Welcome to Grid Brief! Here’s what we’re looking at today: Senator John Barrasso wants to hitch permitting reform to premature power plant retirement prevention, Pemex his a wall, China puts a dome on a reactor they started two years ago, and more.

Barrasso Links Permitting Reform to Premature Retirements

West Virginian Senator Joe Manchin (D) is pushing for a bipartisan agreement on permitting reform—especially for transmission lines. His dancing partner on the Senate Energy and Natural Resources Committee, Wyoming’s John Barrasso (R), want to tie permitting reform to two conditions.

The first stipulation is reliability. Barrasso was adamant that America’s reliability crisis does not stem from a lack of transmission infrastructure, but “the premature retirement of coal, natural gas, and nuclear power plants.”

Secondly, Barrasso insisted that permitting reforms can’t force some states to pay for the policies of other states, according to Utility Dive.

“Congress should not try to force electric customers in rural, inland states, such as Wyoming and West Virginia, to subsidize ill-conceived policies of coastal states, such as California and New Jersey,” he said.

Transmission permitting reform is vital to achieving the renewable energy build out provided for in Biden’s flagship Inflation Reduction Act. Without thousands of miles of new transmission lines, wind and solar projects will struggle to connect to the grid. Manchin worries this is the last shot to get reform done in a bipartisan manner before heading into an election year.

Pemex Gets Rescued

Earlier this month, Fitch downgraded Pemex into the junk tier after a lethal platform explosion, slipping from BB- to B+.

“The downgrades reflect Pemex’s continued weak operating performance,” Fitch said.

This week, the Mexican government has swooped in to save the oil and gas giant, covering Pemex’s near-term maturities. The company’s bonds have jumped at the news.

“Debt due in 2033 jumped by as much as 4.4 cents on Thursday, the largest gain since the bonds were issued in January, to trade at 94 cents on the dollar, according to Trace data,” reports Bloomberg. “Notes maturing in 2048, meanwhile, rose as much as 3.7 cents to 62.9 cents on the dollar.”

“Pemex isn’t a private company,” President Andres Manuel Lopez Obrador said. “It’s connected to the nation.”

Despite the help, Pemex’s bonds have dropped in recent weeks. Yesterday’s rally saw money managers unmoved: they still demand 5.5 percentage points in extra yield to hold the company’s 2028 bonds over similar Mexican government notes, according to Bloomberg.

“The government's announcement that it seeks to cover near-term maturities comes at a welcome time following Fitch's downgrade of Pemex to junk status in light of disastrous accidents out of the firm's Cantarell and Ek Balam oil fields,” Juan David Rojas, an intelligence fellow at Florida International University’s Jack D. Gordon Institute for Public Policy, said in an email. “Despite a programmatic commitment to the firm, President Lopez Obrador has shown a reluctance to intervene directly in the firm's finances. This week's announcement comes as a wake up call as to how, in a very short period, Pemex's longstanding quagmire has gone from bad to worse.”

Pemex is the world’s most indebted oil driller, with $107.4 billion in debt as of March of this year.

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China Domes New Nuclear Reactor

China is sprinting ahead in its nuclear prowess.

“The dome has been hoisted into place on the reactor building of Xudapu unit 3 in a single stage process, six months ahead of schedule, with China National Nuclear Corporation (CNNC) describing the project as “a model of global energy cooperation,’” reports World nuclear News.

The reactor is a Russian VVER-1200 design; it’s the product of a 2018 agreement between Russia and China. Construction on the reactor began in July of 2021. For comparison, America’s new reactors at Vogtle in Georgia began construction in 2009 and finished this year.

Conversation Starters

• NASA commits to using nuclear in space. “Four years from now, if all goes well, a nuclear-powered rocket engine will launch into space for the first time. The rocket itself will be conventional, but the payload boosted into orbit will be a different matter,” reports Arstechnica. “NASA announced Wednesday that it is partnering with the US Department of Defense to launch a nuclear-powered rocket engine into space as early as 2027. The US space agency will invest about $300 million in the project to develop a next-generation propulsion system for in-space transportation. ‘NASA is looking to go to Mars with this system,’ said Anthony Calomino, an engineer at NASA who is leading the agency's space nuclear propulsion technology program. ‘And this test is really going to give us that foundation.’”

• America’s largest power market declared an emergency yesterday. “A heat wave continues to blast the Midwest, Northeast, and South through the end of the work week, forcing the largest US grid operator to declare a level one emergency for Thursday as tens of millions of people crank up air conditioners to escape scorching temperatures as summer in the Northern Hemisphere peaks,” reports Oilprice.com. “On Wednesday evening, PJM Interconnection LLC declared an Energy Emergency Alert Level 1 in 13 states that stretch from Illinois to New Jersey with over 65 million customers. PJM is concerned about maintaining adequate power reserves on Thursday as power demand is set to soar because of air conditioners. It expects demand to reach 153,286 megawatts as of 1700 ET and has about 186,000 megawatts of generating capacity.”

• Pakistan inked a deal with Aramco. “Leading Pakistani state-owned companies are set to partner with Saudi Aramco in the giant $10-billion Greenfield Refinery project at Gwadar Port. Pakistan’s Oil and Gas Development Company Limited (OGDCL), Pakistan Petroleum Limited (PPL), Pakistan State Oil (PSO) and Government Holdings Private Limited (GHPL), will collaborate through a joint investment strategy in setting up an integrated refinery petrochemical complex with a processing capacity of a minimum of 300,000 barrels per day (BPD),” reports Oilprice.com. “The project is likely to secure Pakistan oil supplies from a more friendly nation.”

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