A Tough Weekend Coming to Texas's Grid // Germany to Gain LNG Import Capacity // Leaky Barrel: Biden's SPR Buyback Leaks to Press

A Tough Weekend Coming to Texas's Grid

Earlier this week, the Electric Reliability Council of Texas requested generators postpone their planned outages (and any outages underway) for maintenance until after this weekend. The state is looking at unseasonably warm weather, which could strain its grid if too many generators are inoperative. 

"ERCOT, which manages about 90% of the state's power load, said in a statement, it is not planning to ask consumers to conserve energy this weekend as it predicts there will be enough capacity," reports Houston Public Media.

Texas's grid is predicted to peak at a load just shy of 70 gigawatts on Sunday and Monday due to expected daytime high temperatures in the 90s in the Austin, Dallas, and Houston areas. San Antonio, Laredo, Midland, and elsewhere expect triple-digit heat.

The last time the grid needed this much juice in may was May 2018 when it hit nearly 67 GW. For comparison, Texas's all-time high for summer demand is 74.8 gigawatts.

Normally, ERCOT would be able to handle the situation, but about one-third of its thermal generators--natural gas, coal, and nuclear--are down or planned to be down for maintenance. May should be a safe time for maintenance outages to take place, but the heatwave has caught ERCOT off-guard.

Last year, Texas saw blackouts during the Uri storm in February. The next month, ERCOT asked Texans to use less electricity to make sure demand didn't outstrip supply. In May of 2021, it did the same. 

Germany to Gain LNG Import Capacity

Germany has broken ground on its first LNG terminal. It has been fast-tracked, with German Economics Minister Robert Habeck hoping to complete it in under a year. The terminal is being built in Wilhelmshaven on the German North Sea.

Two other regions have additional LNG import terminals planned. "The terminals will receive LNG from the United States and the Middle East as Germany vows to replace Russian gas at lightning speed in the wake of a Wednesday proposal by the European Union for a full ban on Russian oil," reports Oilprice.com.

“We have a good chance of achieving something that is actually impossible in Germany: to build an LNG terminal within about ten months and to connect it to the German gas supply,” Habeck said.

In the meantime, Germany has chartered four Floating Storage and Regasification Units to increase their LNG import ability. 

The four FSRUs (two from Norway, two from Italy) will beef up Germany's regasification capacity to 20 BCM per year. That's about half its Russian gas import volume. Oilprice.com reports, "Combined, all of Germany’s LNG project plans foresee a total import capacity of 68 BCM, surpassing the amount of Russian gas generally piped into the country."

If Germany can pull this off, it will resolve its Russian dependence dilemma. In the meantime, Germany seems to be burning a lot of its lignite coal to keep things rolling. Here's a snapshot of its electricity generation at time of writing:

Leaky Barrel: Biden's SPR Buyback Leaks to Press

If you release oil from the Strategic Petroleum Reserve, then you have to replace it.

That's the rule.

On March 31, Biden authorized the release of 1 million barrels of oil from the SPR per day for six months in an attempt to bring down oil prices. On Thursday, May 5, an unnamed official from the Energy Department told CNN that the "administration plans to seek bids this fall to buy 60 million barrels of crude oil as the first step in a years-long process aimed at replenishing America's emergency oil reserve."

In response, "[o]il jumped to $111.5 per barrel for Brent–the highest price since late March–and over $108 for WTI on news of the buyback plan, along with results of an OPEC+ meeting earlier today in which the cartel refrained from increasing output quotes beyond 423,000 bpd for June," reports Oilprice.com.

This is the first time since the opening of this century that the Energy Department has snatched up large quantities of oil for the SPR.

"As we are thoughtful and methodical in the decision to drawdown from our emergency reserve, we must be similarly strategic in replenishing the supply so that it stands ready to deliver on its mission to provide relief when needed most," Energy Secretary Jennifer Granholm said.

The administration believes this buyback will serve two purposes: replenishing the reserve and stimulating domestic oil production by supplying a surefire source of future demand.

It's hard to say how exactly this will shake out. The specifics of the Biden administration's buyback protocol haven't been completely ironed out and the plan is entirely novel. We could either have a more actively and thoughtfully managed SPR...or something else. 

Conversation Starters

• California has approved Marathon's and Phillips66's refinery-to-renewable-fuel-plant plans.

• Finland's contract for a nuclear reactor with Russia's Rosatom has been scuttled. Fennovoima terminated its engineering, procurement, and construction contract with Rosatom for a 1,200-MWe VVER-1200 pressurized water reactor. The company cited delays over the two years and the Ukraine conflict as its rationale.

• US thermal coal exports hit a one-year high in March.

Word of the Day

mysid shrimp

n.

The common name for the small shrimp species Mysidopsis bahia, which is used as the test organism in a US EPA bioassay test protocol. (source)

Crom's Blessing

Over the Top (1987).