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Welcome to Grid Brief! Here’s what we’re looking at today: NextEra Energy Partners is quitting the pipeline business, the difference between OPEC and OPEC+, a major German utility warns that the energy crisis isn’t over, and more.

NextEra Energy Partners Quits Pipelines for Renewables

NextEra Energy Partners announced this week that it plans to sell all of its remaining natural gas pipelines and focus exclusively on renewable energy by 2025.

“Some investors believe the natural gas pipeline assets dilute an otherwise clean, renewable energy portfolio,” CEO John Ketchum said. “To address these issues, today we are announcing plans for NextEra Energy Partners to simplify and recapitalize its business, positioning the company to be what I believe will be a best-in-class 100% renewables pure-play investment opportunity.”

“NextEra Energy Partners, a subsidiary of NextEra Energy that owns and operates a portfolio of energy projects spread across 30 states, aims to sell the Midstream pipeline in Texas by the end of this year. It will hold on to the Meade natural gas pipeline in Pennsylvania through 2025,” reports Utility Dive. “Although he did not give specific numbers, Ketchum said NextEra Energy Partners expects the proceeds from the sales to cover the cost of the company’s planned renewable energy expansion through 2024.”

In the past, NEP has turned down pipeline buyers, but Ketchum says now is the time to sell. The company aims to sell the Midstream pipeline in Texas by the end of this year, while holding onto the Meade natural gas pipeline in Pennsylvania until 2025.

In addition to avoiding high financing costs, the sale of the pipelines will position NEP as one of the world's largest renewable energy generators. Ketchum mentioned that only six other companies, including the parent company NextEra Energy, produce more renewable energy than NextEra Energy Partners. The company aims to grow its project portfolio to 58 GW by 2026.

Ketchum expects the move to draw more interest from new investors, increasing the company’s valuation. Ketchum believes the NEP is well-poised to capitalize on the energy transition and become a leading investment opportunity in the renewable energy sector.

The announcement had a positive impact on the company's stock; shares soared nearly 14.5% on Monday.

OPEC and OPEC+: What’s the Difference?

OPEC, or the Organization of the Petroleum Exporting Countries, was established in 1960 by several oil-producing nations. Its membership included Iraq, Iran, Kuwait, Saudi Arabia, and Venezuela.

OPEC's main mission is to coordinate and unify petroleum policies among its members to secure fair prices for producers, supply stability for consumers, and reasonable returns for investors.

More recently, the cart has added 13 member countries. In 2016, in response to a steep drop in oil prices brought on by the American shale boom, OPEC linked up with 10 other oil-producing nations, forming OPEC+. This alliance includes Russia, the third-largest oil producer in the world in 2022, accounting for 13% of global production.

OPEC+ operates under a cooperative framework where OPEC and non-OPEC members collaborate to coordinate their oil production levels and adjust output in response to market conditions. All told, OPEC and OPEC+ countries accounted for about 60% of global oil production last year, amounting to 48 million b/d. As a result, they wield considerable influence over global oil market and oil prices.

“OPEC produced an estimated 32.2 million b/d of crude oil in 2022, which was 40% of total world oil production that year. The largest producer and most influential member of OPEC is Saudi Arabia, which was the world’s second-largest oil producer in 2022, after the United States,” reports the Energy Information Administration. “Oil production in Russia remained above 10 million b/d in 2022 despite sanctions in response to its full-scale invasion of Ukraine. Russia’s oil output and effect on the market is significantly greater than that of other OPEC+ countries, such as Mexico and Kazakhstan, so the actions of the OPEC+ agreement are largely driven by coordination between OPEC and Russia.”

In April of this year, OPEC+ members agreed to more production cuts of 1.2 million b/d until the end of 2023. This reduction, when added to existing production cuts, brings monthly production targets 3.66 million b/d lower than production levels in August 2022. Despite the major cuts, forecasts from the EIA suggest that growth in non-OPEC oil supply over the next two years will help smooth things out and stymy large upticks in oil prices.

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German Utility: Crisis Not Over Yet

According to E.On, one of Germany's leading utility companies, Europe’s not out of the woods yet. The company's CFO, Marc Spieker, said that the crisis is ongoing and their forecast considers the possibility of further deterioration throughout the year.

But E.On believes it is well positioned to handle the expected volatility. In light of the crisis, the utility will continue to invest in transforming Germany and Europe's energy systems to promote a climate-friendly future. It’s unclear how doubling down on intermittent renewables will shore up volatile energy supplies.

“This week, Europe’s benchmark natural gas prices extended losses and began a sixth week of declines amid comfortable inventories and tepid gas demand in Europe and Asia,” reports Oilprice.com. “The front-month futures at the TTF hub, the benchmark for Europe’s gas trading, fell to $40 (36.25 euros) per megawatt-hour (MWh) as of 6:30 a.m. GMT on Wednesday. Prices have now halved since the beginning of the year after a milder winter, which left European gas inventories at the end of the 2022/2023 heating season well above the five-year average.“

Despite the current decrease in demand and prices, experts advise against complacency. It would be foolhardy for Europe to bet on low competition from Asia for LNG supplies and another warm winter.

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• Russia’s pipelines are under threat. “Russian pipeline monopoly operator Transneft said on Wednesday that there was an attempt at a ‘terrorist attack’ on a filling station of the Druzhba oil pipeline in Russia’s Bryansk region bordering Ukraine,” reports Oilprice.com. “‘Yes, indeed, early this morning there was an attempt to commit a terrorist act against the Druzhba oil pipeline system at the Bryansk filling station,’ Transneft’s representative Igor Demin told Russian news agency TASS, confirming an earlier report from a Telegram channel with links to Russia’s law enforcement agencies. No injuries have been reported, Demin told TASS, adding that the incident is being investigated.”

• A Canadian nuclear plant is back in the game. “Bruce Power has reached the major milestone of ‘substantial completion’ of the construction phase of Major Component Replacement portion of refurbishment of Bruce unit 6 and will now begin refuelling work as the focus moves on to returning the plant to service later this year,” reports World Nuclear News. “Unit 6 is the first of six Candu reactors at the site in Ontario to undergo refurbishment in a privately funded investment that will extend the life of the site through 2064. The unit was taken offline for the refurbishment in January 2020 - just as the COVID-19 pandemic was beginning. The impacts and uncertainty of the pandemic presented a "major hurdle" to Bruce Power and its construction partners, the company said, but the substantial completion of the construction phase has been completed on time and on budget.”

• Shell secures a big dub in the UK. “The UK Supreme Court ruled on Wednesday that it was too late for Nigerian claimants to sue two Shell subsidiaries over a 2011 offshore oil spill they say had a devastating long-term impact on the coastal area where they live. The case was one of a series of legal battles Shell has been fighting in London courts against residents of Nigeria's oil-producing Niger Delta, a region blighted by pollution, conflict and corruption related to the oil and gas industry,” reports Reuters. “The action stemmed from the leakage of an estimated 40,000 barrels of crude oil on Dec. 20, 2011, during the loading of an oil tanker at Shell's giant Bonga oil field, 120 km off the coast of the delta.”

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