US overhauls review policy for gas pipelines, LNG
Natural gas companies seeking to build pipelines and LNG export facilities will be subject to more scrutiny over their anticipated greenhouse gas emissions, under sweeping policy changes the US Federal Energy Regulatory Commission (FERC) approved today.
The agency's Democratic majority voted 3-2 to approve two policies, one revising the agency's project certification process and another creating a new framework for scrutinizing greenhouse gas emissions. Together they mark the largest change in US permitting policies for interstate natural gas infrastructure since at least 1999, the last time the agency made major changes.
The two new policies are set to apply immediately, which FERC chairman Richard Glick said would allow the agency to begin processing pending gas pipeline and LNG export applications "without delay." The changes will provide a more legally durable path forward for reviewing projects, he said, after the agency faced a series of court losses focused in part on climate change.
"Right now, I think we have a mess on our hands," Glick said at the agency's monthly open meeting. "The commission has repeatedly failed to live up to the requirements within the Natural Gas Act and the National Environmental Policy Act."
FERC approved the new policies over the objection of the agency's two Republicans, who say the agency has overstepped its congressional mandate to ensure the approval of needed gas infrastructure. Republicans and gas industry officials worry the sweeping changes will add uncertainty and new litigation risks for projects that already take years to permit and can cost billions of dollars to build.
"This new certificate policy approved today is the mother of all legal weapons," Republican commissioner Mark Christie said as part of his dissent. "There is no question that it will be wielded against every single natural gas project, making the cost and uncertainties of even pursuing a project exponentially more daunting."
Industry already adapting
But some gas developers, in anticipation of the changes, have already voluntarily come up with plans that may align with the changes. US LNG developer NextDecade last year asked the agency to modify its plans to build the 27mn t/yr Rio Grande LNG export terminal to include carbon capture equipment capable of handling at least 90pc of the its direct emissions, after a court found issues with FERC's initial climate review.
FERC began considering revisions to its 1999 pipeline certification policy nearly four years ago, but the effort sputtered out as the agency's Republican majority at the time faced widespread industry opposition to changes. Glick restarted the agency's work on the effort a year ago, pursuing a broader scope of changes with more of a focus on climate change.
The first policy change, revising agency policy for certifying gas projects, revamps how FERC determines if there is enough of a "public need" for a proposed project to justify approval, including requiring more scrutiny of alternatives to building a new pipeline. FERC is also lowering the importance of firm contracts, called "precedent agreements," to show that approving a project is in the public's interest, in favor of a process focused on how gas will be used and likely utilization rates.
The second policy, an interim change that could be revised based on public comments due on 4 April, will create a framework for evaluating a project's likely greenhouse gas emissions and effects on climate change. FERC said it will encourage developers to propose plans to mitigate a project's emissions, and it will generally presume a new project emitting more than 100,000 metric tonnes/yr of CO2 requires the most rigorous type of agency review under the National Environmental Policy Act, called an EIS.
The policy shift come at a time when the industry mostly wrapped up a construction boom that has dramatically increased shale gas takeaway capacity in the Appalachian and the Permian basins and helped supply new LNG export facilities. The gas sector from 2016-20 placed into service $41bn of pipelines that fall under FERC jurisdiction, along with $24bn of pipelines from 2010-15, according to data from the US Energy Information Administration.
But the industry has struggled to build pipelines in the northeast US, where state opposition and organized litigation have blocked projects like the $8bn Atlantic Coast pipeline and $1.1bn PennEast pipeline. The pending $6.2bn Mountain Valley pipeline has finished most construction but recently faced a setback to completion from two court decisions throwing out key federal permits.
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Limited strike on Iran opens door to de-escalation
Limited strike on Iran opens door to de-escalation
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India mulls using more natural gas in steel sector
India mulls using more natural gas in steel sector
Mumbai, 19 April (Argus) — India's steel ministry is considering increasing natural gas consumption in the sector as it aims to lower carbon emissions from the industry. Steelmakers held a meeting with the steel ministry earlier this month, to discuss challenges and avenues to increase gas allocation to the sector, according to a government document seen by Argus . Steel producers requested that the government set gas prices at an affordable range of $7-8/mn Btu for them, to make their gas-based plants viable, as well as for a custom duty waiver on LNG procured for captive power. India's LNG imports attract a custom duty of 2.5pc. City gas distribution firms sell gas at market-determined prices to steel companies. Representatives from the steel industry also requested for the inclusion of gas under the purview of the country's goods and service tax, and to be given higher priority in the allocation of deepwater gas, which has a higher calorific value. Deepwater gas is currently deployed mostly to city gas distribution networks. Steelmakers are currently undertaking feasibility tests for gas pipeline connectivity at various steel plants. But a gas supply transmission agreement requires a minimum five-year period for investment approval. The steel industry is heavily reliant on coal, and the sector accounts for about 8-10pc of carbon emissions in the country. A task force of gas suppliers including IOC, Gail, BPCL, Shell, and HPCL and steel producers like Tata Steel, AMNS, All India Steel Re-roller Association and the Pellet Manufacturers Association has been set up, and the team is expected to submit a report on increasing natural gas usage and lowering carbon emissions by 15 May, the government document said. This team is one of the 13 task forces approved by the steel ministry to define the country's green steel roadmap. The steel ministry aims to increase green steel exports from the country in the light of the policies under the EU's Carbon Border Adjustment Mechanism (CBAM), which will take effect on 1 January 2026. Under the CBAM, importers will need to declare the quantity of goods imported into the EU in the preceding year and their corresponding greenhouse gas emissions. The importers will then have to surrender the corresponding number of CBAM certificates. CBAM certificate prices will be calculated based on the weekly average auction price of EU Emissions Trading System allowances, expressed in €/t of CO2 emitted. This is of higher importance to Indian steelmakers as the EU was the top finished steel export destination for Indian steelmakers during the April 2022-March 2023 fiscal year with total exports of 2.34mn t, and has been the preferred choice for Indian steel exports in the current fiscal year owing to higher prices compared to other regions. Indian steelmakers have started to take steps to lower their carbon emissions by announcing collaborations with technology companies to decarbonise, and are trial injecting hydrogen in blast furnaces, and increasing the usage of natural gas in ironmaking. By Rituparna Ghosh Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Karoon cuts 2024 guidance on lower US output
Karoon cuts 2024 guidance on lower US output
Sydney, 19 April (Argus) — Australia-listed oil producer Karoon Energy has cut its production guidance for 2024 to reflect lower production from its stake in the Who Dat floating production system in the US' Gulf of Mexico. Who Dat's weaker well and facility performance has led to the lower guidance, with Karoon now expecting to produce 29,000-34,000 b/d of oil equivalent (boe/d) in 2024, down from a previous 31,000-37,000 boe/d guidance. Karoon said it and joint-venture partner LLOG Exploration will continue to prioritise higher value oil production over gas for the remainder of the year. The firm's January-March output rose by 17pc against October-December 2023 . Who Dat's production on a net revenue interest (NRI) basis was 9,000 boe/d for January-March, with Karoon downgrading its forecast NRI production from 4mn-4.5mn boe in 2024 to 3-3.5mn boe. But output from Karoon's Bauna asset offshore Brazil was 15pc lower than the previous quarter because of continuing reliability problems with Bauna's floating production, storage and offloading (FPSO) vessel, the shut-in of the SPS-88 well for the full period and natural field decline. Production for January-March at Bauna was 24,000 b/d, down from 28,000 b/d the previous quarter. Karoon expects to resume production from the well during July-September following an intervention, assuming no delays in regulatory approval. Bauna's annual maintenance will take place next month with a three-week shutdown of the FPSO planned to boost reliability. By Tom Major Karoon Energy results Jan-Mar '24 Oct-Dec '23 Jan-Mar '23 y-o-y % ± q-o-q % ± Sales revenue ($mn) 197 209 144 37 -6 Production (b/d) 34,000 29,000 22,000 55 17 Sales volume (b/d) 30,000 28,000 22,000 36 7 Average prices ($/bl) Bauna oil price 76 83 73 4 -8 Who Dat sales gas ($/mn ft³) 2.95 2.22 n/a n/a 33 Who Dat oil, condensate, NGLs 78 73 n/a n/a 7 Source: Karoon Energy Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Australia’s Woodside records weaker Jan-Mar LNG output
Australia’s Woodside records weaker Jan-Mar LNG output
Sydney, 19 April (Argus) — Australian independent Woodside Energy's January-March output dropped against a year earlier and the previous quarter, as reliability fell at its 4.9mn t/yr Pluto LNG project offshore Western Australia. Woodside produced 494,000 b/d of oil equivalent (boe/d) across its portfolio for January-March, 5pc below the 522,000 boe/d reported during October-December and 4pc below its 2023 full-year figure of 513,000 boe/d. Lower production at its Bass Strait, Pyrenees and Pluto assets was partially offset by increased production at the 140,000 b/d Mad Dog phase 2 oil field in the US Gulf of Mexico, which hit peak production of 130,000 b/d during the quarter. Reliability at Pluto was 94.6pc for the quarter because of an offshore trip and an onshore electrical fault. Woodside made a final investment decision (FID) on the Xena-3 well to support Pluto production during the quarter. The 16.9mn t/yr North West Shelf (NWS) LNG achieved 97pc reliability for the quarter with NWS' joint-venture partners taking a FID on the Lambert West field, which will support continuing production. Lower seasonal market demand and offshore maintenance activity saw production drop at the firm's Bass Strait fields, while production ended at the Gippsland basin joint venture's West Kingfish platform because of slowing oil output from Kingfish field. The Pyrenees floating production storage and offloading vessel began planned maintenance in early March and will return to crude production for April-June, Woodside said. Two 550,000 bl cargoes of Pyrenees crude loaded each quarter during 2023. Revenue dropped by 31pc to $2.97bn from $4.33bn a year earlier and 12pc from $3.36bn during October-December. Woodside's total average realised price dipped to $63/boe, 6pc down on the previous quarter's $67/boe and 26pc below the year-earlier figure of $85/boe. Woodside's average realised price for LNG produced was $10.40/mn Btu or 10pc down on the previous quarter's $11.50/mn Btu. The firm is more heavily exposed to spot prices and gas hub pricing than fellow domestic LNG producer Australian independent Santos, with about 30pc of Woodside's equity-produced LNG sold at these spot prices. By Tom Major Woodside LNG production (mn boe) NWS Pluto Wheatstone* Total Jan-Mar '24 8.2 11.8 2.4 22.3 Oct-Dec '23 7.8 12.4 2.5 22.7 Jan-Mar '23 9.7 12.2 2.5 24.3 2023 32.8 45.6 10.2 88.6 2022 29.7 46.2 9.2 85.1 y-o-y % ± -15 -3 -4 -8 q-o-q % ± 5 -5 -4 -2 Source: Woodside *Woodside controls a 13pc interest in Wheatstone LNG Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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