Tag Archives: US

Renewable Energy Growth Pick Ups Speed and Support from States – 2/22/17

Wind turbines across the Great Plains states produced, for the first time, more than half the region’s electricity this year as a boom in wind power production is turning states in the region into renewable energy powerhouses.

The power grid that supplies a corridor stretching from Montana to the Texas Panhandle was getting 52.1% of its power from wind, according to a statement from Southwest Power Pool Inc.

“Ten years ago we thought hitting even a 25% wind-penetration level would be extremely challenging, and any more than that would pose serious threats to reliability,” Bruce Row, Southwest Power Pool’s vice president of operations, said in the statement. “Now we have the ability to reliably manage greater than 50%. It’s not even our ceiling.”

The power pool operates 60,000 miles of power grid across 14 states. Texas leads the U.S. wind industry with more than 20GW installed, followed by Iowa, Oklahoma, California and Kansas, according to the American Wind Energy Association (AWEA).

In response to the growth of clean power, governors across the country are urging support for renewable energy as a means of enriching impoverished farmers, creating jobs, and increasing tax revenue..

The Governor’s Wind & Solar Energy Coalition is seeking increased federal funding to modernize local power grids and boost clean energy research, according to a letter submitted to the White House. Since November, Republican governors in Illinois and Michigan signed legislation backing wind and solar.

“The nation’s wind and solar energy resources are transforming low-income rural areas in ways not seen since the passage of the Homestead Act over 150 years ago,” Kansas Republican Sam Brownback and Rhode Island Democrat Gina Raimondo wrote in the letter, on behalf of eight Republican governors and 12 Democrat state leaders.

Clean power has been a boon in many rural regions. Rural property owners earn more than $245 million a year from leasing land to wind farm developers, according to the AWEA’s fourth-quarter report. Solar companies employed more than 200,000 people last year, and most new installations were in rural regions, according to the letter.

Energy Jobs: Automation and Numbers – 2/10/17

If members of Congress and the new President are really dedicated to wringing more jobs out the energy sector, then they should make sure they’re looking for them in the right place.

Since oil prices collapsed in 2014, Bloomberg estimates that 440,000 jobs in the U.S. have been lost as a result of the downturn. As a result, the world’s biggest oil services companies have had to spend billions on severance costs and, now, few seem ready to risk a repeat of that huge expense. Many in the oil industry are increasingly turning to automation to replace many of the lost jobs, a trend unlikely to change as technology costs continue to fall relative to wages. The UBS estimates that the US oil industry will only need about half as many workers per barrel of oil produced post-2017 versus pre-2015.

That doesn’t necessarily mean that states known for oil output are heading for high unemployment rates. For example, Texas may have suffered greatly during the 1980’s oil price downturn, but its economy has since become far less dependent on the commodity thanks to strong growth in other sectors. In fact, Texas has had net creation of new jobs recently despite the severe oil price downturn.

Only about 2.5% of Texas’ employment was related to natural resource extraction before the crisis because oil was and increasingly is not a particularly labor intensive industry. Even now Austin and Dallas are thriving with job growth rates of 4.3% and 4.2% respectively because neither city is dependent on oil prices to drive economic growth. Overall, the biggest oil producing state in the U.S. has held together just fine despite the lower-for-longer oil prices.

Meanwhile, large number of new energy jobs are coming from the wind and solar energy industries. U.S. wind-farm developers and suppliers had more than 100,000 workers at the end of the year, compared to 65,971 coal mining jobs at the start of last year, according to the U.S. Energy Department.

Perhaps surprisingly, the top 10 congressional districts for wind energy are all in Republican-dominated red states such as Iowa and Texas, according to American Wind Energy Association CEO Tom Kiernan.

“We’re hiring workers in the rust belt,” Kiernan said in an interview. “We’re helping families keep farms they’ve held for generations. The lifeblood of our industry is in rural America.”

And the extension of two key federal tax credits by the Republican-controlled Congress at the end of 2015 along with the fact that the new Energy Secretary, Rick Perry, saw Texas become the largest producer of wind power during his term as Governor gives some cause for optimism in the renewable energy companies.

EIA STEO: Natural Gas – 2/8/17

In its January 2017 Short-Term Energy Outlook (STEO), the EIA expects the Henry Hub natural gas spot price to average $3.55 per million British thermal units (MMBtu) in 2017 and $3.73/MMBtu in 2018, both higher than the 2016 average of $2.51/MMBtu.

The confidence interval range for natural gas prices is a market-derived range that reflecting trading on futures, not supply and demand estimates.

The EIA expects natural gas consumption to rise based on a return to more typical winter temperatures, while use of natural gas for electric power generation is expected to decline because of higher fuel prices.

Natural gas-fired power generation is forecast to rise in 2018, but remain below the 2016 level. Current plans for additions show 11.2 GW in 2017 and 25.4 GW in 2018, equating to an overall increase of 8% from the total capacity existing at the end of 2016.

The expansion of natural gas-fired capacity follows five years of net reductions of total coal-fired capacity. Available coal-fired capacity fell by an estimated 47.2 GW between the end of 2011 and the end of 2016, equivalent to a 15% reduction.

The electricity industry has been retiring some coal-fired generators and converting others to run on natural gas in response to environmental regulations, as well as low cost of natural gas resulting from expanded production from shale formations. Many of the natural gas-fired power plants currently under construction are located near major natural gas shale plays or pipeline networks.

Rising natural gas prices could lead developers to postpone or cancel some planned projects, or reduce the capacity used in existing plants. Despite the additions to capacity in 2017, the STEO forecasted share of total U.S. generation supplied by natural gas falls from 34% in 2016 to 32% in 2017. By 2018, however, the scheduled expansion of overall capacity fueled by natural gas is expected to result in a slight increase in natural gas’s share of total U.S. electricity generation despite other factors.

OPEC Deal: Good Compliance, Pessimistic Reactions – 2/6/17

OPEC members seem committed to showing commitment to their deal for whatever that’s worth.

In OPEC’s initial agreement, production data compiled by analysts in the group’s secretariat will be the principal tool for judging whether members are complying with the deal. Notably, the data won’t cover non-members such as Russia. The committee also has no plans to use external agencies to verify implementation of the pledged supply curbs.

Still, non-official channels are happy to keep track for them. Tanker-tracker Petro-Logistics SA estimates that oil supplies from OPEC plunged in January in one of the first outside assessments of compliance. OPEC will reduce supply by 900,000 barrels a day in January, about 75% of the cut that the producer group agreed, according the Geneva-based consultant group.

The data suggests “a high level of compliance thus far into the production curtailment agreement,” said Daniel Gerber, CEO of Petro-Logistics.

An implementation rate of 75% is high relative to past deals such as the 2008 deal where it only reached 70%, according to Hasan Qabazard, OPEC’s former head of research.

For now, there’s no indication that the cuts will need to be extended beyond the initial six-month term, Algeria’s representative Boutarfa said at a recent meeting, echoing previous comments by the Saudi oil minister.

Unfortunately for OPEC, six months of cuts may do little to move prices. The U.S. rig count has been rising and, with a looming resurgence in U.S. output, analysts have their doubts about the efficacy of the OPEC agreement and any future deals the group could make. As the capacity for oil production in the U.S. rises and global demand for oil falls, the group’s power over the market is a fraction of what it once was during the 1973 Oil Embargo and resulting crisis.

The latest energy outlook by supermajor BP illustrates the market-share/price problem facing OPEC.

BP’s Energy Outlook 2017 estimates that there is an abundance of oil resources, and “known resources today dwarf the world’s likely consumption of oil out to 2050 and beyond”. BP expects oil demand growth to slow down in the years to come and pegs the cumulative oil demand until 2035 at around 700 billion barrels, “significantly less than recoverable oil in the Middle East alone”.

In this view, low-cost producers — primarily OPEC nations and Russia — would try to seize more market share. BP predicts that the abundance of oil resources would prompt the lowest-cost producers to pump the low-cost barrels as quickly as possible before demand falls off.

However, OPEC has the recent experience of oil prices crashing weighing on it. After attempting to force high-cost shale drillers out of the market and seeing the resulting drop in oil revenue OPEC appears reluctant to return to a market-share strategy. But OPEC’s decision to cut supply is currently benefiting U.S. shale putting the cartel in a lose-lose situation.

Commenting on OPEC’s current and future relevance and influence on the oil markets, Wood Mackenzie said in an analysis last week:

“The group may still be able to control oil prices to a limited degree, but the benefits of that control will accrue to parties outside the cartel. If OPEC remains a functional entity by the end of 2017, its greatest hits will surely be in the past.”

Energy Security: Oil Independence A Long Ways Off – 2/3/17

U.S. Presidents pledging to make America independent from OPEC oil isn’t new. Energy security has always been a concern for nations, and reliance on imported oil from unstable regions has caused serious problems in recent times. Problems which lead to George W. Bush’s attempts to reduce imports from the Middle East saying the nation was “addicted to oil”, but vowing and doing are very different things. In the end, oil shipments from OPEC to the U.S. rose more than 10% during Bush’s time in office.

Independence from the Middle East would equate to replacing about 2.7 million barrels a day (b/d) in net imports, a 30% increase in current domestic output — currently ~9 million b/d after the already massive increase following the shale drilling and fracking boom.

Still, the new goal is more obtainable than it once was. U.S. oil production has risen significantly in the last decade, so the nation was nearing energy independence even without prompting from the White House.

And shale explorers in the United States are expected to increase spending four times faster than the global average this year. According to Bloomberg, the number of rigs drilling for oil and gas in the U.S. and Canada has more than doubled since May.

As to when the U.S. reach some degree of energy independence, the EIA’s January Short-Term Energy Outlook could hold some clues.

The EIA forecasts an increase in U.S. crude oil production from an average of 8.9 million barrels per day (b/d) in 2016 to an average of 9.3 million b/d in 2018, primarily thanks to U.S. tight oil production in Texas from the Permian and Eagle Ford regions.

Although overall U.S. oil production has been declining since mid-2015, the EIA has observed increasing production in the Permian region. In 2016, Permian production averaged 2.0 million b/d, a 5% increase from 2015. Permian production is projected to average 2.3 million b/d in 2017 and 2.5 million b/d in 2018.

Compared with the Permian region, other regions have fared poorly. The next most successful region, Eagle Ford, saw declines with average annual production at 1.6 million b/d in 2015 and 1.3 million b/d in 2016. The EIA expects production in that region will only begin increasing again in the third quarter of 2017 amid higher oil prices.

Clearly a 0.4 million b/d increase in domestic production isn’t enough to make up for the 2.7 million b/d in imports from OPEC nations, but it is decent progress for two years.

Still, U.S. tight oil is relatively costly to pull out of the ground with even the best U.S. shale plays producing at break-even costs near $35.

The problem with just pumping more oil to reach energy independence is that increasing supplies by a couple million barrels per day would drive down prices. And compared to OPEC nations that can break-even selling at prices below $25 a barrel, no shale driller could operate profitably under the prices declines that large a difference in supply and demand would cause.

U.S. shale drillers may be extremely important as marginal producers, but unless OPEC imports are banned entirely, U.S. tight oil output will inevitably decline like it did over the last two years. Even in that unlikely even, a shift away from OPEC would probably do more to benefit Canada and Mexico than the U.S. The two countries supply 40% and 8% of all U.S. imports of petroleum, respectively.

The Kemper Project: Clean-Coal Gone Awry – 2/1/17

Southern Co.’s “clean-coal” plant in Kemper County, Mississippi has been hailed as a first-of-its-kind project; it could also be the last.

After running more than two years behind schedule and $4 billion over its original $2.88 billion budget, the Kemper project was already hard to call a success. That difficulty becomes nearly insurmountable when you add a number of cheaper, cleaner alternatives to coal and a climate change skeptic in the White House.

The Kemper project began around 2008 when many believed that natural gas would soon become scarce. Shortly after, hydraulic fracturing applied to shales in the United States unlocked so much natural gas that the U.S. soon became a net exporter of the fuel.

And with skyrocketing supplies came plummeting prices.

In a matter of years, natural gas became a much better bet than coal.

Emissions related to combusting coal (206 to 229 lbs CO2/MMBtu) are also higher than those associated with combusting natural gas (117 lbs CO2/MMBtu), according to the EIAA cleaner burn makes natural gas more palatable for environmentalists and helps insulate it from future regulation of emissions. Such qualities are a must for new power plants which have lifetimes measured in decades and must remain profitable through multiple presidential and Congressional administrations.

Kemper was supposed to show how coal could be “clean”, but utilities have to make money too and Kemper only showed how far away carbon capture technology is from matching up to other available options.

On the regulatory side of things, the Trump administration’s committment to clean-coal technology and reviving America’s coal industry seems like a lucky break for the Kemper project. However, promises to roll back energy regulations hold their own problems.

Trump’s antipathy toward the Clean Power Plan would make the financial justification for clean coal an even tougher sell, said Christine Tezak, a managing director at Washington-based ClearView Energy Partners.

“The economics are incredibly disadvantageous,” Tezak said.

Once the government is no longer pushing for lower emissions, the Kemper project loses one of the few justifications for existing, or at least appears to, making it harder to build support.

On top of its economic and regulatory problems, the Kemper facility remains in a tricky legal situation as well. Oil producer, Treetop Midstream Services LLC, is suing for $100 million because of a canceled CO2 supply contract and customers are alleging Southern failed to fully disclose facts related to the plant’s cost. An institutional investor filed suit against Southern on Jan. 23, accusing the company of giving false information about the project.

Southern recently told state regulators that the five-year operating and maintenance costs of the facility have nearly quadrupled to about $1 billion from the original estimate, according to a regulatory filing. When some of those costs are passed along to ratepayers, as they inevitably will be, the project will grow harder and harder to defend.

Coal on the Decline in the U.S. and China – 1/30/17

China and the U.S. are the first and second largest consumers of coal in the world, respectively. And though the governments of each nation are regarding the resource very differently for 2017, it doesn’t have much of a future in either.

China will invest $361 billion over the next three years in renewable power generation, while also canceling plans to build 103 coal-fired power plants, its National Energy Administration recently announced. If the Chinese government follows through on the plan, then it would mean stopping the addition of 120 GW of capacity, including projects already under construction.

The cancellations are in line with China’s goal of limiting its total coal-fired power generation capacity to 1,100 GW by 2020. Under the promise of reducing air pollution and greenhouse gas emission, coal use has been on the decline in China since 2013 and cleaner sources of power have account for a larger share of new additions each year.

Still, implementing the cuts could prove difficult. China is building more capacity than it needs for a number of reasons including the fact that power plant projects are popular way for local governments to raise tax revenue and employ citizens. It is unclear if local officials will play along with canceling contracts when the political cost of doing so is high. Unfortunately for those officials, the directive names each project set for cancellation, so they are likely to face heavy pressure to comply.

In the U.S., coal is under also under threat, though for different reasons. Despite, promises to revive the industry from the executive branch, coal’s share of American electricity generation peaked long ago and all signs point to further decline.

Natural gas alone has devastated coal’s share of energy consumption. Even before the massive shale gas deposits came into play with the rise of fracking, natural gas was a competitive threat. Nowadays, between the low cost of gas and its relatively clean burn, coal can’t even compete with another fossil fuel, let alone renewables with fast-falling costs and popular support.

Fewer than 60,000 Americans now make their living mining while clean energy employs at least 2.5 million Americans.

On top of that, nearly half of American output is produced by companies in bankruptcy.

And utilities in the United States have only four coal-fired plants set to go online through 2020, with a combined capacity of less than 1 GW, according to the U.S. Energy Information Administration. For comparison, more than 13 GW of coal-fired capacity was retired in 2015.

Be it in China or the U.S., with or without government support, coal is set for continued decline for the foreseeable future.

EIA: Natural Gas Fuels Cleaner Power Sector – 1/26/17

Full EIA articles on natural gas and its effect on the power sector: first, second

For the first time since the late 1970s, U.S. CO2 emissions from the transportation sector exceeded electric power sector CO2 emissions on a 12-month rolling total basis, measured from October 2015 through September 2016. Electric power sector emissions are now regularly below those of the transportation sector  despite making up a larger share of total U.S. energy consumption.

The reason for this is a significant decline in carbon intensity for the power sector as natural gas replaces coal as the preferred fuel of electricity generators. On average, emissions associated with combusting coal (~206 to 229 lbs CO2/MMBtu) are higher than those associated with combusting natural gas (~117 lbs CO2/MMBtu). Natural gas electric generators also tend to be more efficient than coal generators, because they require less fuel to generate the same output.

In the 12 months from October 2015 through September 2016, coal and gas accounted for 31% and 34% of electric power generation, respectively. However, their shares of electric power sector emissions were 61% and 31%, respectively, as coal is much more carbon-intensive. Overall power sector carbon intensity has also decreased as generation share of fuels such as wind and solar has grown.

Emissions from the transportation sector are primarily from fuels which have carbon intensities lower than coal but higher than natural gas. For example, gasoline emits an average of 157 lbs of CO2/MMBtu. In the months observed, motor gasoline represented 60% of the total emissions from the transportation sector, while 23% was from distillate fuel oil and 12% was from jet fuel.


Falling prices for natural gas have helped fuel the shift from coal to natural gas in the power sector.

Natural gas spot prices in 2016 averaged $2.49 per million British thermal units (MMBtu) at the national benchmark Henry Hub, the lowest annual average price since 1999. Warmer-than-normal temperatures for most of the year and changing natural gas demand were the main drivers of natural gas prices in 2016.

In the first quarter of the year, much warmer-than-normal winter temperatures and large amounts of natural gas in storage caused prices to decrease. Prices began to gradually increase in late spring, with increasing demand and decreasing production, before sharply increasing at the end of the year with the onset of cold temperatures in mid-December.

Because of warm weather, natural gas consumption in the residential and commercial sectors in 2016 declined 7% and 4%, respectively, from the previous year. As a result, natural gas storage inventories were at or near record levels throughout most of the year.

In November 2016, the United States became a net exporter of natural gas on a monthly basis for the first time since 1957, based on data from PointLogic.

U.S. pipeline exports to Mexico continued to grow throughout 2016, making up 87% of all U.S. natural gas exports and, in May 2016, the Sabine Pass terminal began commercial operations in the Gulf Coast to export liquefied natural gas.

Despite growing demand, low prices resulted in lower natural gas production in 2016. Based on preliminary data, the EIA estimates natural gas marketed production to face its first annual decline since 2005. The number of active natural gas drill rigs is down 19% from the year-ago count, however, production has not fallen as sharply as the number of active rigs, as producers have continued to make gains in drilling efficiency.

Green Businesses – 1/25/17

The markets decide risk and return, not the federal government. That’s good news for businesses still interested in going green.

More than 530 companies and 100 investors signed the Low Carbon USA letter to support policies to curb climate change, invest in the low carbon economy, and continue U.S. participation in the Paris Agreement.

“All parts of society have a role to play in tackling climate change, but policy and business leadership is crucial,” said Lars Petersson, president of IKEA U.S. “The Paris Agreement was a bold step towards a cleaner, brighter future, and must be protected.”

The list of signatories to the Low Carbon USA letter has doubled since November, and includes DuPont USA, General Mills, HP Enterprises, Pacific Gas & Electric, Salesforce.com, Unilever, and more.

In recent decades, global economic development has increasingly been impacted by sustainability considerations. Be it legislation or consumer demand, companies are acting more and more with the environment in mind.

  • Investors controlling more than $5 trillion in assets have committed to dropping fossil fuel stocks from their portfolios, according to a new report on the trend.
  • Climate change criteria shape the investment of $1.42 trillion in assets under management, a more than fivefold increase since 2014.
  • Microsoft-founder Bill Gates and over two dozen other business leaders launched a $1-billion fund to finance energy innovations.
  • Google has pledged to operate on 100% renewable energy in 2017.
  • Microsoft announced a massive wind power purchase agreement in a deal to buy 237MW of capacity from projects in Wyoming and Kansas.
  • Smithfield Farms, the largest pork producer in the world, promised to reduce greenhouse gas emissions 25% by 2025.
  • Walmart has committed to removing a gigaton of emissions from its global supply chain by 2030.
  • Over 2.5 million Americans now work in the clean energy industry, making above average wages.

Prices are dropping, making green power sources like solar and wind competitive even without subsidiesSolar energy is already the lowest-cost option in some parts of the world and expected to offer a better global average return on investment than coal by 2025.

Risks associated with stranded assets and weak future performance are also steering investors away from fossil fuels, especially coal, and towards green investments.

Funding coal mining operations in the U.S. is only becoming harder as credit ratings for coal companies deteriorate. Credit downgrades have outnumbered upgrades among coal mining companies this year by about eight to one, Bloomberg data show.

Climate Change Talk Fills the Room at Davos – 1/24/17

Despite the shift in political weather in Washington, the captains of business and finance gathered in Davos are talking a lot about climate change.

The World Economic Forum is devoting 15 sessions of its 2017 annual meeting to climate change, and nine more to clean energy.

“The good thing is that the Paris agreement raised the bar for everyone,” said Ben van Beurden, the head of Royal Dutch Shell Plc, Europe’s largest oil group. “Everybody feels the obligation to act.”

Achieving the ambitions set out in Paris may require $13.5 trillion of spending through to 2030, according International Energy Agency (IEA) data that show the scale of the opportunity for business. Only last year, clean energy investment stood at $287.5 billion, data compiled by Bloomberg New Energy Finance indicate.

“The scale and scope of the investment flows on renewables shows it’s mainstream,” said David Turk, head of climate change at the IEA in Paris and a former senior U.S. climate diplomat.

A survey of 750 participants at this year’s meeting shows that extreme weather is considered the biggest global risk, outstripping migrations, natural catastrophe and terrorism.

In November’s follow-up meeting to the Paris agreement, nearly 200 nations, including China, vowed to step up their efforts to fight global warming.

China, which historically fought against climate change efforts, is now pushing the importance of the issue.

Chinese President Xi Jinping urged the U.S. to remain in the “hard won” Paris agreement during a Davos speech that touted the world’s largest polluter as a leader in the fight against global warming.

“Walking away” from the pact would endanger future generations, he said.

Earlier this month, China pledged to invest 2.5 trillion yuan ($360 billion) in renewable energy through 2020 to reduce greenhouse gases that cause global warming and China’s government has recently suspended 101 coal-power projects across 11 provinces as it moves toward cutting CO2 emissions.

China already spent almost $88 billion in 2016, according to Bloomberg New Energy Finance, about a third more than the U.S. And China’s investment has already created 3.5 million renewable energy jobs that could grow to 13 million by 2020, according to the International Renewable Energy Agency.

Page 1 of 15
1 2 3 15