Energy Week in Review, Week Ahead: Shifting Layers in the Dispatch Stack, Regulatory Changes Dominate the Near-Term ...
Capitol Hill tends to slow down dramatically after July 4th, but energy topics are currenlty hot in Washington DC and at the state level. Read Event Driven Energy Policy Analyst Scott Speaker's week in review for June 9, 2017 and view on the week ahead.
Capitol Hill tends to slow dramatically after July 4th, but energy topics are currently hot in Washington DC and at the state level. The adoption of
renewable fuel standards and deployment of renewable technologies remains at the forefront of policy decision-makers, as are regulatory and
environmental oversight of traditional energy businesses.
With EPA and DOI seen as loosening regulatory standards with recent executive actions and the recent decision of the Trump administration to
withdraw from the Paris climate agreement, investors can expect each energy infrastructure and jurisdictional battle to become a proxy for the
construction versus conservation schism.
While energy policy and environmental policy is now being treated in some circles as one and the same, investors should be reminded that traditional
sources of energy still dominate the landscape in terms of volumes and dollars - especially in terms of transportation, industrial applications,
and power generation. That factor was prevalent this past week as crude oil pricing - both WTI and Brent - wilted under the weight of growing US
production, rising US rig counts and inventories, disappointing demand for products (especially gasoline), and surprisingly strong production from
countries not covered by the OPEC/non-OPEC curtailment agreement.
Consumers will surely be buoyed by oil’s fundamentally- and psychologically-driven declines, as will the residential, commercial, industrial and
power generation consumers of natural gas - who have seen a supportive fundamental situation overwhelmed by the offsetting impact of a cool
start to the natural gas summer. Commercial and non-commercial energy market participants can expect volatility on the front of both the natural
gas and crude oil curves, but much of the action in those markets is playing out in calendar 2018 trading. Widely traded calendar spreads (December
2017/December 2018 in the case of crude oil and March 2018/April 2018 in the case of gas) will likely continue to be volatile as a result of commercial
hedging interest at price levels just slightly above prevailing calendar 2018 pricing, and consensus expectations moving back toward oversupply
based on new production and delivery infrastructure.
All eyes will be on the
Baker Hughes rig count
this afternoon, as it has become a bellwether for US supply, drilling economics in specific shale basins,
and the general health of the industry.
Week in Review:
Energy Transfer Partners continues
to feel the fallout from the inadvertent drilling fluid spill during construction of its Rover natural gas pipeline,
which was later determined to have traces of diesel fuel.
Canadian federal authorities continue to approve
LNG export project licenses despite the lack of a concrete final investment decision or any flowing
supply. Woodfibre LNG is the latest to receive an export license - Canada’s 24th issued - but global LNG market conditions are far from conducive for a
new entrant with a high cost structure, especially one targeting Asian importers.
FERC nominees Neil Chatterjee and Robert Powelson
sailed through a hearing and vote before the Senate Energy and Natural Resources Committee
with favorable 20-3 votes. The energy markets can likely expect a flood of project approvals when the nominees are confirmed by the Senate.
State and federal efforts are underway to support
energy storage development, as evidenced by a bill currently being considered by the California
General Assembly that would direct that state’s PUC to establish an way to provide rebates to utility customers for the installation of energy storage
systems. The establishment of the Advanced Energy Storage Caucus at the federal level is further evidence that energy storage has buy-in from a
policy perspective at many levels of government.
The recent Regional Greenhouse Gas Initiative (RGGI) carbon dioxide (CO2)
allowance auction drew the attention of northeastern and mid-Atlantic
JUN 9 / 12:18 PM
Event Driven
Reorg Research
Kent Collier
Founder & CEO
kcollier@reorg-research.com
Tim Gray
Head of Sales
tgray@reorg-research.com
Energy Week in Review, Week Ahead: Shifting Layers in the Dispatch
Stack, Regulatory Changes Dominate the Near-Term Landscape
power markets due to the trend over the past several auctions toward lower allowance prices. RGGI’s market monitor today released the results of the
latest auction, reporting further depression in allowance prices - this time to a clearing price of $2.53/ton.
EPA suspended by one year
the implementation of ground-level ozone rules, which had been the subject of much outcry by the oil and gas industry
due to the costs associated with compliance. This decision buys them at least a year.
Carbon capture and storage (CCS)
has been the subject of much attention on Capitol Hill and on the state level, especially in the wake of the Trump
administration’s decision to withdraw from the Paris climate agreement. Two Democratic senators plan to introduce a bill to extend a CCS tax credit in
the near term.
EIA upped its US oil production expectations
for this year and next and then followed that with an inventory report showing a surprise build,
pressuring crude pricing closer to breakevens for certain medium- and higher-cost productive basins. Permian and Eagle Ford drilling continues to
increase as the economics there remains favorable at current price levels, but each incremental move lower should squeeze margins - provided the
producer is under- or unhedged - in basins slightly higher on the cost curve.
The Senate Energy and Natural Resources Committee offered
energy technology market panelists a chance to weigh in on public intervention in
and support for clean energy applications, touting the success in their efforts along the way. Public-private partnerships in the form of grants, loan
guarantees, tax incentives, and subsidies were credited with advancing emerging energy technologies and panelists suggested that those efforts
should be extended or accelerated.
Interior Secretary Ryan Zinke signed an order
seeking the formation of a Sage-Grouse Review Team and a review of the current grouse protection
framework, in a move conservationists see as another loosening of environmental and regulatory oversight of extraction industries.
Week Ahead:
June 12, 13, 14
FERC
scoping
meetings in Louisiana on
Port Arthur Pipeline Louisiana Connector Project
, a Sempra LNG & Midstream project involving a natural gas
pipeline and LNG export facility. Louisiana Connector is one of many pipeline projects on FERC’s pending pipeline project list.
Senate Environment and Public Works Committee hearing
to examine the nominations
of Kristine L. Svinicki, Annie Caputo, and David Wright, each
to be a member of the Nuclear Regulatory Commission, and Susan Parker Bodine, to be an Assistant Administrator of the Environmental Protection
Agency. Caputo’s and Bodine’s nominations have the most potential to draw opposition, as ties to Sen. James Inhofe (R-OK) tend to create lightning
rods in the environmental advocacy community.
June 14
IEA Oil Market Report
. Given the market’s focus on OPEC/non-OPEC production cuts, growth in US production, growth in certain OPEC members’
production, and Brazilian projects set to come online next year, this will be watched more closely than usual. IEA tends to focus on adherence rates for
the curtailment agreement participants, so its reports often come off as supportive of prices - especially that of Brent crude.
Senate Environment and Public Works Committee hearing to examine S.517, to amend the Clean Air Act (CAA) with respect to the
ethanol waiver for
Reid vapor pressure (RVP)
limitations under such act. Legislation has been introduced that would give ethanol-gasoline fuel blends containing greater
than 10% ethanol (e.g., E15, an ethanol-gasoline fuel blend of 15% ethanol and 85% gasoline) a waiver from the CAA requirement that gasoline meet
strict limits on volatility. This waiver could be a favorable development to some stakeholders that want increased market share for ethanol.
Event Driven
Reorg Research
Kent Collier
Founder & CEO
kcollier@reorg-research.com
Tim Gray
Head of Sales
tgray@reorg-research.com
Energy Week in Review, Week Ahead: Shifting Layers in the Dispatch
Stack, Regulatory Changes Dominate the Near-Term Landscape
House Committee on Energy and Commerce subcommittee on energy hearing -
States’ Perspectives on Energy Security Planning
, Emergency
Preparedness, and State Energy Programs. State-federal jurisdictional issues have been a topic of much discussion in light of certain states legislating
policy preferences into energy markets.
June 15
House Committee on Appropriations hearing on EPA budget.
Administrator Scott Pruitt is scheduled to testify
in what should be an enlightening
event given the sharp cuts to the EPA budget in President Trump’s budget proposal.
Possible developments:
- FERC nominees Senate floor vote
- Introduction of carbon capture and storage tax credit extension bill
--Scott Speaker
Scott specializes in energy policy. He was previously Coordinator of Global
Commodities Research at JPMorgan Chase with a focus on natural gas
research and strategy, and before that he was a market analyst with the
Federal Energy Regulatory Commission’s Office of Market Oversight and
Investigations.
Event Driven, a Reorg Research product, offers real-time news and analysis on market-
moving litigations, public policy changes and M&A enforcement for investors, traders
and lawyers. Our team of reporters along with legal and policy analysts, specializing
in a wide range of industries and fields, produces breaking news, market-moving
reporting and in-depth analysis all delivered through our proprietary technology.
SCOTT SPEAKER
Policy Analyst
Focus
: Energy
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Event Driven
Reorg Research
Kent Collier
Founder & CEO
kcollier@reorg-research.com
Tim Gray
Head of Sales
tgray@reorg-research.com
Energy Week in Review, Week Ahead: Shifting Layers in the Dispatch
Stack, Regulatory Changes Dominate the Near-Term Landscape
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