The Energy News Beat Tomorrow’s News Today summary for the podcast is to be released on June 26th. Who would have thought Texas Natural Gas would go negative when in a heat wave and high demand?
1: EU Sanctions 17 Ships that Carried Oil for Russia
Russia has just passed Japan as the fourth-largest economy in the world. One thing that Putin has figured out is how to avoid sanctions. What is buried in this story are admissions that more LNG tankers are being added to the dark fleet.
The European Union placed sanctions on more than two dozen vessels, including 17 that hauled oil for Moscow.
The sanctions follow similar steps taken by the UK, which included so-called dark fleet ships on a list of entities it sanctioned earlier this month.
Among the vessels to be sanctioned are the Robon, which last year was filmed transferring Russian oil miles away from the location it was signaling, and the Andromeda Star, which suffered a crash near Denmark earlier this year. The Robon has been stationed in the Baltic Sea ever since it was named by UK authorities. ….
…The International Maritime Organization last year called on member states to prevent illegal operations by the shadow fleet through resolution A.1192(33). The EU cited that resolution for 11 of the vessels it sanctioned.
The sanctions prevent access to ports in Europe as well as the ability to sell, charter, operate or crew such a vessel. The measure also prohibits European operators from providing supplies and services such as insurance, brokering, financing and bunkering, as well as engage in ship-to-ship transfers or any other transfer of cargo with the vessels, or to get services from them.
A total of 27 ships were sanctioned, including two ships that store liquefied natural gas, and general cargo vessels that carried restricted goods or are linked to sanctioned entities. The list grew from an original proposal of a dozen ships and more vessels could be added in future sanctions packages.
2: Fervo Energy Announces 320 MW Power Purchase Agreements with Southern California Edison
Extremely cool for California. With geothermal power for 350,000 homes for over 15 years. Go geothermal!
World’s largest geothermal PPAs highlight increasing utility demand for clean, reliable next-generation geothermal energy
HOUSTON, TX (June 25, 2024) – Fervo Energy (“Fervo”), the leader in next-generation geothermal energy, announced today the execution of two power purchase agreements (PPAs) totaling 320 MW with Southern California Edison (SCE), one of the nation’s largest utilities. The 15-year agreements for 24/7 carbon-free geothermal energy will provide reliable, clean, and affordable power for the equivalent of 350,000 homes across Southern California and support SCE’s vision to help California transition to a cleaner energy future.
SCE will purchase the power from Fervo Energy’s 400 MW Cape Station project currently under construction in southwest Utah. The first 70 MW phase of the project is expected to be operational by 2026 and the second phase will be operational by 2028.
“This announcement is another milestone in California’s commitment to clean, zero-carbon electricity,” said California Energy Commission Chair David Hochschild. “Enhanced geothermal systems complement our abundant wind and solar resources by providing critical base load when those sources are limited. This is key to ensuring reliability as we continue to transition away from fossil fuels.”
….“Geothermal stands as the dependable and adaptable solution essential for California’s journey towards a fully decarbonized grid,” said Dawn Owens, VP, Head of Development & Commercial Markets for Fervo Energy. “As electrification increases and climate change burdens already fragile infrastructure, geothermal will only play a bigger role in U.S. power markets. Fervo looks forward to continuing to meet these needs, providing firm, clean power to help balance California’s energy portfolio.”
In 2022, Fervo contracted 53 MW of power from Cape Station to California community choice aggregators, and in 2021, Fervo and Google signed the world’s first corporate agreement to develop next-generation geothermal power. Fervo’s commercial pilot in Nevada came online in November 2023 and is sending carbon-free electricity to the local grid that powers Google’s data centers.
3: German airline Lufthansa hikes ticket prices by up to $77 due to environmental costs
Elections matter, and so do the unelected bureaucrats creating policy.
German airline company Lufthansa Group said Tuesday it would add an “environmental cost surcharge” to ticket prices as soon as this week, which could be as high as 72 euros ($77) for some flights.
“The surcharge is intended to cover part of the steadily rising additional costs due to regulatory environmental requirements,” Lufthansa said in a statement, pointing to regulations from the European Union and International Civil Aviation Organization.
The additional cost will be applied to fights departing from any of the 27 member countries of the European Union, as well as the U.K., Norway and Switzerland, Lufthansa said. All flights sold or operated by Lufthansa Group, which owns airlines including Lufthansa, Eurowings, Swiss and Edelweiss Air, and Austrian Airlines, will be subject to the charge.
“The amount of the surcharge varies depending on the flight route and fare and is between 1 euro and 72 euros,” Lufthansa said, adding that the exact amount would be visible to customers during the booking stage.
The fee will be applied to all tickets issued from June 26 — Wednesday of this week — that are for flights departing from Jan. 1, 2025, Lufthansa said.
Environmental regulations
Several regulations from institutions including the EU would increase costs for airlines, Lufthansa said.
This includes EU quotas for how much sustainable aviation fuel is used. These are set to come into effect in 2025 and increase over the years until 2050.
Sustainable aviation fuel is an alternative to fossil fuels, and can be made of products such as waste oil and fats, nonfood crops, and other waste materials. It can also be created in a process that captures carbon from the air. …
….Lufthansa said it was investing heavily in technology to make aviation more sustainable and supporting climate research.
“However, the airline group will not be able to bear the successively increasing additional costs resulting from regulatory requirements in the coming years on its own. Part of these expected costs for the year 2025 are now to be covered by the new Environmental Cost Surcharge,” the company said.
4: Forget Shale: Canada’s Oil Sands Are Having Their Moment
This is fantastic for the Canadian oil and gas companies. I wish we had the million barrels per day heading to the US, but with the Keystone pipeline canceled, we can’t cry over lost energy security.
anada’s oil sands were once the high-cost, dirty and unloved sibling to America’s fast-growing shale. Not any more.
Oil-sands producers have been among the top-performing companies in the energy sector over the past year. Shares of the four largest Canadian oil-sands producers by market capitalization have gained an average of 37% over the past 12 months, outpacing an index of the largest U.S. energy companies by 19 percentage points. Two of those companies—Canadian Natural Resources CNQ -0.39%decrease; red down pointing triangle and Imperial Oil IMO -0.57%decrease; red down pointing triangle—now fetch higher valuation multiples on some measures than U.S. supermajor Chevron CVX -0.93%decrease; red down pointing triangle.
Things weren’t always so rosy. Oil-sands facilities required enormous upfront spending, were expensive to operate and had a controversial environmental footprint. Not only that, but also Canadian oil typically commanded steep discounts because of a chronic lack of pipeline capacity. Global energy giants such as ConocoPhillips COP -0.79%decrease; red down pointing triangle and Shell SHEL 0.47%increase; green up pointing triangle raised billions of dollars by selling a substantial chunk of their oil-sands stakes years ago. ….
…..The caveat is that Canadian oil sands remain among the most carbon-intensive sources of oil. The industry is, however, making progress: It reduced methane emissions by 45% from 2014 levels in 2022, three years ahead of the target set by the province of Alberta, according to the government website. Technological progress on solvent-based extraction and carbon capture are further-out solutions but could ultimately help reduce emissions in the long term.
The energy industry’s onetime ugly duckling suddenly looks more like a beauty.
5: Hedge Fund Making 20% a Year For Last Decade Targets Uranium M&A
With the nuclear energy renaissance worldwide, Uranium prices will rise. Adding geopolitical issues creates a strong bull market.
(Bloomberg) — A top performing hedge fund is betting the pullback in uranium producer NexGen Energy Ltd. will be short lived, as the industry’s growing appeal leaves the startup well placed for a potential takeover.
Melbourne-based L1 Capital’s flagship Long Short Fund is up 20% per annum since inception, the best performing Australia-based strategy for that 10-year period, according to data compiled by Zenith Investment Partners, a research firm. While NexGen’s stock struggled this year after a 53% surge in 2023, L1’s head of research Amar Naik says he isn’t tempted to trim the position.
“It’s such a strategic asset that once they get their final approvals, it’s a very high likelihood that it would be a good takeover candidate for one of the majors,” said Naik in an interview in Melbourne.
Uranium takeover activity has already started to manifest, with Paladin Energy Ltd. making a C$1.14 billion ($833 million) offer to buy Canadian mining firm Fission Uranium Corp. on Monday.
L1 Capital was founded by Raphael Lamm and Mark Landau in 2007, beginning with long-only stocks before launching the Long Short fund in 2014, that’s now about A$4.6 billion. More recently, the firm’s drawn plaudits for its Catalyst Fund that’s seen success with an activist strategy. It now manages across all its funds around A$7.5 billion.
NexGen counts L1 as its biggest shareholder after the Australian firm first invested in early 2021. The fund’s uranium stock positioning has weathered recent swings, while copper-related positions have been trimmed, Naik said. Shares of NexGen’s Canadian listing are up 0.7% this year.
As climate change intensifies and governments across the world are drawn anew to the steady carbon-free power generated by nuclear plants, interest in uranium deposits has picked up. China is rapidly deploying atomic power, Japan is looking to boost its economy by giving nuclear another chance and across the US and allied countries, owners of left-for-dead uranium mines are restarting operations.
The surge in the price of uranium is a testament to the magnitude, and speed, of this pivot back to nuclear. Over the past five years, the metal has climbed 233% — more than triple the gains in gold and copper even after a slight decline in 2024.
The supply-demand outlook for uranium is positive given years of very little investment in production after the Fukushima accident, according to Naik.
“If we think through into the 2030s, there’s gonna be this huge supply demand gap” Naik said. The major miners have “all pivoted to copper as green energy and that’s been a great trade for us,” but it “could very well be that uranium’s the next one.”
The diversified fund also counted firms from Qantas Airways Ltd. to Flutter Entertainment Plc among key contributing performers in recent months, according to a webinar in May.
6: Texas Natural Gas Prices Turn Negative Even Amid Heat Wave
Who would have guessed that getting stranded gas in the Permian due to a pipeline repair would have a negative impact?
In an unexpected turn of events, U.S. spot natural gas prices in Texas dropped below zero on Tuesday despite soaring demand driven by a severe heat wave. This phenomenon, typically seen in the low-demand seasons of spring and autumn, was primarily caused by pipeline maintenance that stranded gas in the Permian Basin. Kinder Morgan’s Permian Highway gas pipeline, operating at reduced capacity due to necessary repairs, contributed to this price plunge.
The Permian Basin, a significant oil-producing region, also produces substantial gas volumes. When oil prices are high, producers tolerate losses on gas sales due to lucrative oil profits. Energy players are left with few good options when there is too much gas in a specific region. They can reduce crude oil production and as a consequence, reduce natural gas production. They can flare the associated gas if they can get a permit to do so. Their last option is to pay someone to take the gas off their hands that they cannot transport away.
The latter is what we are seeing, and as a result, next-day gas prices at the Waha hub fell to negative $1 per million British thermal units on June 24, marking the 18th occurrence of negative pricing at Waha this year.
Despite these challenges, the Permian Highway is expected to resume full service soon, potentially stabilizing prices. However, this incident highlights the delicate balance of supply and demand in energy markets and the impact of infrastructure maintenance on pricing dynamics.
The Kinder Morgan Permian Highway pipeline expansion, which added 550 million cubic feet of capacity to the pipeline, was placed into service in December, and is expected to return to full capacity by June 27.
California should be known as a windy state: The state energy bureaucracy are blowhards who blow hard, Stu.