US prospects for permitting overhaul dwindle
Oil and business groups' hopes that the US Congress could fast-track permitting this year are rapidly fading, with Republicans consumed by infighting and a key Democrat openly flirting with a presidential run.
The prospect of meaningful permitting legislation passing this year was always a long shot, given deep divides on the issue and the current split in the control of Congress. But industry hoped a deal could arise, with Democrats trying to fast-track clean energy projects funded by the Inflation Reduction Act (IRA) and Republicans seeking to remove obstacles to new fossil fuel infrastructure.
Permitting reform advocates concede a deal is unlikely to emerge any time soon, given scant progress on the issue so far, and as Congress heads into an election year where any deal would be much more difficult to pass. "I am not optimistic of anything passing this year," Republican-leaning non-profit Citizens for Responsible Energy Solutions president Heather Reams says.
In another headwind to a possible deal, Democratic West Virginia senator Joe Manchin, who leads the Senate's energy committee, earlier this month said he would not run for re-election in 2024 but will be "travelling the country" to mobilise moderate voters. Manchin has been a top negotiator on permitting and energy issues, including parts of the IRA that restarted oil and gas leasing on federal land and the US Gulf of Mexico. Manchin says he is "absolutely" considering a run for the White House, adding a potential complication to President Joe Biden's re-election bid.
Permitting negotiations had already become stuck in early summer after Congress was able to pass modest permitting changes as part of a bipartisan debt limit law. After the enactment of those changes, the issues left outstanding are more politically thorny, such as energy sector demands for judicial reform to make it harder to bring lawsuits against permitting, or changes to the Clean Water Act sought by the gas sector and opposed by environmentalists and some states.
And the signing of the debt limit law came before far-right Republicans paralysed the US House of Representatives last month by removing Kevin McCarthy as speaker. The infighting shows no sign of easing. House Republicans last week blocked votes on their party's own spending bills. The new speaker Mike Johnson had to rely on Democrats to prevent a government shutdown after 17 November, and Congress is on track to spend the next two months trying to stop a shutdown from 20 January. Far-right House Republicans have held up work as they demand spending cuts and policy changes as a condition to keep the government open.
One event away
Oil and gas executives are holding out hope for permitting changes they say are essential to supporting the industry's growth, including supplying gas to LNG export facilities being developed on the US Gulf coast. An energy crisis, such as a spike in prices, could create the political pressure needed to pass legislation, US gas producer EQT chief executive Toby Rice told an industry conference last month. "We're one event away from something happening. You have one event, you get to reality real quick and you start getting stuff built," Rice said, giving the example ofLNG terminal permitting in Germany after the onset of Russia's invasion of Ukraine.
Congress is set to finish the year having passed some modest permitting tweaks as part of the debt limit agreement. The law will allow the $7.2bn Mountain Valley Pipeline to be completed, enabling the transport of natural gas from West Virginia, and it has expanded the use of "categorical exclusions" that fast-track reviews. But the impasse over broader legislation will put pressure on the White House to pursue changes that allow faster permitting, such as federal initiatives to build out long-distance electric transmission projects to add renewables to the grid.
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Australia’s ANZ bank to end new gas, oil lending
Australia’s ANZ bank to end new gas, oil lending
Sydney, 9 May (Argus) — Australia-based bank ANZ has updated its oil and gas policy, with it to no longer provide direct financing to new or expanding upstream oil and gas projects. The bank declared its new policy as part of its 2024 half-year results released on 7 May, saying it would also decline to integrate new customers primarily focused on upstream oil and gas. ANZ said that while it believes gas plays a "material and important part in meeting Australia's current energy needs and will do so for the foreseeable future", it will instead collaborate with energy customers to help finance their transition away from fossil fuels. The bank has a 26pc greenhouse gas (GHG) emissions reduction by 2030 goal and committed in 2020 to exit all lending to companies with exposure to thermal coal, either through extraction or power generation by 2030 as part of lending criteria to support the 2015 UN Paris climate agreement target of net zero GHG emissions by 2050. ANZ has however promised to consider exceptions on a case-by-case basis, if any national energy security issues arise. Australia's banks have been under sustained pressure by environmental groups to exit lending to fossil fuel projects, as upstream gas firms also face shareholder rebellions over climate action plans. But Australia's federal government has conceded gas will likely be needed post-2050 as a firming power source for renewables and industrial feedstock for some sectors. But investment in upstream exploration has been extremely low in recent years, with imports of LNG likely in southern Australia from about 2026 to meet demand for industrial users and power generation. By Tom Major Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
LNG imports loom as Australia unveils gas strategy
LNG imports loom as Australia unveils gas strategy
Sydney, 9 May (Argus) — Australia's federal government will attempt to reverse the decline in new gas developments by expediting projects, although a report has found it is unlikely to reverse an anticipated shortfall in southern states' supplies later this decade. Canberra's long-awaited Future Gas Strategy will form its future policy on the resource, following two years of uncertainty for the industrial sector. This follows the Labor party-led government's election in May 2022 and its dumping of the previous Liberal-National coalition administration's gas-fed recovery from Covid-19 policy, which emphasised bringing new supplies on line to drive down rising prices. Six principles have been outlined by the government — driving down emissions reductions to reach net zero emissions by 2050, making gas affordable for users during the transition, bringing new supplies on line, supporting a shift to "higher-value and non-substitutable gas uses", ensuring gas and power markets remain fit for purpose during the energy transition and maintaining Australia's status as a reliable trading partner for energy, including LNG. The report found that gas-fired power generation will likely provide grid firming as renewables replace older coal-fired plants. Peak daily gas demand could rise by a factor of two to three by 2043, according to projections, with gas-powered peaking generation labelled a "core component of the National Electricity Market to 2050 and beyond". But by the 2040s more alternatives to gas for peaking and firming are expected to become available. Supplies are forecast to dip significantly in the latter years of the decade, especially in gas-dependent southeast Australia, driven by the 86pc depletion of the region's producing fields. This reduced supplies will outpace a fall in demand , while rising demand is forecast because of the retirement of Western Australia's coal-fired power plants . The report found the causes of Australia's low exploration investment are "multifaceted", blaming the Covid-19 pandemic, difficulties with approvals processes , legal challenges, market interventions and a perceived decline in social licence. It added that international companies may focus on lower cost and lower risk fields in other countries. New sources Stricter enforcement of petroleum retention leases and domestic gas reservation policies are also likely to increase supplies, the report found, with term swap arrangements beneficial in increasing their certainty. Upwards pressure in transport costs is likely to result from increased piping of Queensland coal-bed methane gas to southern markets such as Victoria state, which could influence industrial users to relocate closer to gas fields in the future. Options canvassed to meet demand include more pipelines and processing plants and LNG import terminals , which would provide the fastest option but must overcome regulatory and commercial pressures, given the pricing of LNG would be higher than current domestic prices. Longer term supplies depend on the commerciality from unsanctioned projects such as Narrabri and in the Beetaloo and Surat basins, the report said. More supplies are needed to support exports under foundational LNG contracts, with an impact on the domestic market if Surat basin developments such as Atlas does not continue, the report said. Forecasts show LNG exporters have sufficient production from existing and committed facilities to meet forecast exports until 2027 if expected investments proceed. But beyond this new investment is required, especially for the 8.5mn t/yr Shell-operated Queensland-Curtis LNG at Gladstone. The Australian Energy Producers lobby, which represents upstream oil and gas businesses, said the strategy should now provide clear direction on national energy policy. But the Greens party, the main federal parliamentary group aside from Labor and the Liberal-National coalition, said any plans to continue gas extraction beyond 2050 will negate state and federal net zero 2050 climate targets. By Tom Major Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Baltic April gas consumption rises on year
Baltic April gas consumption rises on year
London, 8 May (Argus) — Gas demand in the three Baltic states and Finland was up by 26pc on the year in April, although there were diverging trends in the different markets. Consumption in Finland, Estonia, Latvia and Lithuania totalled 3.56TWh, up from 2.82TWh a year earlier but down from 4.31TWh in March ( see data and download, graph ). That said, total demand was still well below the 2018-21 average for the month of 5.03TWh. Consumption was up on the year in all three Baltic countries, but Finnish demand edged down. This was the first month in which Finnish demand was lower on the year since April 2023. In contrast, Lithuanian consumption surged by nearly 50pc on the year, and was also higher than in February and March despite the end of the traditional heating season. Gas-fired power generation held broadly stable from a year earlier, totalling 305MW across the four countries compared with 301MW in April last year ( see gas-fired output table ). Output edged down in Estonia and Lithuania and dropped by 25MW in Finland, but this was offset by a 31MW increase on the year in Latvia. But, unlike in March, gas-fired output fell by 246MW, a large contributing factor to the lower gas demand on the month. Many combined heat and power plants will have switched off at around the end of March or mid-April as the traditional heating season came to a close, possibly driving the fall in gas-fired output. But renewables generation was also stronger in April than March, particularly in Finland, where wind output rose to 2.03GW from 1.63GW, while hydro also stepped up. In Lithuania, solar and waste-based production increased on the month. Demand was also stronger despite higher year-on-year minimum temperatures in all four capital cities, which may have curbed most residual heating demand after the end of the traditional heating season, although there was a brief cold snap towards the middle of the month that temporarily drove up demand ( see temperatures table ). With gas-fired power generation only marginally higher than a year earlier, and the warmer weather curbing residential demand, a possible uptick in industrial demand may have driven the aggregate rise in consumption. Average prices on the regional GET Baltic exchange were €33.30/MWh in April, up by 8pc on the month but 30pc lower than a year earlier, the exchange said. Prices increased in around the middle of April "due to the unexpectedly cold weather and the increased demand for gas in the market", but then fell again "as the weather warmed", GET Baltic chief executive Giedre Kurme said. There were a total of 2,400 transactions last month for a combined 642GWh of gas. Volumes sold on the Finnish market accounted for 42pc, the joint Latvian-Estonian market 33pc, and the remaining 25pc was sold in Lithuania. Klaipeda and Balticconnector to change flows The return of the Finnish-Estonian Balticconnector pipeline and the start of maintenance at the Klaipeda LNG terminal in Lithuania will drive changed flow patterns this month. The Balticconector resumed commercial operations on 22 April after being off line since 8 October following a rupture caused by a dragging ship anchor . The reconnection of Finland to its southern neighbours has allowed for strong southward flows since 22 April, at an average of 62 GWh/d on 22 April-7 May. Some of this gas is probably being injected into storage, with the region's only facility at Incukalns switching to net injections on 23 April from net withdrawals of 7 GWh/d earlier in the month. Net injections have since averaged 46 GWh/d on 23 April-6 May, the latest data from EU transparency body GIE show. Stocks at Incukalns ended the withdrawal season on 30 April at 11.29TWh, the highest since at least 2014 and well above the previous high from last year of 9.03TWh. Large volumes of gas that had been stored over the previous summer for export to Finland over the winter were left stranded in Incukalns after the Balticconnector went off line. And the Klaipeda LNG terminal began maintenance on 1 May, which will last until 15 June, as the terminal's Independence floating storage and regasification unit (FSRU) departed for dry-docking in Denmark. As a result, there were net exports from Poland to Lithuania for the first time since early November, at an average of 17 GWh/d on 1-7 May. Some of this gas could have been withdrawn from Ukrainian storage, with flows from Ukraine to Poland averaging 10 GWh/d over the same period. Lithuania's largest supplier Ignitis has said it stored some volumes in Ukraine. And flows at the Kiemenai border point with Latvia have also flipped towards Lithuania, averaging 11 GWh/d on 1-7 May, compared with net flows towards Latvia of 15 GWh/d in April. That said, there were no flows at the point on 6-26 April. By Brendan A'Hearn Finnish, Baltic average gas-fired power generation MW Apr-24 Apr-23 Mar-24 ± Apr 23 ± Mar 24 Estonia 5 6 7 -1 -2 Latvia 49 18 215 31 -166 Lithuania 46 47 52 -1 -6 Finland 205 230 277 -25 -72 Total 305 301 551 4 -246 — Entso-E Daily average minimum temperature in FinBalt capitals °C Apr-24 Apr-23 Mar-24 ± yr/yr ± m/m 2014-23 Apr avg Vilnius 5.22 3.83 0.93 1.39 4.29 2.63 Riga 5.01 4.98 1.93 0.03 3.08 3.65 Tallinn 2.00 1.46 -0.59 0.54 2.59 1.17 Helsinki 0.11 -0.45 -2.55 0.56 2.66 0.12 — Speedwell Finnish and Baltic April consumption by country GWh Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Japanese ethylene producers unite for decarbonization
Japanese ethylene producers unite for decarbonization
Tokyo, 8 May (Argus) — Japanese petrochemical producers Mitsui Chemicals, Mitsubishi Chemical and Asahi Kasei have agreed to co-operate on decarbonization of their ethylene crackers in west Japan, targeting to decide a pathway within the current April 2024-March 2025 fiscal year. They plan to accelerate carbon neutrality at Mitsubishi Chemical and Asahi Kasei's 496,000 t/yr Mizushima cracker in Okayama prefecture and Mitsui Chemicals' 455,000 t/yr Osaka cracker in Osaka prefecture. The partners aim to introduce biomass feedstocks such as biomass-based naphtha and bioethanol and low-carbon cracking fuels like ammonia, hydrogen and electricity. They said joining forces will enable them to accelerate reducing greenhouse gas emissions, although they have not yet decided any further details. Mitsui Chemicals has experience in using bio-naphtha and recycled pyrolysis oil at its Osaka cracker. Japanese petrochemical producers have increasingly united to achieve decarbonization of their production processes, which account for around 10pc of the Japanese industrial sector's carbon dioxide emissions, according to the trade and industry ministry. Mitsui Chemicals, Sumitomo Chemical and Maruzen Petrochemical agreed to study the feasibility of chemical recycling and using bio-feedstocks at the Keiyo industrial complex in Chiba. By Nanami Oki Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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