With help from Josh Siegel and Catherine Morehouse.
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QUICK FIX
— U.S. oil and gas capacity is looking up with LNG export facilities capable of handling President Joe Biden's goal of expanding fuel supplies to Europe and Permian leases on the upswing last month, according to analyses out this week.
— California is proposing a more ambitious timeline to phase out internal combustion car sales.
— FERC won't entertain challenges to its controversial gas policy rules as it works on revising them.
HAPPY THURSDAY!I’m your host, Matthew Choi. Today is the 110th anniversary of the Titanic hitting the iceberg. Gong xi to Bracewell’s Frank Maisano for knowing the kittens in “Sagwa, The Chinese Siamese Cat” were named after melons. For today: Who is the current Bonapartist claimant to the French throne? Send your tips and trivia answers to [email protected]. Find me on Twitter @matthewchoi2018.
Check out the POLITICO Energy podcast — all the energy and environmental politics and policy news you need to start your day, in just five minutes. Listen and subscribe for free at politico.com/energy-podcast. On today's episode: Why Biden’s energy moves have unsettled his green base.
Driving the day
NO NEED FOR MORE LNG:The U.S. doesn’t need to build new LNG export facilities beyond what is already under construction in order to fulfill the Biden administration’s pledge to boost gas exports to Europe by at least 15 billion cubic meters this year, according to a new report by the Institute for Energy Economics and Financial Analysis.
And even if new projects are greenlighted, LNG export terminals have typically taken three to five years to build in the U.S. — not quick enough to help with the acute crisis at hand — says energy tracking nonprofit Global Energy Monitor in a separate new analysis. There are 20 proposals to build new billion-dollar LNG export facilities in the U.S., the Global Energy Monitor analysis shows.
Taken together, the two reports, discussed at an event hosted by Climate Nexus on Wednesday, provide data points that rebut a contention from the oil and gas industry that U.S. regulators must swiftly permit new LNG projects to help Europe displace Russian energy.
IEEFA analyst Clark Williams-Derry said just by using the six fully operational LNG terminals in the U.S., the country is on pace to “blow past” the 15 bcm target by July or August and that the industry has the ability to nearly meet the Biden administration’s longer-term ambition to fulfill the EU’s demand for U.S. LNG by 50 bcm annually through 2030.
By the time new LNG projects could come online, they would have to compete with cheaper gas options from countries like Qatar, along with renewables now being fast-tracked by the EU.
CRUDE FUTURE BUSTLING:Further upstream, U.S. crude production is likely to have a field day, with oil companies receiving a record 904 permits to drill in the Permian Basin last month, according to a Rystad report. That’s a weekly rate of new permits double those in the preceding two months.
Though permits don’t guarantee new drilling operations and oil companies report investor hesitancy in pouring money into new drilling, the boost in permits sends “a clear signal that operators in the basin are kicking into high gear on their development plans, positioning for a significant ramp-up of activity level and an acceleration in the speed of output expansion over the next few months once supply chain bottlenecks ease,” Artem Abramov, Rystad’s head of shale research, said in the analyst note.
The increased domestic crude supply could be good news for an administration desperate to cool $4+ gasoline prices and imploring oil and gas companies to make use of their federal leases. Read more from POLITICO’s Ben Lefebvre.
Meanwhile in Russia,the impacts of Western moves away from the country’s oil are starting to show their effects, The Wall Street Journal reports. Russia’s crude oil production is starting to dip, with the International Energy Agency expecting that almost 3 million barrels per day will be taken off line beginning in May. Its refining capacity is also starting to shrink as lower demand causes storage constraints in the country.
Future declines are heavily reliant on whether Russia can find new customers in Asia, notably China, though the People's Republic hasn’t shown signs of a fresh wave of Russian orders, according to IEA.
Related:“Oil prices settle up 4% despite big U.S. crude inventory build,” via Reuters.
In the States
A CALIFORNIA SUNSET:California could be looking at a more aggressive timeline to phase out internal combustion cars under a California Air Resources Board proposal this week. The proposal would require zero-emissions vehicles to make up 35 percent of new sales by 2026, 68 percent in 2030 and 100 percent in 2035. The 2035 phase-out deadline is already state policy, with Gov. Gavin Newsom including it in a 2020 executive order.
The plan is likely up for approval in August, POLITICO’s Colby Bermel reports, and there could be a lot of hemming and hawing before then. Such a fast transition could be a tall order for the auto industry, while environmentalists called for an even faster phase down of greenhouse gas emitting cars. The timeline is more ambitious than the Biden administration’s goal of having half of all car sales be zero-emission by 2030.
Around the Agencies
FERC REJECTS PIPELINE CHALLENGES:FERC unanimously shut down the challenges filed by the gas industry and some states against its proposed pipeline policies on Tuesday. Because the commission revised the policies so that neither applies to currently pending projects — and both are now in draft form and subject to further review — opponents of the original rules will not be able to issue any further challenges until the rules are finalized.
Commissioner James Danly, who has been a vocal opponent of the majority’s efforts to revise its guidance on how gas infrastructure is permitted, reiterated his belief that turning the orders into drafts is a step in the right direction, but does not remove the “fog of indecision” that he and other opponents say now lingers over natural gas development. “Although the Commission has indicated it will apply its 1999 Certificate Policy Statement over the next two months’ comment period, what will happen thereafter is anyone’s guess,” he wrote in a separate statement attached to the order.
ANOTHER HACKING WARNING:The Biden administration warned Wednesday that hackers are able to breach controls in industrial sector facilities, including utilities. The Energy Department, FBI, Homeland Security Department and National Security Agency issued the bulletin Wednesday, calling out “advanced persistent threat actors” — a term often used for state-backed hackers, Bloomberg reports. Though the bulletin didn’t single out any specific country, the federal government has been warning energy firms to be on high alert for Russian hackers targeting critical U.S. infrastructure.
GRANHOLM IN THE SUN:Energy Secretary Jennifer Granholm continues her Arizona visit today, including a roundtable and solar farm tour with Rep. Tom O’Halleran (D-Ariz.). The visit is part of the administration’s tour to tout its clean energy and infrastructure agenda, with numerous cabinet secretaries joining members as they head home for recess.
O’Halleran is also facing a steep reelection bid this year, fighting for a district with altered borders that includes more conservative base voters (read more from The New York Times), and vulnerable House Democrats are facing a lot of pressure from rising gasoline prices. RNC spokesperson Ben Petersen called this week’s visit “Jennifer Granholm’s attempt to rescue Tom O’Halleran’s hopeless re-election bid,” adding it “will fall flat as Arizonans suffer through the highest gas prices in state history and the worst inflation in the country.”
Beyond the Beltway
THE CASE FOR THE ST CROIX REFINERY:U.S. Virgin Islands Gov. Albert Bryan pushed the Biden administration to let an oil refinery on St. Croix reopen in a bid to expand the country’s refinery capacity and bring down gasoline prices. The refinery closed last year after flaring gone awry caused oil to rain down on the local community. EPA intervened to shut down the facility, which was later bought by West Indies Petroleum and Port Hamilton Refining and Transportation. But the facility will likely need a new Clean Air Act permit before it can be up and running again (E&E News has all the background here).
Bryan advertised the refinery’s location and 200,000 bpd refining capacity as a potential aid in rising gasoline prices. The island is located squarely between the Eastern U.S. and Venezuela.
“The refinery has new owners that are anxious to make the necessary investments and efforts to restart it,” including working with the EPA “to ensure that the refinery can operate safely and without threats to public health and the environment in St. Croix,” Bryan said in a statement Wednesday. “I urge the Biden Administration to prioritize this effort and to take every step possible to reopen the St. Croix refinery as soon as possible.”
GOOGLE ISN’T GIVING UP:Google is still pushing for clean energy policies that fell by the wayside in last year’s Build Back Better negotiations, stressing that they are crucial for decarbonizing the grid. The company is releasing a policy roadmap today that calls for a clean electricity standard, shift away from coal generation, rapid expansion of federal clean energy research funding, streamlined transmission permitting and tax credits for clean energy investments.
Of course, some of those items, particularly a clean electricity standard, were the political pressure points that led to much hand wringing in negotiations between progressives and Senate Energy Chair Joe Manchin. The West Virginia senator ultimately canned the Clean Electricity Performance Program, which would have used monetary incentives and penalties to wean the grid off of carbon-emitting generation. When asked what political pathways could exist to get some of Google’s priorities across, Caroline Golin, the company’s global head of energy markets and policy, pointed beyond federal policy to state efforts that could create a favorable market for more clean energy deployment.
“These markets need to radically reform and a lot of that means states working with other states, and that means states working with the [regional transmission organizations]that exist in this country,” Golin said. “That is a very different picture than just passing a big climate package at the federal level. That is actually a bit more of a bottoms up approach, but we need it on all levels.” Read the policy roadmap here.
The Grid
— “Realization of Paris Agreement pledges may limit warming just below 2 °C,” via Nature.com
— “Electric Vehicles, Not Luxury Cars, Dominate the New York Auto Show,” via Bloomberg.
— “Gas embargo to plunge Germany into ‘sharp recession,’ according to experts,” via POLITICO.
— ”A ‘Silent Victim’: How Nature Becomes a Casualty of War.” via The New York Times.
THAT’S ALL FOR ME!
