************************************* ENERGY INDUSTRY **************************
EXXON
Activist Investor Stuns Energy Behemoth
In one of the most shocking corporate upsets in recent history, an activist investor, hitherto unknown to the rest of the world, stunned energy giant Exxon by winning two board seats during May 26, 2021, annual shareholders meeting. As the tally from the shareholders votes is being counted inside Exxon's headquarters, Engine No. 1, the activist group, apparently has won at least two board seats. Engine No. 1 holds a small stakes in the energy giant, but the outcome of proxy fight reflects the shift in outlook of many of the institutional investors. Engine No. 1 raised its profile in December 2020 as it demanded a clear plan from Exxon for transition into cleaner energy footprint, aligning the executive compensation with shareholder interests and diversification of the company's business model.
Exxon to Achieve Net-Zero Greenhouse Gas Emissions by 2050
That the three of 12 board members elected last year represent the activist shareholders has a seismic effect on how the energy giant is seeing the climate change and pursuing measures to fight it. On January 18, 2022, six months after the activist shareholders have won three seats on its Board of Directors, Exxon announced its plan to achieve Net-Zero Greenhouse Gas emissions by 2050. It said that the company had identified more than 150 projects to be invested to achieve the Net-Zero goal by 2050. Exxon pledged to invest $15 billion by 2027 to achieve the Net-Zero goal.
ALASKA DRILLING RIGHTS GIVEN TO CONOCO PHILLIPS
Biden Administration Approves Three Drilling Sites in Alaska's North Slope
A day after banning or limiting drilling in 16 million acres in Alaska and Arctic Ocean, Biden administration on March 13, 2023 infuriated the environmentalists by granting the energy giant Conoco-Phillips the approval to drill at three sites in the National Petroleum Reserve-Alaska while denying two other drill sites. The three drill sites approved on March 13, 2023 include up to 199 wells. Lauding the approval of the company's Willow Project, Conoco-Phillips Chairman and CEO Ryan Lance called it the "right decision for Alaska and our nation". According to the company, the Willow Project will pump 180,000 barrels of oil per day, employ up to 2,500 construction jobs during construction phase and an additional 300 jobs on the long-term basis.
Environmental activists are livid and upset by the Biden administration's Bureau of Land Management's decision that will emit 239 million metric tons of greenhouse gases over the life of the project expected to supply oil over three decades. Earthjustice President Abigail Dillen blasted Biden, saying that it "is not climate leadership".
A day before, March 12, 2023, Biden barred oil drilling in 3 million acres in Beaufort Sea and limited oil drilling in 13 million acres in National Petroleum Reserve.
Judge Rules in Favor of Biden Administration's Willow Project
U.S. District Judge Sharon Gleason on November 9, 2023 rejected the environmental groups and other plaintiffs that had asked to block the Biden administration's March 13, 2023, approval of Willow Project.
ALASKA DRILLING RIGHTS GIVEN TO CONOCO PHILLIPS
************************************* ENERGY INDUSTRY **************************
************************************** ONCOR ***********************************
EFH Files Bankruptcy
On April 29, 2014, Dallas-based Energy Future Holdings Corporation filed for much anticipated bankruptcy protections after a prolonged, and often gruesome, negotiations with its creditors. In 2007, formerly TXU Corporation was bought out by the private equity firms KKR and Co., TPG and Goldman Sachs Capital Partners in what was dubbed as the largest ever leverage buyout (LBO) transaction worth of $45 billion based on betting that the prices of the natural gas, primary driver of wholesale electric prices, would go up. Instead, the natural gas prices began slumping because of natural gas boom made possible because of technological innovation such as horizontal drilling and hydraulic fracturing, leading to obtaining natural gas that once was inaccessible in shale formations such as Barnett Shale. However, the bettors, the PE firms, will get away with little loss as majority of the financial damages will be borne out by the second-lien creditors in Texas Competitive Electric Holdings such as Wilmington Savings Fund Society, and EFH didn't hold any negotiation with these second-lien creditors prior to filing Chapter 11 in the bankruptcy court of US Judge Christopher Sontchi on April 29, 2014. So far, the company had reached agreement with the first-lien creditors of Texas Competitive Electric Holdings such as Apollo Global Management led by Leon Black, Oaktree Capital Management led by Howard Marks and Fidelity Investments. The first-lien creditors of hold nearly $13.5 billion in debt, leaving nearly $25 billion in debt possessed by other creditors outside the agreement. Under the deal, EFH plans to:
* Split its regulated arm Oncor from its retail arm, TXU Energy, and generator unit, Luminant.
* Emerge from bankruptcy in 11 months
Hunts Consolidated to File Papers to Buy Oncor
Ray L. Hunt's company, Hunt Consolidated, on August 10, 2015 announced that it would file papers with the Texas Public Utility Commission next month to acquire Oncor. Energy Future Holdings, the parent company, is to file a new re-organization plan with the U.S. Bankruptcy Judge Christopher Sontchi that would value the purchase price of electric delivery entity around $20 billion. This is also the first time that a REIT has applied to acquire an energy entity.
Bankruptcy Judge Hands a Key Victory to EFH
Bankruptcy Judge Christopher Sontchi on December 3, 2015 gave go-ahead to Energy Future Holdings' re-organization plan in which the energy conglomerate's delivery arm, Oncor, would be acquired by Hunt Consolidated while the other two units--Luminant, the generation unit, and TXU Energy, the retail arm--would be owned by a creditor group.
Hunt Receives Approval from Federal Energy Regulator
A day after garnering key support from the bankruptcy judge, EFH and Hunt Consolidated on December 4, 2015 received a very positive news from Federal Energy Regulatory Commission as the federal energy approved Oncor's sale to the family company led by Ray L. Hunt and its subsequent corporate evolution as a REIT. EFH still needs approval from four other federal and state agencies: Federal Communications Commission, Nuclear Regulatory Commission, Internal Revenue Service and Public Utility Commission.
Oncor Deal in a State of Uncertainty
Texas Public Utility Commission took exception to Hunt group's proposed REIT structure aimed at saving at least $250 million a year. The bone of contention is over Hunt group's creation of two REIT companies: one that will own Oncor's assets such as 119,000 miles power lines and distribution of power to more than 3 million households and the other will lease the lines from the first company and maintain them. If the first company pays out at least 90 percent of the annual profit as dividend, it will avoid paying federal taxes, fetching a benefit of $250 million. PUC decided that the lease agreement between two REIT companies was an essentially of a utility rate issue that must be approved by PUC. Hunt filed a new motion on April 18, 2016 for PUC to reconsider its stand.
Hunt Asks PUC to Kill the Deal
Faced with the uncertainty as questions and doubts were raised over its corporate structure on how it would operate Oncor, Hunts group on May 18, 2016 filed an application to the Texas Public Utility Commission to withdraw its bid to acquire the Energy Future's electricity delivery unit. The May 18, 2016, move by Hunter and Ray Hunts doesn't preclude the family-owned company from another bid. The $17.6 billion Hunt acquisition bid was scuttled after PUC had imposed a last-minute condition to put part of the REIT savings in an escrow account for any future credit to ratepayers. Hunt earlier received the approval from the creditors group as well as bankruptcy court.
NextEra Offers to Buy Oncor
After Hunts withdrew their bid to buy Oncor, the Florida-based electric delivery company NextEra Energy on July 29, 2016 offered to acquire the transmission arm of EFH for $18.4 billion. Unlike Hunt Consolidated' offer that includes a much complex REIT transaction, NextEra's offer is pretty simple, and that may be the appeal of this offer. The $18.4 billion, stock-and-cash deal needs to be approved by a Delaware bankruptcy judge overseeing the reorganization of EFH and Texas Public Utility Commission. Underlining his commitment to a strong local presence, CEO and Chairman of NextEra Energy, Jim Robo, said in a statement that "we are incredibly impressed by Oncor's management team and its employees, and we are committed to retaining the Oncor name, its Dallas headquarters and local management".
Parts of EFH Emerge from Bankruptcy
After more than two years in the Chapter 11, Energy Future Holdings' power generation arm, Luminant, and its retail arm, TXU Energy, emerged from the bankruptcy after a judge in Delaware okayed the reorganization plan on late October 3, 2016. Texas Competitive Electricity Holdings (TCEH) Company LLC was out of bankruptcy by October 4, 2016. Still under bankruptcy was EFH's Oncor business unit. The former EFH was rebranded later as Vistra Energy.
Texas Regulators Reject NextEra Bid to Buy Oncor
Texas Public Utility Commission on April 13, 2017 rejected NextEra's bid to acquire Oncor over the Florida company's insistence that it kept the control over the Oncor board. Texas PUC wants the board to be independent.
Buffett Joins the Fray to Buy Oncor
Warren Buffett's Berkshire Hathaway on July 6, 2017 agreed to buy Oncor, becoming the third company to pursue the Texas' leading electricity delivery company that serves more than 3 million homes and businesses. If blessed by the stakeholders, bankruptcy judge and Texas regulators, Oncor will be folded as part of Berkshire Hathaway Energy that has 8.5 million customers in the U.S., U.K. and Canada and an annual revenue of $17.4 billion. Berkshire will pay $9 billion with an equity value of $11.25 billion. However, it's not clear how Berkshire's estimate stands in comparison to NextEra's $18.7 billion offer. However, Berkshire agreed to the PUC requirements that had sunk two earlier deals involving Hunt Consolidated and NextEra:
* "Ring Fence" option, implying an independent board of directors
* Allowing board to have complete control over dividends
* Eliminating the debt of Oncor's parent company
* Returning 90 percent of the interest rate savings to customers in terms of rate cuts
California Energy Company Wins Bankruptcy Court's Approval
Sempra Energy, which successfully outbid Warren Buffett's Berkshire Hathaway Energy in the third week of August 2017, won the approval from the Delaware Bankruptcy Judge Christopher Sontchi on September 6, 2017 for buying 80 percent stake in Oncor for $9.45 billion.
Oncor a Step from Emerging out of Bankruptcy
California-based Sempra Energy's re-org plan as part of its $9.45 billion acquisition of Oncor won a key approval on February 27, 2018. After receiving the approval from Delaware bankruptcy judge, Christopher Sontchi, Sempra now has just one last hurdle to cross: Texas' Public Utility Commission.
Oncor Deal Completed
Texas Public Utility Commission on March 8, 2018 gave the final approval of Sempra Energy's $9.45 billion acquisition deal of Oncor.
On April 29, 2014, Dallas-based Energy Future Holdings Corporation filed for much anticipated bankruptcy protections after a prolonged, and often gruesome, negotiations with its creditors. In 2007, formerly TXU Corporation was bought out by the private equity firms KKR and Co., TPG and Goldman Sachs Capital Partners in what was dubbed as the largest ever leverage buyout (LBO) transaction worth of $45 billion based on betting that the prices of the natural gas, primary driver of wholesale electric prices, would go up. Instead, the natural gas prices began slumping because of natural gas boom made possible because of technological innovation such as horizontal drilling and hydraulic fracturing, leading to obtaining natural gas that once was inaccessible in shale formations such as Barnett Shale. However, the bettors, the PE firms, will get away with little loss as majority of the financial damages will be borne out by the second-lien creditors in Texas Competitive Electric Holdings such as Wilmington Savings Fund Society, and EFH didn't hold any negotiation with these second-lien creditors prior to filing Chapter 11 in the bankruptcy court of US Judge Christopher Sontchi on April 29, 2014. So far, the company had reached agreement with the first-lien creditors of Texas Competitive Electric Holdings such as Apollo Global Management led by Leon Black, Oaktree Capital Management led by Howard Marks and Fidelity Investments. The first-lien creditors of hold nearly $13.5 billion in debt, leaving nearly $25 billion in debt possessed by other creditors outside the agreement. Under the deal, EFH plans to:
* Split its regulated arm Oncor from its retail arm, TXU Energy, and generator unit, Luminant.
* Emerge from bankruptcy in 11 months
Hunts Consolidated to File Papers to Buy Oncor
Ray L. Hunt's company, Hunt Consolidated, on August 10, 2015 announced that it would file papers with the Texas Public Utility Commission next month to acquire Oncor. Energy Future Holdings, the parent company, is to file a new re-organization plan with the U.S. Bankruptcy Judge Christopher Sontchi that would value the purchase price of electric delivery entity around $20 billion. This is also the first time that a REIT has applied to acquire an energy entity.
Bankruptcy Judge Hands a Key Victory to EFH
Bankruptcy Judge Christopher Sontchi on December 3, 2015 gave go-ahead to Energy Future Holdings' re-organization plan in which the energy conglomerate's delivery arm, Oncor, would be acquired by Hunt Consolidated while the other two units--Luminant, the generation unit, and TXU Energy, the retail arm--would be owned by a creditor group.
Hunt Receives Approval from Federal Energy Regulator
A day after garnering key support from the bankruptcy judge, EFH and Hunt Consolidated on December 4, 2015 received a very positive news from Federal Energy Regulatory Commission as the federal energy approved Oncor's sale to the family company led by Ray L. Hunt and its subsequent corporate evolution as a REIT. EFH still needs approval from four other federal and state agencies: Federal Communications Commission, Nuclear Regulatory Commission, Internal Revenue Service and Public Utility Commission.
Oncor Deal in a State of Uncertainty
Texas Public Utility Commission took exception to Hunt group's proposed REIT structure aimed at saving at least $250 million a year. The bone of contention is over Hunt group's creation of two REIT companies: one that will own Oncor's assets such as 119,000 miles power lines and distribution of power to more than 3 million households and the other will lease the lines from the first company and maintain them. If the first company pays out at least 90 percent of the annual profit as dividend, it will avoid paying federal taxes, fetching a benefit of $250 million. PUC decided that the lease agreement between two REIT companies was an essentially of a utility rate issue that must be approved by PUC. Hunt filed a new motion on April 18, 2016 for PUC to reconsider its stand.
Hunt Asks PUC to Kill the Deal
Faced with the uncertainty as questions and doubts were raised over its corporate structure on how it would operate Oncor, Hunts group on May 18, 2016 filed an application to the Texas Public Utility Commission to withdraw its bid to acquire the Energy Future's electricity delivery unit. The May 18, 2016, move by Hunter and Ray Hunts doesn't preclude the family-owned company from another bid. The $17.6 billion Hunt acquisition bid was scuttled after PUC had imposed a last-minute condition to put part of the REIT savings in an escrow account for any future credit to ratepayers. Hunt earlier received the approval from the creditors group as well as bankruptcy court.
NextEra Offers to Buy Oncor
After Hunts withdrew their bid to buy Oncor, the Florida-based electric delivery company NextEra Energy on July 29, 2016 offered to acquire the transmission arm of EFH for $18.4 billion. Unlike Hunt Consolidated' offer that includes a much complex REIT transaction, NextEra's offer is pretty simple, and that may be the appeal of this offer. The $18.4 billion, stock-and-cash deal needs to be approved by a Delaware bankruptcy judge overseeing the reorganization of EFH and Texas Public Utility Commission. Underlining his commitment to a strong local presence, CEO and Chairman of NextEra Energy, Jim Robo, said in a statement that "we are incredibly impressed by Oncor's management team and its employees, and we are committed to retaining the Oncor name, its Dallas headquarters and local management".
Parts of EFH Emerge from Bankruptcy
After more than two years in the Chapter 11, Energy Future Holdings' power generation arm, Luminant, and its retail arm, TXU Energy, emerged from the bankruptcy after a judge in Delaware okayed the reorganization plan on late October 3, 2016. Texas Competitive Electricity Holdings (TCEH) Company LLC was out of bankruptcy by October 4, 2016. Still under bankruptcy was EFH's Oncor business unit. The former EFH was rebranded later as Vistra Energy.
Texas Regulators Reject NextEra Bid to Buy Oncor
Texas Public Utility Commission on April 13, 2017 rejected NextEra's bid to acquire Oncor over the Florida company's insistence that it kept the control over the Oncor board. Texas PUC wants the board to be independent.
Buffett Joins the Fray to Buy Oncor
Warren Buffett's Berkshire Hathaway on July 6, 2017 agreed to buy Oncor, becoming the third company to pursue the Texas' leading electricity delivery company that serves more than 3 million homes and businesses. If blessed by the stakeholders, bankruptcy judge and Texas regulators, Oncor will be folded as part of Berkshire Hathaway Energy that has 8.5 million customers in the U.S., U.K. and Canada and an annual revenue of $17.4 billion. Berkshire will pay $9 billion with an equity value of $11.25 billion. However, it's not clear how Berkshire's estimate stands in comparison to NextEra's $18.7 billion offer. However, Berkshire agreed to the PUC requirements that had sunk two earlier deals involving Hunt Consolidated and NextEra:
* "Ring Fence" option, implying an independent board of directors
* Allowing board to have complete control over dividends
* Eliminating the debt of Oncor's parent company
* Returning 90 percent of the interest rate savings to customers in terms of rate cuts
California Energy Company Wins Bankruptcy Court's Approval
Sempra Energy, which successfully outbid Warren Buffett's Berkshire Hathaway Energy in the third week of August 2017, won the approval from the Delaware Bankruptcy Judge Christopher Sontchi on September 6, 2017 for buying 80 percent stake in Oncor for $9.45 billion.
Oncor a Step from Emerging out of Bankruptcy
California-based Sempra Energy's re-org plan as part of its $9.45 billion acquisition of Oncor won a key approval on February 27, 2018. After receiving the approval from Delaware bankruptcy judge, Christopher Sontchi, Sempra now has just one last hurdle to cross: Texas' Public Utility Commission.
Oncor Deal Completed
Texas Public Utility Commission on March 8, 2018 gave the final approval of Sempra Energy's $9.45 billion acquisition deal of Oncor.
Oncor to Invest $19 billion in Capital Expense
To fulfill the demand of in-migration of tens of thousands of people to Texas, Oncor is investing $19 billion in the next four years (2023-2027). Oncor CEO Allen Nye on May 4, 2023 said that Oncor would do whatever it could to ensure Texas remained the magnet for prosperity and growth. Oncor will recoup all the investments through rate hikes which has been already approved by the PUC. Usually there is rate review filing once in four years. Last time, Oncor filed rate review in 2017. An average family using 1,300 kilowatt-hours will pay an average 3% more.
************************************** ONCOR ***********************************
Biden Taps Strategic Reserve to Check Rising Oil Prices
As the national average of the gasoline is hovering around $3.40 a gallon, almost 50% higher than last year's price level, President Joe Biden on November 23, 2021 took the unprecedented step to draw 50 million barrels from the country's Strategic Petroleum Reserve. Biden administration coordinated its move with other nations such as India, Britain, South Korea and Japan, thus making the November 23, 2021, move the largest concerted international move. Within hours, India decided to release 5 million barrels from its strategic stockpile. U.K. also decided to release 1.5 million barrels while South Korea and Japan were about to take action. OPEC, though, is not happy with the U.S. move as it's trying to keep a tight lid on the supply side to keep the pricing at a mutually profitable threshold.
Biden Announces 15 million barrels from Strategic Petroleum Reserve
Weeks before the crucial midterm election, President Joe Biden on October 19, 2022 announced the release of 15 million barrels from the country's Strategic Petroleum Reserve. The decision is designed to provide relief to America's consumers in the light of recent OPEC+ announcement to curtail production. USA's Strategic Petroleum Reserve now holds the lowest level of oil reserve since 1984, pegging the volume at 400 million barrels.
Under Biden's Watch, U.S. Producing More Oil than Any Other Nation
That President Joe Biden has left his Green Energy credentials on the campaign trail itself as often accused by Environmentalists may not be a total overstatement as the U.S. has beaten out OPEC behemoth Saudi Arabia and non-OPEC oil giant Russia by producing 13.2 million barrels of oil per day, an all-time record for the U.S., according to the January 1, 2024, edition of The Dallas Morning News. As the largest producer of oil, U.S. has reined in the inflation and blunted the impact of OPEC's effort to cut oil production. What Trump and Biden will be clamoring for in the midst of 2024 Presidential Campaign politics is a surreal picture to what's happened in reality: Pro-fossil fuel President Trump administration's highest oil production of 13 million barrels a day recorded in November 2019 has come short of Pro-Green Energy President Biden administration's record of 13.2 million.
Biden Admin to Pause on New Gas Export Permits
Biden Admin to Pause on New Gas Export Permits
In a politically savvy decision during a presidential election year, Biden administration on late January 25, 2024 put a pause on issuing permits for new LNG export terminals. Energy Secretary Jennifer Granholm said that the pause was needed to conduct a more thorough analysis and impact assessment of such projects related to climate health, national security and economy. Since the U.S. began to export LNG eight years ago, it had ramped up its exports, especially over the past two years by increasing exports to Asia and Europe to impose a hefty cost on Russia for its war against Ukraine. American Petroleum Institute President and CEO Mike Sommers didn't omit to mention that point while criticizing the Biden administration's pause decision, adding that "this is a win for Russia and a loss for America's allies, U.S. jobs and global climate progress" as in many developing nations, this decision would spark usage of more polluting coal.
Granholm dismissed any notion that it would help Russia as the existing export mechanism would not be perturbed and any already-approved projects in the pipeline would not be impacted. Nation's seven export terminals are working on high-gear operational mode.
Biden Admin to Hike Cost on Oil Exploration in Federal Land
On April 12, 2024, Biden administration's Interior Department unveiled an ambitious proposal to slap more fees per lease on the federal land. It will be $150,000, up from $10,000 per lease. Also, the royalty is to be increased from 12.5% to 16.67% of the revenue.
HYDRAULIC FRACTURING
Obama Administration Proposes New Fracking Rules
Obama administration's Interior Department on March 20, 2015 issued new rules that would regulate hydraulic fracturing, a technique that has revolutionized U.S. oil industry by providing capability to extract once unreachable oil and natural gas from deep underneath the rock formation. Obama administration touted the regulations, they would go into effect in 90 days and be open to public comments for the next 30 days, as the new baseline off which states and cities might take a crack to chart their own fracking regulations. Although the Interior Department began to write the regulations from Obama's first term, the full fledge unveiling took more than four years and a different cabinet secretary, Sally Jewell, for formal release of the regulations. Under the regulations,
(1) Government workers will be able to inspect the safety of the concrete barriers that line the fracking wells
(2) Companies are required to provide the information on chemical mix used on an industry-owned website, FracFocus, within 30 days of fracking
OPEC NEWS
Saudi Arabia Cuts Crude Exports Prices to USA
In an effort to compete against US domestic independent drillers who had made a windfall in recent years due to technological advances such as horizontal drilling and hydraulic fracturing, Saudi Arabia on November 4, 2014 reduced the crude prices to one of its major export markets, the USA. The US appetite for Saudi oil has decreased significantly in recent years because of shale oil boom. In August 2014, US imported on the average 894,000 barrels per day from Saudi Arabia, down from 1.3 million barrels per day.
OPEC to Stay Put in Oil Production
Faced with steep decline in crude prices, Organization of Petroleum Exporting Countries on November 27, 2014 came up short on an appropriate response, and after a crucial meeting at Vienna, decided to have the crude output intact at the current level of 30 million barrel per day. The secretary-general of the 12-nation bloc, Abdalla El-Badri, said on November 27 that the oil cartel didn't want to panic, and wanted to "see how the market" would behave.
Saudi Arabia Joins Russia to Support Crude Prices
Saudi Arabia, Russia, Qatar and Venezuela announced on February 16, 2016 that, if other nations went along, they would pursue a policy of realigning the crude production with the market demand in order to support the prices. However, it's not clear how Iraq and Iran are going to respond to the plan announced by the four nations, especially Teheran has just been allowed to export oil to earn much needed foreign currency.
OPEC, Russia Fail to Act to Rein in Production
As the worldwide crude glut blunted the effect of any action to stop slide in oil prices, OPEC and Russia came to the table at Doha, Qatar on April 17, 2016 to take a minimal level of action to help the global oil market. Instead, the outcome of the April 17, 2016, Doha meet of OPEC and Russia was anything but productive as the participants failed to agree on freezing at the current production level, leave alone cuts in production. Saudi Arabia, which was the primary force behind the call for freezing production in the run-up to the Doha meet, backtracked at the last minute on the ground that Iranian representative was not present at the meeting. Saudi Arabia didn't want to make any pledge without Iran's commitment to comply. However, Iran's priority is just the opposite to OPEC's goals as Teheran is more intent to ramp up its production to the pre-sanction level in the aftermath of lifting of international sanctions as part of implementation of historic nuclear agreement.
OPEC Stays Put in Oil Output
The 13-nation OPEC on June 2, 2016 decided to maintain the status quo in terms of how much oil to pump to the world market. The meeting at Vienna drew considerable interest as it was the first meeting with Saudi Arabia, the cartel's king, under a new oil minister. Khalid al-Falih, minister of expanded portfolio of energy, industry and mining, made an impactful and influential comment after the meeting of oil ministers that the era of OPEC managing the crude price for the world was over. Khalid's predecessor and Saudi Arabia's longtime oil minister Ali al-Naimi was known to leverage Saudi clout in OPEC to nudge the cartel's crude output policy as a tool to influence prices in the world market. However, in a remarkable shift last month, the Kingdom shuffled ministries and priorities to lessen its dependence on oil, reduce the scale of largesse to its people and diversify its economy. As part of that effort, the rationale for Saudi Arabia to keep pumping oil at high volume makes sense as it will help the kingdom earn more revenue and funnel it into other areas of economy.
OPEC to Reduce Oil Production
Common and calmer sense seems to have returned to OPEC as on the sidelines of an energy conference at Algiers, OPEC ministers huddled over depressed global oil prices and, after three days of off-and-on negotiations, announced on September 28, 2016 to have reached a preliminary deal to curb production. The final decision will be taken at a formal OPEC meeting at Vienna in November. What's heartening to the oil market is that Saudi Arabia and Iran have been able to join the force in their collective effort to shore up the oil prices. At present, OPEC pump 33.2 million barrels of oil per day. According to OPEC's president, Mohammed Bin Saleh Al-Sada, Qatar's oil minister, the collective production may go down to the range of 32.5 to 33 million barrels a day.
OPEC to Pump Less Oil
In a desperate bid to support weak oil prices, Organization of the Petroleum Exporting Countries (OPEC) on November 30, 2016 displayed a rare appearance of unity and announced the reduction of oil output by 1.2 million barrels a day. The reduction to become effective January 1, 2017 will reduce the OPEC output to about 32.5 million barrels a day if nobody cheats. After the meeting at the cartel's headquarters in Vienna, the 14-nation bloc's president, Mohammed Bin Saleh al-Sada told reporters that barring Indonesia, which preferred to be suspended instead of acquiescing to the production cut, all other nations had agreed to the production reduction. Al-Sada expressed hope that other non-OPEC oil producers, including Russia, would soon join OPEC in reducing oil output, and gave a ballpoint figure of Russian target: 300,000 off its total daily production of 10 million barrels a day. Saudi Arabia, according to Mohammed Bin Saleh al-Sada, will reduce the oil output by 486,000 barrels a day from its current production level of 10 million barrels.
OPEC, Non-OPEC Nations Join Hands to Cut Crude Output
In a rare deal between non-OPEC countries, including Russia, and OPEC, non-OPEC nations on December 10, 2016 agreed to join OPEC in reducing the crude production to bolster the oil prices. Non-OPEC nations agreed to cut 558,000 barrels of oil production.
As Oil Prices Tumble amid Coronavirus Pandemic, Saudis and Russians Cut Deal
After days of belligerent attitude by Saudi Arabia and Russia that had led to collapse in oil prices, Saudi Arabia-led OPEC and non-OPEC nations, including Russia and USA, on April 10, 2020 reached a oil production cut agreement that would immediately take out 10 million barrels, or 10%, of the global oil supply. The phased-in reduction plan calls for 10 million barrels reduction through July 2020, and then 8 million barrels a day through December 2020, and then 6 million barrels a day cut for 16 months beginning January 2021. The agreement has come as part of an energy ministerial conference of G-20 nations held virtually.
Russia, OPEC Put Stamp of Approval on the Supply Reduction Deal
Two days after reaching an agreement via video-conferencing, involving 23 nations, and papering over a sticking point over Mexico's share of reduction limited to only 100,000 barrels a day backed by a U.S. guarantee to pick up the remainder of Mexico's reduction quota, OPEC+, OPEC nations plus other major oil producers on April 12, 2020 gave final consent to the deal that would take out 9.7 million barrels a day effective May 1, 2020.
HYDRAULIC FRACTURING
Obama Administration Proposes New Fracking Rules
Obama administration's Interior Department on March 20, 2015 issued new rules that would regulate hydraulic fracturing, a technique that has revolutionized U.S. oil industry by providing capability to extract once unreachable oil and natural gas from deep underneath the rock formation. Obama administration touted the regulations, they would go into effect in 90 days and be open to public comments for the next 30 days, as the new baseline off which states and cities might take a crack to chart their own fracking regulations. Although the Interior Department began to write the regulations from Obama's first term, the full fledge unveiling took more than four years and a different cabinet secretary, Sally Jewell, for formal release of the regulations. Under the regulations,
(1) Government workers will be able to inspect the safety of the concrete barriers that line the fracking wells
(2) Companies are required to provide the information on chemical mix used on an industry-owned website, FracFocus, within 30 days of fracking
OPEC NEWS
Saudi Arabia Cuts Crude Exports Prices to USA
In an effort to compete against US domestic independent drillers who had made a windfall in recent years due to technological advances such as horizontal drilling and hydraulic fracturing, Saudi Arabia on November 4, 2014 reduced the crude prices to one of its major export markets, the USA. The US appetite for Saudi oil has decreased significantly in recent years because of shale oil boom. In August 2014, US imported on the average 894,000 barrels per day from Saudi Arabia, down from 1.3 million barrels per day.
OPEC to Stay Put in Oil Production
Faced with steep decline in crude prices, Organization of Petroleum Exporting Countries on November 27, 2014 came up short on an appropriate response, and after a crucial meeting at Vienna, decided to have the crude output intact at the current level of 30 million barrel per day. The secretary-general of the 12-nation bloc, Abdalla El-Badri, said on November 27 that the oil cartel didn't want to panic, and wanted to "see how the market" would behave.
Saudi Arabia Joins Russia to Support Crude Prices
Saudi Arabia, Russia, Qatar and Venezuela announced on February 16, 2016 that, if other nations went along, they would pursue a policy of realigning the crude production with the market demand in order to support the prices. However, it's not clear how Iraq and Iran are going to respond to the plan announced by the four nations, especially Teheran has just been allowed to export oil to earn much needed foreign currency.
OPEC, Russia Fail to Act to Rein in Production
As the worldwide crude glut blunted the effect of any action to stop slide in oil prices, OPEC and Russia came to the table at Doha, Qatar on April 17, 2016 to take a minimal level of action to help the global oil market. Instead, the outcome of the April 17, 2016, Doha meet of OPEC and Russia was anything but productive as the participants failed to agree on freezing at the current production level, leave alone cuts in production. Saudi Arabia, which was the primary force behind the call for freezing production in the run-up to the Doha meet, backtracked at the last minute on the ground that Iranian representative was not present at the meeting. Saudi Arabia didn't want to make any pledge without Iran's commitment to comply. However, Iran's priority is just the opposite to OPEC's goals as Teheran is more intent to ramp up its production to the pre-sanction level in the aftermath of lifting of international sanctions as part of implementation of historic nuclear agreement.
OPEC Stays Put in Oil Output
The 13-nation OPEC on June 2, 2016 decided to maintain the status quo in terms of how much oil to pump to the world market. The meeting at Vienna drew considerable interest as it was the first meeting with Saudi Arabia, the cartel's king, under a new oil minister. Khalid al-Falih, minister of expanded portfolio of energy, industry and mining, made an impactful and influential comment after the meeting of oil ministers that the era of OPEC managing the crude price for the world was over. Khalid's predecessor and Saudi Arabia's longtime oil minister Ali al-Naimi was known to leverage Saudi clout in OPEC to nudge the cartel's crude output policy as a tool to influence prices in the world market. However, in a remarkable shift last month, the Kingdom shuffled ministries and priorities to lessen its dependence on oil, reduce the scale of largesse to its people and diversify its economy. As part of that effort, the rationale for Saudi Arabia to keep pumping oil at high volume makes sense as it will help the kingdom earn more revenue and funnel it into other areas of economy.
OPEC to Reduce Oil Production
Common and calmer sense seems to have returned to OPEC as on the sidelines of an energy conference at Algiers, OPEC ministers huddled over depressed global oil prices and, after three days of off-and-on negotiations, announced on September 28, 2016 to have reached a preliminary deal to curb production. The final decision will be taken at a formal OPEC meeting at Vienna in November. What's heartening to the oil market is that Saudi Arabia and Iran have been able to join the force in their collective effort to shore up the oil prices. At present, OPEC pump 33.2 million barrels of oil per day. According to OPEC's president, Mohammed Bin Saleh Al-Sada, Qatar's oil minister, the collective production may go down to the range of 32.5 to 33 million barrels a day.
OPEC to Pump Less Oil
In a desperate bid to support weak oil prices, Organization of the Petroleum Exporting Countries (OPEC) on November 30, 2016 displayed a rare appearance of unity and announced the reduction of oil output by 1.2 million barrels a day. The reduction to become effective January 1, 2017 will reduce the OPEC output to about 32.5 million barrels a day if nobody cheats. After the meeting at the cartel's headquarters in Vienna, the 14-nation bloc's president, Mohammed Bin Saleh al-Sada told reporters that barring Indonesia, which preferred to be suspended instead of acquiescing to the production cut, all other nations had agreed to the production reduction. Al-Sada expressed hope that other non-OPEC oil producers, including Russia, would soon join OPEC in reducing oil output, and gave a ballpoint figure of Russian target: 300,000 off its total daily production of 10 million barrels a day. Saudi Arabia, according to Mohammed Bin Saleh al-Sada, will reduce the oil output by 486,000 barrels a day from its current production level of 10 million barrels.
OPEC, Non-OPEC Nations Join Hands to Cut Crude Output
In a rare deal between non-OPEC countries, including Russia, and OPEC, non-OPEC nations on December 10, 2016 agreed to join OPEC in reducing the crude production to bolster the oil prices. Non-OPEC nations agreed to cut 558,000 barrels of oil production.
As Oil Prices Tumble amid Coronavirus Pandemic, Saudis and Russians Cut Deal
After days of belligerent attitude by Saudi Arabia and Russia that had led to collapse in oil prices, Saudi Arabia-led OPEC and non-OPEC nations, including Russia and USA, on April 10, 2020 reached a oil production cut agreement that would immediately take out 10 million barrels, or 10%, of the global oil supply. The phased-in reduction plan calls for 10 million barrels reduction through July 2020, and then 8 million barrels a day through December 2020, and then 6 million barrels a day cut for 16 months beginning January 2021. The agreement has come as part of an energy ministerial conference of G-20 nations held virtually.
Russia, OPEC Put Stamp of Approval on the Supply Reduction Deal
Two days after reaching an agreement via video-conferencing, involving 23 nations, and papering over a sticking point over Mexico's share of reduction limited to only 100,000 barrels a day backed by a U.S. guarantee to pick up the remainder of Mexico's reduction quota, OPEC+, OPEC nations plus other major oil producers on April 12, 2020 gave final consent to the deal that would take out 9.7 million barrels a day effective May 1, 2020.
OPEC, Allies to Produce Additional , Allow Five Countries to Raise Output
After debate and deliberations, Organization of the Petroleum Exporting Countries on July 18, 2021 announced that OPEC and non-OPEC allies such as Russia would collectively increase the output by 2 million barrels per day by the end of 2021. In addition, decision has been made to allow five nations--UAE, Saudi Arabia, Russia, Iraq and Kuwait--to increase their production limits beginning in May 2022. UAE will have a new ceiling of 3.5 million barrels per day, short of 3.8 million barrels it has sought. Saudi Arabia's limit will be increased to 11.5 million barrels per day, an increase of 500,000 barrels. Saudi Energy Minister Prince Abdulaziz bin Salman sounded optimistic of the cartel on July 18, 2021: "we differ here and there, but we bond".
OPEC+ Announces Production Cuts
Weeks before the crucial midterm election in the U.S. and amidst a stubbornly high inflation in much of the world, OPEC and major non-OPEC oil ministers met at Vienna on October 5, 2022 and decided to cut 2 million barrels in daily oil production beginning in November to bring price stability in the global oil market. This is the first in-person meeting of officials since the pandemic had erupted in early 2020.
Biden Mulls "Some Consequences" for Saudi-led Oil Production Cut
That the October 5, 2022, decision at Vienna by the Saudi oil minister and his OPEC+ counterparts to remove 2 million barrels of oil from the market didn't sit well with the Biden administration and Democratic lawmakers became amply evident on October 11, 2022 as President Joe Biden expressed his public displeasure over the decision that would help Russia fund its war campaign against Ukraine. Biden, who didn't mention about potential impact on the U.S. pump prices, said on October 11, 2022 that he would consult with Congress to formulate "some consequences" for Saudi action, but stopped short of approving a measure that had been floated by Sen. Richard Blumenthal, D-CONN, and Rep. Ro Khanna, D-CA, to stop arms sales as well as sales of parts and spare parts to Saudi Arabia.
Saudi, Other OPEC+ Nations to Cut Production by 1.15 million barrels per day
Though not coming as a collective OPEC+ news release, Saudi Arabia and other nations on April 2, 2023 announced to collectively take out 1.15 million barrels per day of oil to stabilize the oil prices. The cut will become effective in May 2023. This is the second reduction in oil production by OPEC+ nations in five months.
Saudi's Unilateral Decision to Pump Less Oil Surprising
After two rounds of production cuts, 1.6 million barrels reduction on April 2, 2023 and the October 5, 2022, cut of 2 million barrels, respectively, Saudi Arabia on June 4, 2023 surprised by announcing an additional 1 million barrels of oil off the marketplace effective July 1, 2023. The Saudi unilateral decision at the end of an OPEC+ meeting at Vienna is intended, in the words of Saudi Energy Minister Abdulaziz bin Salman, to "bring stability to this market".
RENEWABLE ENERGY
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Commerce Department's Inquiry Sets Alarm with Renewable Energy Supporters
Biden administration's Commerce Department on March 28, 2022 launched an anti-dumping investigation into imports of solar panels manufactured and assembled in Vietnam, Cambodia, Malaysia and Thailand. That the inquiry may lead to retroactive tariffs as high as 240% has alarmed environmentalists and advocates of renewables as it will thwart the burgeoning market for solar energy. A California solar panel manufacturer complained against the manufacturers of four Southeast Asian nations, accusing them of skirting the regulations designed to penalize the anti-dumping practices of Chinese manufacturers.
TEXAS MIRACLE: Renewable Pushes Nuclear, Fossil Fuel-based Energy to be Cost Effective
How wasteful was the measure that had been passed by the Texas legislature in the last session and allocated $5 billion in taxpayers money for the utilities to create new fleet of natural gas-fired power plants by taking low-interest loans and grants was proven on February 25, 2024 as the high yield from solar and wind had forced the fossil fuel and nuclear power plants to offer energy at the dirt cheap prices to remain competitive, thus paving the way for $0 electricity price for almost five hours.
At present, solar power has the maximum generation capacity in the pipeline, followed by battery and wind. According to a front-page article published The Dallas Morning News on March 19, 2024, the generation capacity in the pipeline for the various sources in the ERCOT market are as follows:
* Solar (152,098 megawatts)
* Battery (140,219 megawatts)
* Wind (37,215 megawatts)
* Gas (16,022 megawatts)
* Others (2,967 megawatts)
Each megawatt is likely to power 200 Texas households during peak demand
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U.S. Approves Second Commercial-scale, Off-shore Wind Energy Project
U.S. Interior Secretary Deb Haaland on November 24, 2021 announced only the second commercial-scale, off-shore wind energy project off the coast of Rhode Island. The approval for the South Fork Wind Project came only days after the last week's ground-breaking of the country's first commercial-scale, off-shore wind project off the coasts of Massachusetts.
Last month, Biden administration announced plans for seven large, commercial-scale offshore wind energy project as part of a broader plan to generate 30 gigawatts of energy by 2030, powering more than 10 million homes. The administration will review the plans for 16 commercial-scale wind energy facilities by 2025. South Fork Wind Project will generate 130 megawatts of energy, providing electricity to approximately 70,000 homes.
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World Adds Record Energy from Renewables
2023 is shaping up as a bumper year for renewable energy, according to a report issued on December 27, 2023 by The Associated Press based on the projection made by the International Energy Agency. If IEA's estimate meets reality, the world will have added 440 gigawatts of renewable energy by the end of 2023. That's equivalent of total energy capability of Germany and Spain. The breakdown of the renewable energy gives some valuable insight into how individual categories are performing.
SOLAR: According to the projection, China, U.S. and Europe are expected to set records in solar installations as the prices of solar panels have dropped by 40% to 53% over the past year. China itself is expected to add 180 to 230 gigawatts while Europe is projected to add 58 gigawatts.
BATTERY: As the sales of EVs are ramping up throughout the world, one in every five new vehicles sold is thought to be an EV. Thanks to the Inflation Reduction Act, one of the legacy-setting measures that President Joe Biden had championed, there was a whopping $43.4 billion investment in battery manufacturing and recycling sectors. The U.S. and Europe each had 38 gigafactories, massive battery factories, in the pipeline or completed in November 2023, China had 295 in the works.
WIND: World is expected to add wind energy footprint equivalent to power nearly 80 million homes
