New burdens lined up for communities and climate in U.S. debt ceiling deal
As part of efforts to avoid a U.S. debt default, a side deal between the White House and Republican leaders appears to guarantee the Mountain Valley Pipeline’s completion and also seeks to limit the scope of environmental reviews for future infrastructure projects. These provisions defy market logic and would further roll back essential laws in favor of pipeline developers to the detriment of communities, writes Suzanne Mattei for the Institute for Energy Economics and Financial Analysis.
Insurance industry shift away from fossil fuels set to continue despite ESG backlash in the U.S.
Top insurers are exiting an industry climate alliance amid allegations of antitrust violations by U.S. Republicans, a clear sign that the withdrawal of lifeline insurance support for oil and gas is starting to bite, writes Polly Bindman in Energy Monitor.
Gas-fired power plans at a crossroads in Asia
Over 8,000 megawatts of potential gas-fired power capacity was canceled in Asia over a 12-month period to February this year, yet the region continues to account for 60% of global gas-fired capacity in development. Of this project pipeline, 70% of capacity is still in the early, pre-construction stages, making it vulnerable to a combination of volatile LNG import prices and far cheaper renewable energy options, writes Warda Ajaz in Energy Tracker Asia.
Momentum on deal to tackle Turkmenistan’s super-pollutant methane problem: After several months of international pressure and diplomatic overtures from Washington, unnamed officials at the U.S. State Department have begun to make optimistic noises about a deal being forged with Turkmenistan to capture significant quantities of methane from the Caspian state’s notoriously leaky fossil fuel infrastructure. Negotiations are said to be advancing between the two states, with funding on offer from the U.S. side — potentially via the U.S. Export-Import Bank — and oilfield service firms Halliburton Co. and SLB also in the frame to find leaks and replace equipment. Bloomberg Green calculates that if all of the gas leaked or vented by Turkmenistan’s energy sector were salvaged and burned instead, despite the resulting production of carbon emissions, the net overall effect would amount to a reduction of roughly 92 million tons of CO2 every year, equivalent to twice the total amount of carbon that can be captured from smokestacks globally today. (Bloomberg)
Reclassification of gas-fired power as “clean” energy in Mexico: The latest indication of Mexican president Andres Manuel Lopez Obrador’s pro-fossil fuel leanings has been evidenced by the national Energy Regulatory Commission’s decision to reclassify some electricity generated from gas-fired power plants as “clean electric energy” if the facilities meet certain energy efficiency requirements. Under Mexico’s climate change law, renewable energy should make up 35% of total energy generation by 2024. This target is not going to be met, with the energy regulator’s rebranding move coming as low-carbon energy’s share in total power generation fell to 26.1% in 2022 from 27.5% in 2021. Environmental organizations, including Greenpeace, slammed the reclassification, saying in a joint statement: “The world would be made to believe that our country is increasing the percentage of renewable energies in our energy matrix when in reality it is not.” (Reuters, BNamericas)
Seismic exploration plans trigger mounting opposition on Argentina’s Atlantic coast: Since the government authorized seismic prospecting for oil and gas in the offshore Northern Argentine Basin at the end of 2021, street protests and legal challenges have sprung up along the Atlantic coast of Buenos Aires Province. The companies that were awarded the concessions, Shell, Norway’s Equinor, and the Argentine energy company YPF, have yet to commence exploration activities due to delays caused by opposition from the public and environmental groups but could begin in October when marine conditions become more benign. The extreme sound levels — “underwater acoustic bombardments” — involved in seismic exploration have drawn concern owing to the Argentine continental shelf’s biodiversity riches, which are centered where significant oil and gas deposits are believed to be located. A report last year from the Forum for the Conservation of the Patagonian Sea and Areas of Influence cataloged the huge diversity of species at risk from exploration, including elephant seals, dolphins, sperm whales, and the southern right whale. (Mongabay, Forum for the Conservation of the Patagonian Sea and Areas of Influence)
LNG activists kick off the summer on Rügen island: Hundreds of activists, including the climate protection movements Ende Gelände and Fridays for Future, have demonstrated on Rügen against the German government’s still-to-be finalized plans to deploy up to two floating LNG import terminals on the Baltic Sea island. As uncertainty over the plans continues alongside stiff local opposition, senior officials from the Mecklenburg–Western Pomerania state government have laid out demands to Berlin for up to €1 billion in federal funding for development of the region. Tourism and business leaders on the island have rejected this quid pro quo approach, commenting that the state government appears ready to sell off Rügen’s silverware — its nature — to make major new LNG facilities more acceptable. (Ruptly, Berliner Zeitung [German])
Energy experts spell out LNG risks to Irish lawmakers: An Irish parliamentary committee has heard that the development of LNG facilities would not only be costly but also risks locking the country into long-term reliance on fossil fuels, thereby jeopardizing net-zero targets. The warnings from Gergely Molnar, a gas analyst with the International Energy Agency (IEA), and Barry McMullin, professor of engineering at Dublin City University, come as the government in Dublin edges towards making a decision on a hotly contested proposal from New Fortress Energy. The U.S. company has submitted a planning application to develop a €650 million (US$693 million) LNG import terminal on the west coast of Ireland. The IEA’s Molnar pointed out that the speedy deployment of new gas import infrastructure across Europe since last year, with further new terminals also under construction, was sufficient to ensure security of supply for the region to the end of the decade. (The Irish Independent)
Big pollution gaps starting to show in proposed U.S. rules for gas plants: Two steam turbines at the Ninemile Point power plant in Louisiana emit more carbon dioxide than any other gas-fired units in the U.S., federal emissions data show. However, as they’re generally fired up for only around one-third of the year, these units would be exempt from the draft rule to limit power plant emissions unveiled recently by the Environmental Protection Agency (EPA). As a whole, the 2,439 megawatt (MW) Ninemile Point complex — comprising two steam turbines built in the 1970s, two combustion turbines built in 2014, and a third steam turbine also built in 2014 — is the sixth largest CO2 emitter among gas burning power plants in the country. The plant’s two heavy polluting steam turbines operate as peaking units to handle short-term electricity demand surges, and these and other so-called “peakers” will not be required to introduce pollution controls under the EPA’s proposed measures, despite several of them being renowned nationally as major emitters. More widely, under the draft EPA rule, combined cycle units, such as Ninemile Point’s three newer units, will only have to introduce measures such as carbon capture by 2035 if they are greater than 300 MW and run for more than half the year. Analysis from the Natural Resources Defense Council has shown that if this threshold were lowered to 150 MW and applied to plants that run at least 40% of the time, then 80% of gas plant emissions in the U.S. would be subject to the EPA’s pollution reduction regulation rather than 29% as currently proposed. (E&E News)
Australia: New analysis from environmental group Market Forces shows that Australia’s big four commercial banks loaned more than A$13 billion (US$8.5 billion) for fossil fuel projects in 2021 and 2022, with A$11.2 billion going to the oil and gas industry, including A$4 billion for the LNG sector.
France: Paris-based SCOR, the world’s 7th biggest non-life reinsurance company, has announced that it will no longer underwrite the development of new gas fields, though exceptions may be made for clients deemed to have credible net-zero transition plans.
Germany: The Federal Government cabinet has approved the creation of a national core hydrogen pipeline network, to become law this year, with the exact pipeline routes to be “modelled by long-distance gas network operators in the coming months.”
Norway: Equinor has shut down operations at the Hammerfest LNG terminal following a gas leak and has not yet been able to say when production will be resumed.
Russia: Novatek says it is planning to build a new 20.4 million tonnes per year (mtpa) LNG terminal in Murmansk, close to Finland, with production expected to start in 2027.
South Africa: Türkiye’s Karpowership is appealing a decision from the Department of Forestry, Fisheries and the Environment that rejected the company’s request for more time to apply for an environmental permit to operate a 320 MW gas-to-power ship at the Saldanha port.
South Korea: National companies Posco International and LX International have signed a deal to build a 3.5 mtpa LNG import terminal at Dangjin with startup planned for 2027.
U.S.: LNG exporter Venture Global has raised US$4.5 billion through a bond offering.
U.S.: The Arlington City Council in North Texas authorized a new zone close to homes and schools for drilling and fracking by TotalEnergies and its subsidiary Total E&P Barnett USA.
“The USD 1.5 trillion returned to [oil & gas] shareholders in the form of dividends and buybacks from 2020 to 2022 could have fully covered the investment requirements in all clean fuels in the [Net Zero Emissions] Scenario between 2023 and 2030,”
notes the International Energy Agency’s ‘World Energy Investment 2023’ report (page 107).
Union accuses Woodside of downplaying explosion at Pluto LNG plant: A non-fatal incident at the Pluto LNG terminal in Western Australia, which was heard by residents eight kilometers away in the port town of Dampier and resulted in the evacuation of all personnel from the site, has been described by the owner and operator Woodside Energy as an “audible release” of gas from the Pluto facility’s flare tower. In a Facebook post, the Offshore Alliance union challenged the company’s description: “Woodside need to be transparent about what has occurred and the cause of the explosion, as their spin and bullshit doesn’t cut it.” The Pluto export terminal currently has one operating production train with a capacity of 4.9 mtpa, and Woodside and Bechtel are building a second train. Inspectors from Western Australia’s safety regulator were sent to investigate the explosion on site. (Upstream)
PetroChina and BP secure 20 year access to key European import terminal: In what is the state-owned Chinese firm’s first long-term access to a European gas terminal, PetroChina and BP have separately booked 2 billion cubic meters (bcm) per year of regasification and corresponding storage capacity at the Gate terminal in the Netherlands. A final investment decision on the Rotterdam terminal’s 4 bcm expansion is expected in September and startup is due to follow in the third quarter of 2026 for a period of 20 years. The PetroChina deal is being viewed as particularly significant as Chinese LNG players go about expanding their portfolios through long-term investments with the aim of positioning themselves as influential traders in the global LNG market. To that end, several Chinese state-run companies are building up trading teams in Singapore, London, and elsewhere. (Offshore Energy, Reuters)
Bangladesh signs long-term LNG deal as Qatar’s North Field deal-making gathers pace: Bangladesh’s state-owned gas company Petrobangla has signed a 15-year supply deal with QatarEnergy to take at least 1.5 mtpa of LNG starting in January 2026 when the Gulf state’s North Field LNG terminal starts up. Having endured nationwide power blackouts last year as a result of a gas imports crisis caused by astronomical LNG spot prices, the contract is Bangladesh’s latest long-term supply bet. The deal is also QatarEnergy's second to Asia since it started selling gas from the massive North Field project. CEO Saad al-Kaabi has recently voiced the company’s intention to tie up supply deals by the end of the year for all of the export project’s 49 mtpa of LNG due online by 2027. Despite reports that contract durations have been an obstacle in deal-making with European customers, QatarEnergy now expects to finalize deals to Europe after the summer. “If a European is actually negotiating with me and has an issue, he will tell me ‘I have an issue with duration,’ I've not heard that,” al-Kaabi said. (Reuters, Reuters)
Activist investors gain ground inside TotalEnergies AGM, activists outside beaten back: Against a backdrop of French riot police deploying tear gas and pepper spray to repel demonstrators making their way to the annual general meeting of TotalEnergies in Paris, activist investors were unsuccessful in their bid to push the French energy major to set stronger climate commitments by aligning its 2030 emissions target to the Paris climate agreement. The vote on a resolution co-filed by green shareholder group Follow This and 17 institutional investors, which also called on TotalEnergies to include Scope 3 emissions in its strategy, saw almost 70% of shareholders back the company by voting against. The 30% vote in favor, though, was a marked rise from the 17% garnered in support of a similar motion in 2020. The vote also equalled the highest level of support for a Follow This climate resolution at a European super major, the group said. (Upstream, Follow This)
Funding complications cloud green light for 3,000 MW Eskom gas plant: The National Energy Regulator of South Africa (Nesra) has gone back on a previous decision to block state-owned utility Eskom’s plans to build a 3,000 MW gas-fired power station built in Richards Bay, KwaZulu-Natal province. The approval from Nesra, however, leaves the financially-troubled company facing the challenge of getting the project off the ground — and operating by 2028, it hopes — without taking on any debt owing to rules imposed on it by the country’s finance ministry. As a result, Eskom’s funding route for the project, potentially a US$4 billion investment, sounds complex and likely burdensome for South African taxpayers. “A public private partnership of IPP [independent power producer] model or derivatives thereof will be the most likely mechanisms for the project,” it said. Environmental groups groundWork and the South Durban Community Alliance for the Environment have been granted leave to appeal to the Supreme Court of Appeal over a dismissal by the Pretoria High Court last October of their request to review the project’s environmental authorization granted in 2019. (The Citizen, Bloomberg, groundWork)
New report identifies stranded asset risk lurking beneath LNG tanker boom: The recent dramatic uptick in new builds and orders for LNG tankers is on course to lead to an oversupply of the vessels by end of decade, according to a report by Climate Analytics, a Berlin-based climate think tank, and Solutions for Our Climate, a South Korean climate and energy advocacy group. In 2022, 34 LNG carriers were added to an existing global fleet of roughly 700 ships, with a further 335 ships on the order books of predominantly South Korean, Japanese, and Chinese shipbuilders and set for delivery between 2023 and 2028. This level of buildout, the groups’ analysis finds, is out of kilter with decarbonization scenarios from the IEA that project declining global LNG demand post-2030. The stranded asset implications are particularly acute for South Korean shipbuilders and also for financial institutions such as export credit agencies that lend to and underwrite the capital-intensive industry, the report warns. (Climate Analytics, The Straits Times)
LNG, Climate and Energy Security: Towards a Comprehensive Approach for Europe, Dezernat Zukunft and Agora Energiewende, May 17, 2023. (Pdf)
This 26-page paper finds that the development of new LNG export terminals that have not yet reached a final investment decision poses the biggest risk for climate targets and, as a consequence, European companies and governments should not enter into long-term contracts that enable such projects. To balance climate goals and energy security, it recommends European buyers to focus their contracting efforts on the growing amount of uncontracted volumes from expiring legacy contracts and portfolio players, and from export projects that have already reached FID.
Ship-strike forecast and mitigation for whales in Gitga’at First Nation territory, North Coast Cetacean Society, University of St. Andrews, Fisheries and Oceans Canada, WWF-Canada, et al. May 25, 2023. (Pdf)
This 28-page peer-reviewed study projects an increase in fin and humpback whale deaths from ship strikes in the Great Bear Sea when new LNG export terminals currently under development in Kitimat, British Columbia, are fully operational by 2030. The single largest source of mortality risk for whales in the region comes from the LNG Canada project, due to commence operations in 2025 and expected to dramatically increase shipping traffic in the region.