts global oil demand will be 100.8 million barrels per day in 2022. This is almost a million-barrel increase from 2019. The forecast is fueled by growing vaccination rates, consumers gaining confidence to travel, the U.S. oil industry recovering from Hurricane Ida, and countries filling energy demand gaps. Most of the oil will come from developing countries producing 600,000 barrels a day, while the remaining countries’ production will remain under pre-pandemic levels.
TEXAS ENERGY NEWS
Texas Attorney General Ken Paxton announced that customers of the now-bankrupt energy utility Griddy Energy will not have to pay bills they received following Winter Storm Uri. During February 15-19 the wholesale price per megawatt-hour jumped to $9,000 leaving some customers with thousands of dollars in bills. Griddy will waive its claim to the charges as part of the liquidation plan. Customers who’ve already paid can request reimbursement through the bankruptcy court.
Veterans of the oil and gas industry are using the drilling and fracking techniques they mastered to now produce pumped-storage hydropower. At a basic level, the process pumps water thousands of feet underground to create small wells. These wells hold the water where it stays in storage under a significant amount of pressure and heat. When it’s needed to generate electricity, the well can be opened, releasing the pressured water back to the surface as steam where it can then spin a turbine. Mandell, cofounder of Quidnet, a pumped-storage hydropower start-up from Houston, highlights the real impact the oil and gas industry has had on geothermal saying, “People don’t like the f-word,” he said, “but in fact, fracking is key to a clean energy future.”
Eleven energy and chemical companies have “expressed interest” in creating a carbon capture site in Houston. In a statement, Houston Mayor Sylvester Turner said “It’s exciting to see so many companies have already come together to talk about making Houston the world leader in carbon capture and storage…We’re reimagining what it means to be the energy capital of the world.” But the biggest hurdle for the new site will be selling it as good investment: “The technology isn’t the constraint. The constraint is making the commercial case for it,” said Caleb Stephenson, executive vice president of Calpine Commercial Operations “The quantity of dollars (from government incentives) is not yet adequate.” The companies are seeking to increase the tax credit for carbon capture from its current level of $50 per ton of carbon dioxide stored to $85 per ton. While no firm commitments to the project have been made yet, Jeff Gustavson, President of Chevron New Energies, seems optimistic about the group of potential investors, saying “We always hedge our bets on these press releases but having 11 logos on this is significant in itself.”
- Public Utility Commission of Texas Meeting - September 16th
On September 16th, the Public Utility Commission of Texas (PUC) held a public work session. The purpose of the session, in PUC Chairman Peter Lake’s words, was “primarily devoted to The Electric Reliability Council of Texas (ERCOT) market design features and a proposed rule on continuity of service.” This included discussing the programs ERCOT manages, the Load Resource Program & the Emergency Response Services Program. Chairman Lake made the future of ERCOT clear saying “We don’t need to adjust reliability to existing technology, we need the technology to rise to the reliability.”
You can watch the entire work session here.
MEANWHILE IN CALIFORNIA...
California’s grid manger, The California Independent System Operator (CAISO), filed a request with the Secretary of Energy to acknowledge that California is in a “electric reliability emergency.” The letter states it would allow CAISO “to dispatch additional generation that may be necessary for CAISO to meet demand in the face of extremely challenging conditions including extreme heat waves, multiple fires, high winds, and various grid issues.” Surprisingly, the emergency declaration by the Energy Department would allow CAISO to add new natural gas units to the grid immediately and relax pollution standards for other gas units that would have to temporally stop production under non-emergency conditions.