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Manchin’s New Permitting Bill

West Virginian Senator Joe Manchin keeps pushing for permitting reform. His most recent effort, the Building American Energy Security Act, would expedite permits for both fossil fuel and renewable energy projects.

The legislation “sets a two-year limit on environmental reviews of major federal energy projects and one year for smaller ones, reduces court delays over energy projects, and directs the U.S. president to designate at least 25 high level energy projects and prioritize their permitting,” reports Reuters. “The bill also calls for completion of Equitrans Midstream Corp's Mountain Valley Pipeline, that would run through Manchin's state. The $6.6 billion, 300 mile (480 km), natural gas project is mostly built, but still needs several permits.”

The bill would also streamline and speed up electrical transmission projects, which many see as vital to the success of the Inflation Reduction Act. Without adequate transmission, many of the wind and solar projects the IRA has incentivized will die on the vine.

Manchin’s bill takes another stab at securing bipartisan support after similar bills failed last year. Green groups and some of Manchin's fellow Democrats criticized his previous permitting measures as a handout to the fossil fuel industry, while some Republicans were angered that he supported President Joe Biden's Inflation Reduction Act. But Manchin could get support from Republicans whose states would benefit from energy projects.

"There is overwhelming bipartisan recognition that our current permitting processes aren't working, and equally bipartisan support for addressing it through comprehensive permitting reform legislation," Manchin said in a statement.

The White House voiced its support for Manchin’s bill.

New England Greens Fight Reliability Costs

New England has a problem: it gets really cold in winter. That means consumers need more electricity and more gas to keep the heat running and the lights on.

But New England has another problem: its electricity market disincentivizes on-site storage because allowing for on-site storage would allegedly give an unfair advantage to baseload power plants.

To solve this, ISO-NE, the region’s grid operator, has tried for several years to work with stakeholders and the Federal Energy Regulatory Commission in devising a winter reliability program. The grid operator’s recent plan, Inventoried Energy Program (IEP), pays more for gas and oil generators to keep fuel on-site during the winter. To afford this, the grid operator needs to increase rates starting June 6. The cost estimate sits between $274 million and $812 million, though ISO-NE told FERC the upper estimate is likely a large overstatement of actual costs. In 2019, the cost estimate was $300 million.

But environmentalists aren’t happy. Anti-nuclear activist group the Sierra Club has criticized the grid operator. The Sierra Club said that ISO-NE “seeks to dramatically increase the cost of this program without showing that it would improve reliability.” And one of its senior attorneys said the IEP makes the market less competitive.

In a protest to FERC, the Sierra Club, the Union of Concerned Scientists, and the Conservation Law Foundation said that the IEP “shows the risks to consumers of a system that relies on imports of a volatile commodity fuel for electricity generation.”

Wind and solar, the favored energy sources promoted by these groups, fail to perform effectively during New England’s winters. A pipeline to the Bakken shale formation would fix the region’s dependence on the global LNG market for natural gas, but they would likely oppose that too. These groups have also worked to shut down nuclear plants in the region.

“ISO-NE told the Federal Energy Regulatory Commission that failing to increase the rate ahead of winter could ‘diminish the program’s ability to cover market participants’ costs to secure fuel supply’ and limit incentives for inventoried energy and improve winter reliability,” reports Utility Dive.

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Sakhalin-2 Maintenance Worries Market

Repairs on Russia’s Sakhalin-2 LNG facility may become a market flashpoint this summer.

“The Sakhalin-2 liquefied natural gas project will conduct its annual maintenance without any foreign contractors for the first time after companies cut ties with Russia following Vladimir Putin’s invasion of Ukraine. The work will start in July and last roughly 40 days,” reports Bloomberg. “LNG traders are anxious that Russia may not be able to finish the job within that time frame. A prolonged outage could cut key gas supply at a time when the world will be refilling stockpiles for winter, risking higher prices.”

Many anticipate delays because the companies who were previously involved with Sakhalin-2 cut ties with Russia following its invasion of Ukraine. That leaves Russian company Novatek alone in repairing the highly complex infrastructure. Delays in maintenance are not uncommon even in the best of circumstances for LNG facilities.

The Russian project is a large LNG supplier to Asia. Last quarter, it supplied about 8% of Japan’s total supply and its exports increased nearly 10% last year, with more deliveries going to China.

A drop in Sakhalin deliveries could ratchet up competition for LNG between Asia and Europe, which has become more dependent on LNG since pipeline flows from Russia stopped.A message from Arcadia Power

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Conversation Starters

1. OPEC+’s output gets laggy. “OPEC’s oil production fell last month as Iraq’s exports were reduced by a pipeline suspension while a labor strike cut shipments from Nigeria,” reports Bloomberg. “Output from the Organization of Petroleum Exporting Countries declined by 310,000 barrels a day to an average of 28.8 million, the lowest level in almost a year, according to a Bloomberg survey. OPEC and its allies have announced new production cutbacks starting this month to shore up global oil markets, but the biggest supply changes in April were unintentional. Iraq accounted for about 80% of the drop.”

2. Vogtle 4 in Georgia, US has finished its hot fuel loading test. “Completion of the testing - which confirms that the reactor is ready for fuel load - is a major step towards commercial operations for the second AP1000 reactor at the site. The unit is projected to enter service towards the end of this year or early in 2024,” reports World Nuclear News. “Hot function testing, during which plant systems are brought to normal operating pressure and temperature, without nuclear fuel in the reactor, to demonstrate the systems will operate on an integrated basis as designed, began at Vogtle 4 in March.”

3. Deal-making in America’s oil patch has ground to a halt. “U.S. oil and gas dealmaking fell to a two-year low of $8.58 billion last quarter, as combinations of natural gas companies dried up and oil buyers focused on mature plays,” reports Reuters. “The results fly in the face of expectations for a tsunami of mergers and acquisitions given the giant profits made by U.S. shale oil firms in the last two years. But rather than more and bigger dollar deals, their number and average price tumbled.”

Nuclear Barbarians

Crom’s Blessing