US Gas Production Lurches // Non-Partisan Pleas for Nuclear Power // Danly Fires Back at FERC's Transmission Decision

US Gas Production Lurches

A lack of pipeline infrastructure is hampering growth in American natural gas. 

Since February, natural gas prices have risen by 50% as the US has geared up to export as much LNG to Europe as possible to put a damper on the EU's dependence on Russia. Now, producers in Appalachia and West Texas are struggling to move product into the market because there aren't enough pipelines. 

Oilprice.com reports, "Appalachia accounted for 37% of total U.S. gas production, while West Texas accounted for another 19%." Bank of America analysts warn that Appalachia is reaching the "limits of its takeaway capacity" which heralds "a potential halt to production growth."

Pipelines are brimful in the Permian Basin, too.

This could lead to higher gas prices, which "topped $7 per million British thermal units on the spot market at the end of last month. May futures also expired at a price above $7 per mmBtu, the Energy Information Administration (EIA) reported last week. Natural gas prices stood at $7.250" yesterday morning Eastern Standard.

Europe won't like the bad news as it tries to wean itself off Russian gas. Right now, America can export 9.8 billion cu ft daily, but Europe’s largest economies import gas from Russia at 18.3 billion cu ft daily. The strain, coupled with inflation, will hurt Americans' pocketbooks.

Non-Partisan Pleas for Nuclear Power

Two letters have gone out in defense of nuclear energy in America.

The first letter comes from Rep. Cathy McMorris Rodgers (R., Wash.), ranking member of the House Energy and Commerce Committee, and Fred Upton (R., Mich.), ranking member of the Subcommittee on Energy. Addressed to Energy Secretary Jennifer Granholm, Upton and McMorris Rodgers urge Granholm to do more to secure America's nuclear supply chains.

In it, the representatives point out that like some oil and gas needs, America has become reliant on and so vulnerable to Russia for its nuclear energy needs.

They write, that the fuel disruptions after Fukushima in 2011 and the plants closures over the last decade have "eroded our domestic nuclear fuel infrastructure. At the same time, reliance on inexpensive, Russian-sourced fuels to well more than 20 percent of America’s nuclear fuel supply  created strategic vulnerabilities.”

They ask Granholm to provide information regarding the DOE’s implementation of nuclear energy security measures by May 11. They have a laundry list of other requests, but the main thrust is that they want DOE to look into what it can do to shift vulnerable parts of the nuclear supply chain to domestic industry.

The second letter is addressed to both Granholm and Michigan Governor Gretchen Whitmer. It comes from the Climate Coalition in recognition of their efforts to save the Palisades plant. The group commends Granholm and Whitmer for their swift action in trying to get the plant the funds it needs to survive.

They write, “By saving Palisades, Michigan will be a leader in implementing clearly articulated recommendations by scientists, rather than responding to ideological partisan politics or allowing flawed markets to make decisions that are misaligned with and contrary to our best interests.”

Nuclear makes for 20% of U.S. electricity generation and 52% of the carbon-free sources. It's about time it had more defenders. Combine these letters with California Governor Newsom's reconsideration of the Diablo Canyon closure and the tides seem to be turning for the maligned technology almost a year to the day after the premature closure of Indian Point last year. 

Danly Fires Back at FERC's Transmission Decision

Recently, the Federal Energy Regulatory Commission laid out new ground rules for transmission projects. All but one commissioner approved. The dissenter, James Danly, had some harsh words about the decision at a meeting held by WIRES, a utility industry trade group, reports Utility Dive.

Danly aired two major objections to FERC's new ruling. 

• FERC needs to be able to show that transmission rates are systematically unjust in order to alter how it does cost allocation. Danly doubts that FERC has the ability to pull this off under the Federal Power Act.

• The rule discriminates in a way that favors states with renewable energy standards. “It bakes in from the get-go … considerations of specific types of state policies, and then creates a mechanism that sort of presupposes the conclusion that you’re going to arrive at, which is that all of the transmission plan has to achieve those goals,” he said.

The second part seems to be true, as that's what supporters of the rule were saying. They agree with Danly--the rule will help more transmission get built to accommodate more renewables--and they think that's a good thing. 

Danly also pointed out that the rule would have major implications for regions that belong to regulated utilities rather than RTOs. Regulated utility areas have fewer transmission lines. “Why would it be that certain regions, in certain parts of the country, like the Southeast, have remarkably low transmission rates and other areas, especially those that seem to have an awful lot of oversight from the federal government — I can think of particular RTOs ... — have very high transmission rates?” 

RTOs have an easier time accommodating renewables because of the nature of the market--just-in-time natural gas can bid right when wind and solar step generating. About 80% of the renewables in America are built in RTO areas. 

Conversation Starters

• Hungary threatened to veto to ban on Russian oil and now the EU is contemplating exemptions. Slovakia and Hungary are among the countries staunchly opposed to a ban on Russian oil due to their very high dependence on Russian imports.

• The diesel crunch is tightening in America. Diesel inventories are at a historic low. Analysts expect diesel to stay at a premium.

• Gazprom's January-April exports fell by nearly 30%.

Crom's Blessing