Crude Summit: Hamm calls for Jones Act LNG waiver

  • Market: Natural gas
  • 01/24/19

The US should exempt liquefied natural gas (LNG) shipments to the US northeast from the Jones Act, but should otherwise keep the shipping regulation, said Continental Resources chief executive Harold Hamm.

"[The US needs to] get LNG shipped to New York and Boston and places there that have to have it, instead of buying it from Russia. That waiver needs to be granted. It can be and should be," said Hamm at the Argus Crude Summit in Houston today.

There are no Jones Act-compliant LNG carriers available to serve that trade, said Hamm, and a waiver would allow international carriers to do it.

Hamm, though a frequent critic of US regulation on the energy industry, voiced support for the Jones Act as a whole.

"[The Jones Act] involves the military, shipbuilding, and warships, and keeping that capability. [The Jones Act] is a tough one to get around," he said.

The Jones Act helps ensure that the US has a shipbuilding industry by creating a market for high cost US-built ships.

The last time the US granted a Jones Act waiver was in September 2017, when hurricane-struck Puerto Rico needed fuel and other supplies to be delivered to the US territory's ports for relief.

The Jones Act is a long-standing piece of US legislation that requires cargo shipments between US ports to be conducted on US-flagged, US-built, and US-crewed ships.


Sharelinkedin-sharetwitter-sharefacebook-shareemail-share

Related news posts

Argus illuminates the markets by putting a lens on the areas that matter most to you. The market news and commentary we publish reveals vital insights that enable you to make stronger, well-informed decisions. Explore a selection of news stories related to this one.

News
03/06/24

US SEC adopts weaker climate disclosure rule

US SEC adopts weaker climate disclosure rule

Washington, 6 March (Argus) — Far fewer companies will be required to begin disclosing climate-related information under a rule the US Securities and Exchange (SEC) finalized today, in a retreat from more ambitious climate reporting requirements proposed in 2022. Publicly traded companies will still have to disclose to investors if they have "material" climate-related risks, under the final rule adopted today, in addition to whether they have processes to manage those risks. But in a major change from the proposal, the SEC will only require companies to disclose their greenhouse gas emissions data if they would be material to investors, with no reporting at all of "scope 3" emissions that arise from a company's supply chain. The rollback of the rule marks a victory for oil companies, manufacturers and business groups that said the proposed rule — which the agency initially estimated could cost more than $6bn/yr — was too burdensome and was unlikely to offer useful information to investors. Critics were particularly opposed to SEC's initial push for some disclosure of scope 3 emissions, which they said would create a dragnet forcing companies to collect emissions data across their supply chains, even from private and small companies that might consider that data confidential. The final rule also aligns closer with the status quo. Many large companies, including major oil companies, already voluntarily disclose their direct "scope 1" and "scope 2" greenhouse gas emissions to their investors through annual reports, in addition to other information related to any material climate-related risks they face. But SEC chairman Gary Gensler said the rule, approved in a 3-2 vote, will offer investors more "consistent, comparable and decision-useful information" on a company's greenhouse gas emissions and climate-related risks. Investors will end up having far more useful information as a result of the rule, he said, replacing an existing voluntary structure under which companies decided on their own what climate information to tell investors. Despite the rule's rollbacks, state-level Republicans are preparing to challenge the rule in court, based partly on complaints that the SEC has veered away from its investor protection mandate and instead is trying to set climate policy. West Virginia attorney general Patrick Morrisey, who plans to file a lawsuit on behalf of at least nine states later today in the US 11th Circuit Court of Appeals, said one problem with the rule is it would be "virtually impossible" for companies to decide if their emissions are material to investors. Environmentalists also said they are considering filing a lawsuit challenging the removal of the stringent sectons of the rule, while also defending the SEC's authority to require climate disclosures for publicly traded companies. The SEC's two Republican commissioners voted in opposition. The rule marks the culmination of activist attempts to "hijack" securities laws to further climate-related goals, commissioner Mark Uyeda said. The disclosure mandate will result in a "flood of climate-related" data that will "overwhelm" investors but not necessarily offer useful information, SEC commissioner Hester Peirce said. 'Bare minimum' Environmentalists say the disclosure requirement could be useful but would be far more effective if it was finalized as proposed, concerns echoed by Gensler's fellow Democratic commissioners. The final rule is the "bare minimum" for climate-related disclosure and was "better for investors than no rule at all," SEC commissioner Caroline Crenshaw said in explaining her decision to support the new climate rule. Under the rule, companies with at least $700mn in outstanding shares will have to disclose material climate-related risks in fiscal year 2025. Those companies will also have to begin disclosing material "scope 1" and "scope 2" greenhouse gas emissions — which come from direct operations and buying electricity — in fiscal year 2026, but with reporting deferred until their second quarterly report to offer time to gather data. The climate risk disclosures will take effect a year later for companies with at least $75mn of outstanding shares, and those companies do not have to begin disclosing material greenhouse gas data until fiscal year 2028. Any smaller publicly held companies will have to report climate-related risks in fiscal year 2027, with no disclosures required at all of greenhouse gas data. The SEC had initially proposed requiring greenhouse gas reporting for all public companies, with no materiality requirement. The SEC retained requirements for companies to report more information if they have plans to reach climate-related targets and goals. If a company is using carbon offsets or renewable energy credits as a "material component" of its climate goals, it will have to start disclosing any relevant costs and losses. In another part of the rule, the SEC will require companies to disclose in financial statements any costs, charges and losses in excess of a 1pc threshold that arise as a result of severe weather, droughts, wildfires, sea-level rise or other natural conditions. The rule's importance has somewhat diminished in the years since the SEC first proposed the mandate. California last year enacted a law to require public and private companies with business in the state and at least $1bn/yr in revenue to disclose their greenhouse gas emissions, including scope 3 emissions, starting as soon as 2026. The SEC rule will not preempt state disclosures, agency staff said. The SEC initially aimed to finalize the rule by the end of 2022. But the agency repeatedly delayed that timeline amid a shifting legal environment, including the US Supreme Court's 2022 ruling in a separate climate lawsuit that embraced the "major questions doctrine" that raised doubts over novel regulatory initiatives. By Chris Knight Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Read more
News

Austrian government to partly fund gas pipe upgrade


03/06/24
News
03/06/24

Austrian government to partly fund gas pipe upgrade

London, 6 March (Argus) — The Austrian government today confirmed plans to partly fund the WAG loop upgrade project, which will boost gas entry capacity from Germany by roughly a third. The upgrade will increase entry capacity at Oberkappel by 27 TWh/yr, or around 30pc. An expansion of transport capacity from Germany to Austria is a "top priority" to enable diversification of gas supply and ensure that if needed, Austria can carry out a large share of its imports through this route, the government said. The government will provide €70mn ($76mn) for the project "and more if necessary", finance minister Magnus Brunner said, emphasising that safe, affordable energy is "crucial for our budgets and the competitiveness of our location". Once the line is in use, operator Gas Connect Austria (GCA) will return the loan in order to refinance the measure. The funds will be taken from the federal budget only after a final investment decision (FID) has been taken. The aim is to require less Russian gas in the short term and no longer need it in the medium term, while transitioning fully to renewable energies in the longer term, vice-chancellor Werner Kogler said. "Out of Russian gas, into renewables and thus into independence. That is our goal", energy minister Leonore Gewessler said. GCA expects the entire project to cost around €200mn and be completed in 2027 . Operator response GCA welcomed the government's funding pledge but noted that further steps are necessary before it can reach an FID. The tariff system needs to be overhauled "in order to ensure the company's economic survival and ability to invest", GCA said, adding that the European Commission must also approve the state aid measure. "We are confident that with the support of politicians, authorities and [Austrian energy regulator] E-Control, the next steps can move forward quickly in the following months," GCA said. An FID "must be issued this year to trigger large-volume bookings", GCA said. But based on the existing tariff methodology, the construction and operation of the pipeline involves a "significant financial risk that a company like GCA cannot bear alone", the operator said. GCA has already carried out a feasibility study for the project and is working on the environmental impact assessment. E-Control has proposed radical changes to the tariff methodology from 2025, aimed at adjusting to the significantly changed gas flow patterns over the past two years. GCA and fellow operator Tag support the changes , but almost all other market participants are critical . By Brendan A'Hearn Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

Pertamina, Conrad to jointly develop Aceh gas resources


03/06/24
News
03/06/24

Pertamina, Conrad to jointly develop Aceh gas resources

Singapore, 6 March (Argus) — Indonesian state-owned energy firm Pertamina and gas exploration and development company Conrad Asia Energy have signed an agreement to co-operate in the provision of gas supply and infrastructure development in two potential resources offshore Aceh, Indonesia. Conrad and Perusahaan Gas Negara (PGN), the gas subsidiary of Pertamina, will undertake a joint study on the commercialisation of gas resources in two shallow-water fields — the offshore northwest Aceh (Onwa) production sharing contract (PSC) near Meulaboh and the offshore southwest Aceh (Oswa) PSC near Singkil. The firms aim to collaborate on the development and maintenance of possible small-scale infrastructure, and sales and marketing of LNG. The fields are estimated to contain contingent resources of 214bn ft³ of sales gas, of which 161bn ft³ is attributable to Conrad, in three of the four shallow-water discovered gas accumulations in two PSCs. The net attributable resource is the commercial resource attributable to Conrad after the government fiscal take. The net present value of these resources amounts to $88mn, attributable to Conrad. Prospective resources identified within the two PSCs amount to 15 trillion ft³ of recoverable gas, of which 11 trillion ft³ are net attributable to Conrad. There are also several multi-trillion ft³ worth of targets which have been identified in deep-water areas, "which are a longer-term focus and which are attracting interest from larger upstream companies", Conrad said. Conrad holds a 100pc operating interest in the Onwa and Oswa PSCs, which were awarded to the firm in January last year. The blocks cover an area of 20,000km², and each PSC has a 30-year tenure. Conrad plans to carry out 3D seismic surveys this year at the Onwa field, to better define the resource size and possibly identify new prospects. The Indonesian government intends to continue optimising the management and utilisation of natural gas as the main alternative energy source in the country's energy transition, Indonesia's ministry of energy and mineral resources (ESDM) said on 4 March. Indonesia's natural gas reserves are currently greater than its oil reserves, but the country's gas production is expected to drop in the next few years because of the natural decline in existing gas wells, ESDM said. Existing supply can meet contracted natural gas needs, and if potential supply comes on stream according to plan, it is estimated there is still enough gas to continue meeting domestic needs, the ESDM's oil and gas programme preparation co-ordinator Rizal Fajar Muttaqin said, without specifying timescales. By Prethika Nair Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

Unique New York GHG market rules risk linkage


03/05/24
News
03/05/24

Unique New York GHG market rules risk linkage

New York, 5 March (Argus) — New York's economy-wide carbon market could include a variety of unique rules, potentially jeopardizing regulators' goal of designing the new program to be able to join similar cap-and-trade systems elsewhere. Governor Kathy Hochul (D) has said she wants New York's new program to be "linkage-ready" when it launches next year. But various features that the administration plans to include differ from those existing systems, such as California, Quebec and Washington state, making linkage later this decade less likely, according to various stakeholders in comments on draft program rules and emissions modeling. For one, regulators have only modeled scenarios with relatively modest price ceilings that range from $14-23/metric tonne in 2025 and rise to $40-86/t by 2035. But California and Washington both have annually increasing price ceilings in their respective markets that are already above $88/t, creating a significant gulf that could make linkage with New York "completely incompatible," according to the International Emissions Trading Association. Shell agreed, saying that alignment around the price ceilings is "necessary for linkage to take place." Another barrier, according to commenters, is how New York measures greenhouse gas (GHG) emissions, which forms the basis for compliance obligations. The state tracks GHG emissions on a unique 20-year warming timeline that emphasizes shorter-lived methane emissions, while North American jurisdictions with carbon markets in place use a more typical 100-year warming timeline. Hochul has criticized the GHG accounting method for potentially increasing carbon market costs, but it is required by state law and her administration has signaled that changes are not a priority for budget negotiations this year. This accounting "presents a significant issue" and "would prevent further linkage to other programs," according to the US environmental services company Waste Management. The Clean Fuels Alliance America agreed, saying that New York's unique GHG accounting, which also treats biofuels differently than other states, and the state's plan to not exempt biofuels from allowance holding obligations make linkage "very challenging." Programs do not have be identical to link, but too many bespoke rules would make linkage more complicated. Differing again from California and Washington, New York has said it plans to not allow the use of offsets toward compliance, to impose minimum hold times on allowance purchases, and to potentially restrict allowance trading for sources near disadvantaged communities. Beyond policy concerns, linkage could also run into political backlash from New York environmental groups wary of altering state climate targets and GHG accounting methods. Multiple commenters, including the environmental groups Sierra Club and Earthjustice, suggested that linkage could violate state climate law by allowing sources to buy allowances from out of state and thus exceed mandatory statewide GHG limits. By Cole Martin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

Commission agrees German levy is against EU law: Sikela


03/05/24
News
03/05/24

Commission agrees German levy is against EU law: Sikela

London, 5 March (Argus) — The European Commission agreed that the German gas storage levy is probably in violation of EU laws at the energy ministers' meeting in Brussels on Monday, Czech industry and trade minister Jozef Sikela said. The commission "seriously doubts" that the German storage levy is in line with EU laws and has sent Germany "an official letter" about it, according to Sikela. The commission will hold further discussions with the concerned parties about the matter, he said. While Germany argued during the council meeting that its high investments into energy infrastructure had resulted in benefits for other countries, it heard the criticisms and will participate in further discussions, according to Sikela. A potential agreement between Germany and the commission is preferable to the EU potentially starting a formal infringement proceeding, Sikela said. The Czech Republic will react further only if there is an "unsatisfactory" conclusion to negotiations between the two parties, the minister said. The Czech Republic — with the support of Slovakia, Poland, Hungary and Austria — had called for the subject to be placed on the energy ministers' meeting agenda . Gas storage charges may make Russian gas "more favourable" than "geopolitically safer alternatives", threatening security of supply in countries without direct access to LNG terminals, Sikela said. German grid limits threaten CEE gas supply Bottlenecks within the German gas grid could potentially limit supply to the Czech Republic and other countries in the region, Sikela said. The Ukrainian transit contract will "most likely" end this year, which could affect gas supply to central Europe, Sikela said. And the German gas grid's capacity must be "strengthened" to be able to supply central European markets, particularly at the Brandov point between Germany and the Czech Republic, the minister said. If Ukrainian transit halts, transport capacity from west to east within Germany would be insufficient to meet demand in central Europe if it is unusually high, a source at the energy ministers' meeting told Argus . This is largely because two compressor stations in Germany need to be reinforced to increase capacity at the German-Czech border, he said. There is roughly 240 GWh/d of firm freely allocable gas transport capacity (FZK) from Germany to the Czech Republic for most of this year at Brandov, according to Gascade data. Around 1.4 TWh/d of capacity can be booked as interruptible dynamically allocable gas transport capacity (DZK), meaning this capacity is not guaranteed to be available. By comparison, Net4Gas offered around 2.2 TWh/d of firm capacity for entry into the Czech Republic at Brandov for this month. "We have to start discussions with Germany about further acceleration of planned investments into transport capacity," Sikela said. By Jana Cervinkova Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.