Welcome to Grid Brief! Here’s what we’re looking at today: Russia shirks the price cap on oil, the US Bureau of Land Management takes back its authorization of lithium exploration, PG&E assures its customers it can survive the summer, and more.

Russia Defies Oil Price Cap

Russia scored a win in the fight over global oil market influence last week as its crude began to trade over the price of the Western price caps meant to cripple Moscow.

“It is the first time that the price for its flagship Urals grade of oil has breached the $60-a-barrel limit since the U.S. and its allies introduced the novel sanctions policy last December,” reports the Wall Street Journal. “It is a sign that the Kremlin has succeeded, at least in part, in adjusting to the restrictions.”

The West has been touting its sanctions as vital tool for bleeding the Kremlin’s coffers, but it has instead allowed Russia to form new oil networks using tankers out of Tehran. Those tankers were being used as offshore storage for Iran until they started to move all that over $60 a barrel Russian oil.

Iran and Venezuela have benefited handsomely from the Russian sanctions, as the West and its allies have used their oil to keep prices low. Iran will be the second-largest source of new oil this year as a result.

In a recent piece entitled “The Smoke and Mirrors of Western Oil Sanctions,” Bloomberg’s Javier Blas writes, “Heading into winter 2024, keeping oil prices down will become more difficult. Russia is today selling its crude between $60 a barrel and $75 a barrel, depending on the variety.”

“The West won’t be able to rely on rising Iranian and Venezuelan output to soften the market. As Russia and Saudi Arabia cut their production, prices will rise further,” Blas added.

US BLM Drops Lithium Exploration Authorization

The US Bureau of Land Management has rescinded its authorization of a Canadian mining company’s efforts to explore for lithium in the Southwest.

“The Center for Biological Diversity and the Amargosa Conservancy said in a lawsuit filed July 7 that the project on the edge of the Ash Meadows National Wildlife Refuge outside Las Vegas posed an illegal risk to a dozen fish, snail and plant species currently protected under the Endangered Species Act,” reports Politico. “They filed an additional motion this week in federal court seeking a temporary injunction prohibiting Rover Metals from initiating the drilling of 30 bore sites in search of the highly sought-after metal used to manufacture batteries for electric vehicles.”

Yet before a judge could rule on the case, the BLM rescinded its previous authorization.

“The agency has concluded that proposed operations are likely to result in disturbance to localized groundwaters that supply the connected surface waters associated with Threatened and Endangered species in local springs,” said Angelita Bulletts, district manager of the bureau’s southern Nevada district in a formal notice last Wednesday. “BLM is rescinding the Acknowledgment of the Notice issued on April 6 (because) the operator cannot prevent unnecessary or undue degradation based on the record before it.”

Environmental conservation groups counted it as a win. “We need lithium for our renewable energy transition, but this episode sends a message loud and clear that some places are just too special to drill,” said Patrick Donnelly, Great Basin director at the Center for Biological Diversity.

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PG&E Assures Customers

California utility Pacific Gas & Electric has told its customers that it is fully prepared for strain on its system this summer.

“The company said it is bringing online new resources like battery energy storage, including an additional 700 megawatts (MW) than it had last summer. California residents have worried about the effect of extreme weather after power grid operators were forced to impose rotating outages in the state during a brutal heat wave in August 2020,” reports Reuters. “At the time, PG&E said it had just 6.5 MW of battery energy storage connected to the power grid. By September, it expects to have 1,700 MW online, or enough to meet the demand of 1.2 million homes at once, it said.”

Through its load management programs and contracts, PG&E anticipates being able to alleviate up to 900 MW of energy demand on the grid (about the demand of 650,000 homes) when a significant number of customers participate.

Furthermore, PG&E expressed confidence in having sufficient hydropower capacity to support meeting peak summer demand periods.

Conversation Starters

• Biden rolls out aggressive oil drilling rules. “In a win for conservation groups, the Biden administration plans to increase the amount of money oil companies have to provide before they can drill on public lands twentyfold, the Interior Department indicated Thursday,” reports E&E News. “The draft overhaul of Interior’s onshore oil and gas rules also weighs tightening the amount of time an oil and gas drilling permit can be used, while killing the long-standing practice in the federal oil patch of renewing unused permits. Bureau of Land Management Director Tracy Stone-Manning characterized the proposed reforms — due out officially next week — as ‘common sense and needed.’”

• The US Department of the Interior pushes ahead with offshore wind. “The Department of the Interior announced Thursday a final sale notice for offshore wind energy lease areas in the Gulf of Mexico, saying that the associated auction will take place in August,” reports Utility Dive. “The three lease areas have the potential to generate up to 3.7 GW, the DOI said. They include a 102,480-acre area offshore Lake Charles, Louisiana, and two areas offshore Galveston, Texas, that comprise 102,480 acres and 96,786 acres, respectively.”

• But offshore wind keeps running into trouble. “A unit of Spain’s Iberdrola SA agreed to cancel a contract to sell power from a planned wind farm off the coast of Massachusetts. Danish developer Orsted A/S lost a bid to provide offshore wind power to Rhode Island, whose main utility said rising costs made the proposal too expensive. Swedish state-owned utility Vattenfall AB scuttled plans for a wind farm off the coast of Britain, citing inflation,” reports Bloomberg. “Soaring costs are derailing offshore wind projects even as demand for renewable energy soars. Extreme heat driven by climate change is straining electric grids all over the world, underscoring the need for more power generation — and adding urgency to calls for a faster transition away from fossil fuels. In Europe, the move to reduce reliance on Russian oil and gas has also given clean-energy projects momentum.”

Crom’s Blessing

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