What Biden's moves on oil leasing mean for Permian Basin production


Ben Geman
Fri, March 5, 2021

President Biden's freeze on new federal lands oil leases will deter Permian Basin output to a limited degree but will also push development from the New Mexico side of the basin to Texas, per a new Dallas Fed forecast.

Why it matters: It's an attempt to gauge the impact of emerging federal policies in the country's most prolific shale basin.

The big picture: The recently imposed leasing moratorium, combined with slower approvals of permits on existing acreage, would lower projected oil output compared to what's expected without those policies.

Check out the "hybrid" above, which shows Permian production in 2025 around 200,000 barrels per day less than the "reference" case.

That's hardly nothing, but not huge compared to the millions of barrels per day produced in the Permian.

They also modeled aggressive restrictions that bars new drilling permits on existing leases ("restrictive" above), which lowers projected recovery from the pandemic decline even more.

Threat level: Restrictions have a much bigger future effect in New Mexico, which produces far less than the Texas side but is still a key source of revenues for the state.

Half of New Mexico's Permian production is on federal lands, while in Texas production occurs on state and private lands.


Under the leasing freeze combined with slower permit approvals, New Mexico's production in 2025 is 400,000 barrels per day lower than in the reference case.


"With an expected shift in drilling from federal acreage, employment moves across state borders from New Mexico to Texas."

The intrigue: While the Biden administration has frozen new federal lands leasing, it has not moved to end permitting on existing tracts.


Interior officials say large numbers are still going out the door despite tighter scrutiny.

Of note: Their analysis is based on WTI at $50 per barrel, which is well below current levels, so the production estimates should be considered conservative.
Charted: Visualizing New Mexico's oil future

Data: Kayrros, WellDatabase, Federal Reserve Bank of Dallas; Chart: Will Chase/Axios

This chart from the Dallas Fed analysis looks at New Mexico's projected Permian output under the leasing freeze and hypothetical permitting ban.

By the numbers: In the fiscal year ending in mid-2020, New Mexico received $2.6 billion from industry fees, royalties and taxes.


Over $800 million came from the state's cut of revenues from federal acreage, the analysis notes.


Under the leasing freeze case, production keeps returning from the pandemic decline this year, dips a bit in 2022, and then stabilizes and "preserves state royalty and tax revenue closer to current levels."


If permitting ended as well, much more revenue would be at risk.

Firm behind Keystone pipeline hires Biden-linked lobbyists



Lachlan Markay
Fri, March 5, 2021


The company behind the Keystone XL pipeline broadened its advocacy team with Biden-linked lobbyists in January, public records show.

Why it matters: The K Street hires weren't enough to save the pipeline, which President Biden effectively canceled during his first days in office. But they could help ensure similar projects don't meet the same fate.

What's new: TransCanada Pipelines, TC Energy's principal operating subsidiary, retained a former senior Biden aide to lobby for the company in January.

The company hired Putala Strategies and its eponymous principal, Christopher Putala, a former senior aide when Biden was in the Senate.


Putala's lobbying registration filing, posted publicly on Thursday, said he will work on "matters concerning energy policy, including pipelines, storage facilities and power generation origination."


Putala was officially hired Jan. 20 — the day his former boss was inaugurated as president.

Five days earlier, TC Energy had hired another prominent lobbyist: the brother of Biden White House counselor Steve Ricchetti.


Jeff Ricchetti's firm said it would work on "legislative issues affecting energy infrastructure, the safe and efficient transportation of natural gas and liquids energy, renewable electricity policy and alternative fuel sources like renewable natural gas and hydrogen."


Ricchetti's hire was first reported this week by Bloomberg.

What they're saying: In a statement to Axios, TC Energy spokesperson Marc Palazzo described the new lobbying hires as an extension of both Ricchetti's and Putala's prior advisory work.


"Chris Putala and Jeff Ricchetti have advised our company for the better part of a year and are part of a diverse team of advisors that provide strategic advice and counsel on a wide range of issues,” Palazzo said.

Between the lines: In spite of those early Biden-era hires, the president rolled back U.S. government approval for Keystone XL during his first days in office, a move hailed by environmental policy advocates who'd campaigned against it for years.


Keystone XL may be dead, but TC Energy has a history of developing cross-border pipelines, and said in January it has "a robust portfolio of other similarly high-quality opportunities under development."


Its Biden-connected lobbying team could help ensure it can at least make its case to the White House more effectively in the future.


No company — particularly in the energy space — wants to land at the center of a political firestorm. Lobbyists with the ear of the president and senior staff could allow a company to open channels of communication with top policymakers before the political or public relations campaigns take over.

Editor's note: This story has been updated to include comments from TC Energy

Fracking gas is too risky for our climate future

Katie Rock, Opinion contributor
Sat, March 6, 2021

Last month’s polar vortex and other extreme weather events from the past year in Iowa and nationally have shown us the risks of continuing to rely on fossil fuels. As fuel lines froze, large volumes of gas and coal power plants were not able to operate during extreme cold putting millions at risk. Massive power outages caused millions of people, from here in Iowa down to Texas, to survive against the raw elements.

Some suffered and died due to hypothermia, carbon monoxide poisoning, or fires caused by burning their own belongings for warmth. While some renewables were also forced offline, clean energy was largely more reliable than fossil fuels during this crisis.

Extreme weather and natural disasters show us time and again the need for a comprehensive shift to a clean, reliable energy system that keeps us healthy and does not worsen our climate crisis. We should reject claims that renewable energy is less reliable than our dependence on fossil fuels. Our energy grid needs critical infrastructure updates to continue to expand clean energy as the effects of climate change accelerate.


It is time to take a hard look at how to build a more resilient electricity system in Iowa. These moments of extremes are happening more often and reveal how vulnerability leads to injustice. Increasing investment in local distributed energy could have helped prevent the blackouts that affected over 5 million people across the U.S. We can start by adding on-site solar and storage to our most critical community spaces — hospitals, schools, and essential businesses — to offer support and shelter for times of crisis.

Gulf Power construction workers install a solar panel at the Blue Indigo Solar Energy Center in Jackson County on Jan 7, 2020.

It should be clear now that generating more power from out-of-state gas in Iowa is a risky deal. Building more of the same will not fix this problem. It will only make it worse. Fracking gas generates high rates of emissions of methane, a greenhouse gas over 80 times more potent than carbon dioxide. When methane emissions from leaky, unregulated fracking wells are included, gas power is as bad as coal for our planet. Plus, as methane degrades in our atmosphere, it just becomes carbon dioxide. And that does not even include the contamination and depletion of our water supply from fracking.

Pollen season is expanding: If your allergies are more severe, more expensive and last longer, blame climate change

Gas also poses risks financially. We know that more than 80% of large gas plants built today will become uneconomical due to the falling costs of energy by 2035, much like coal plants are today. In Iowa we have seen old coal plants shift to gas only to be demolished ahead of schedule. Roughly 80% of Iowa’s remaining coal fleet is over 40 years old. Iowa can continue to lead on clean energy by retiring coal power, replacing it with clean energy, and saying no to new gas plants. As more coal plants come offline this decade, they must be replaced with clean sources including wind, solar, storage, energy efficiency and demand response tools.

Sen. Capito: Bipartisan transportation bill can propel American economy forward

Wind, solar and batteries are the lowest cost options for energy, and costs continue to decline. We don’t need gas as a "bridge fuel." We are already on our way with wind and solar in Iowa, but we need more investments in clean energy and a clean grid to complete the transition. The Iowa Legislature should reject new state incentives for new gas infrastructure currently under consideration. A course correction to avoid the worst effects of climate change should include cutting fossil fuel use not only from electric power supply, but in buildings, transportation. and manufacturing supply chains.

The extreme cold in 2019 was followed by a "Bomb Cyclone" that melted all our existing snow in days resulting in multibillion-dollar flood damage throughout the state, from which we are still recovering. We need to recognize that these new terms for unprecedented weather conditions are becoming our new normal. Climate change is the greatest challenge of our lifetimes. We owe the legacy of a clean, carbon-free energy transition to future generations.

Katie Rock is campaign representative with Iowa Beyond Coal. This column originally appeared in the Des Moines Register.


This article originally appeared on Des Moines Register: Climate change answer can't include gas; it's too risky

The oil industry says it might support a carbon tax – here's why that could be good for producers and the public alike


David Schoenbrod, Professor of Law, New York Law School and Richard Schmalensee, Professor Emeritus, Member of National Bureau of Economic Research Board of Directors, MIT Sloan School of Management

Fri, March 5, 2021, 

Regulations have an accountability problem. AP Photo/Gregory Bull

The oil industry’s lobbying arm, the American Petroleum Institute, suggested in a new draft statement that it might support Congress putting a price on carbon emissions to combat climate change, even though oil and gas are major sources of those greenhouse gas emissions.

An industry calling for a tax on the use of its products sounds as bizarre as “man bites dog.” Yet, there’s a reason for the oil industry to consider that shift.

With the election of President Joe Biden and rising public concern about climate change, Washington seems increasingly likely to act to reduce greenhouse gas emissions. The industry and many economists and regulatory experts, ourselves included, believe it would be better for the oil industry – and for consumers – if that action were taxation rather than regulation.


The American Petroleum Institute emphasized that trade-off in its draft statement, first reported in the Wall Street Journal on March 1. The statement says “API supports economy-wide carbon pricing as the primary government climate policy instrument to reduce CO2 emissions while helping keep energy affordable, instead of mandates or prescriptive regulatory action.”
Regulations versus taxation

There are a few ways to set a price on carbon. The most straightforward is a carbon tax. The price is designed to reflect all the harm done by greenhouse gas emissions, such as the impact of heat waves on public health.

A tax on carbon emissions would likely be imposed on firms that produce oil, gas, coal and anything else whose use results in carbon emissions. While companies would be taxed, they would pass those costs on to consumers.

The tax gives everyone incentives to reduce their contributions to carbon emissions by, for instance, fixing leaky windows, buying an electric vehicle or making a factory more efficient. In addition, the revenue from the carbon tax could be rebated to consumers in a variety of ways. Thus, if the tax is high enough, everyone from the biggest corporation to the most modest homeowner would have a strong incentive to search out the most cost-effective ways to cut carbon emissions.

In contrast, regulations put federal agencies in charge of deciding how best to reduce emissions. Regulators in Washington often know far less than individual factory owners, homeowners and others how to cut those factories’ and homes’ emissions most cost-effectively and thus reduce the cost of the tax for those people. Regulation comes with procedural requirements that impose paperwork expenses and delays on businesses, too.

Regulators can also be subject to pressure from members of Congress and lobbyists to do favors for campaign contributors such as, for example, not regulating emissions of favored industries stringently or regulating in ways that protect favored industries from competition. In the 1970s, one of us, David Schoenbrod, was a Natural Resources Defense Council attorney who sued under the Clean Air Act to get the EPA to stop the oil industry from adding lead to gasoline. That experience laid bare the accountability problem: The statute allowed Congress to take credit for protecting health, but lawmakers from both parties lobbied the agency to leave the lead in, and then Congress blamed the agency for failing to protect health.

The upshot, in our view, is that regulation could produce less environmental protection bang for the buck than a carbon tax.

As then-presidential candidate Barack Obama stated in 2008, with regulation, agencies dictate “every single rule that a company has to abide by, which creates a lot of bureaucracy and red tape and oftentimes is less efficient.”
What will Congress do?

On March 2, a new major climate bill was introduced in Congress. It reflects many of Biden’s climate strategies, but it sticks to regulation rather than considering a carbon price.

The CLEAN Future Act, introduced by the ranking Democrats on the House Energy and Commerce Committee, directs regulators to reduce greenhouse gas emissions to zero by 2050. The centerpiece of the bill is a national clean electricity standard, which focuses narrowly on electricity generation and, we believe, misdefines the climate problem as too little clean electricity rather than too much carbon being emitted from all sources.

The bill’s 981 pages are jam-packed with regulatory mandates and leave plenty of opportunity for legislators to blame regulators for both the failure to achieve the act’s goal and the burdens of trying to do so. Besides, most of the legislators who would vote for such a bill will be out of office long before 2050.

A carbon tax could be passed decades before 2050. Whether it will be set high enough to do the job remains to be seen, but we will know exactly which elected officials to blame or applaud for their attempt to tackle climate change. Government will be transparent, as it and a clean atmosphere should be.

What’s at stake in the choice between taxing carbon and regulating it is not how much we will cut emissions – Congress can set the tax, and thus the reduction in emissions, as high as it wishes. What is at stake is whether the choice of how to cut carbon will be made by the businesses and people who emit it or by regulators, legislators, and lawyers and lobbyists working for business and advocacy organizations.

Read more:
Janet Yellen confirmed as first female US Treasury secretary – here’s what she can do about climate change

With the right guiding principles, carbon taxes can work

This article is republished from The Conversation, a nonprofit news site dedicated to sharing ideas from academic experts. It was written by: David Schoenbrod, New York Law School and Richard Schmalensee, MIT Sloan School of Management.

David Schoenbrod is a senior fellow of the Niskanen Center and has written extensively about the regulatory process.

Richard Schmalensee does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

Oil Sands Give OPEC a Boost With Half-Million-Barrel Output Cut

Robert Tuttle

Fri, March 5, 2021

(Bloomberg) -- Major oil sands producers in Western Canada will idle almost half a million barrels a day of production next month, helping tighten global supplies as oil prices surge.

Canadian Natural Resources Ltd.’s plans to conduct 30 days of maintenance at its Horizon oil sands upgrader in April will curtail roughly 250,000 barrels a day of light synthetic crude output, company President Tim McKay said in an interview Thursday. Work on the Horizon upgrader coincides with maintenance at other cites.

Suncor Energy Inc. plans a major overhaul of its U2 crude upgrader, cutting output by 130,000 barrels a day over the entire second quarter. Syncrude Canada Ltd. will curb 70,000 barrels a day during the quarter because of maintenance in a unit.

The supply cuts out of Northern Alberta, following a surprise OPEC+ decision to not increase output next month, could add more support to the recent rally in crude prices. OPEC+ had been debating whether to restore as much as 1.5 million barrels a day of output in April but decided to wait.

The Saudi-led alliance closely monitors other major oil producers as it seeks to manage the entire global market, and surging production in North America was its biggest headache in recent years -- especially from U.S. shale but also from Canada.

“The U.S., Saudi Arabia, Russia, Canada, Brazil and other well endowed countries with hydrocarbon reserves -- we need to work with each other, collaboratively,” Saudi Energy Minister Prince Abdulaziz bin Salman said after the group’s meeting on Thursday.

Read More: Saudis Bet ‘Drill, Baby, Drill’ Is Over in Push for Pricier Oil

Canada’s contribution to balancing the market with less production, much like slowing output in the U.S., is not a deliberate market-management strategy but significant nonetheless.

Even though the output cuts are short-term, the battered oil-sands industry shouldn’t be a concern for the Saudis in the long run either, judging from McKay’s outlook for the industry.

“I can’t see much growth in the oil sands happening because there is going to be less demand in the future,” he said. “The first step is we have to get our carbon footprint down.”

After years of rising output turned Canada into the world’s fourth-largest crude producer, expansion projects have nearly halted on the heels of two market crashes since 2014.

Adding to its struggles, Canada’s oil industry is being shunned by some investors such as Norway’s $1.3 trillion wealth fund amid concern that the higher carbon emissions associated with oil sands extraction will worsen climate change. These forces help make future growth in the oil sands unlikely, said McKay, whose company is among the largest producers in the country.

Oil sands upgraders turn the heavy bitumen produced in oil sands mines into light synthetic crude that’s similar to benchmarks West Texas Intermediate and Brent. Syncrude Sweet Premium for April gained 60 cents on Thursday to $1.50 a barrel premium to WTI, the strongest price since May, NE2 Group data show.

©2021 Bloomberg L.P.

Saudis Bet ‘Drill, Baby, Drill’ Over in Push for Pricier Oil






Javier Blas, Grant Smith and Salma El Wardany
Fri, March 5, 2021,

(Bloomberg) -- Saudi Arabia just made a high-stakes wager that the glory days of U.S. shale, which transformed the global energy map in the last decade, are never coming back.

By keeping a tight grip on supply at Thursday’s meeting of the OPEC+ alliance of oil producers, Saudi Energy Minister Prince Abdulaziz bin Salman showed he’s focused on boosting prices -- and confident that this time around it won’t encourage American producers to surge back and steal market share.

“‘Drill, baby, drill’ is gone for ever,” said Prince Abdulaziz, who’s orchestrated the revival of the oil market after last year’s catastrophic collapse.


His swagger comes mixed with a good dose of diplomatic tension: Russia, Saudi Arabia’s most important OPEC+ partner, has tried to convince Riyadh for several months to increase output, fearing that rising oil prices would ultimately awaken rival shale producers. The Saudis are certain the American industry has reformed itself.

If the prince is right, OPEC+ will be able to both push prices higher now and recover market share later without worrying that rivals in Texas, Oklahoma and North Dakota will flood the market. But if Riyadh has miscalculated -- and it’s got shale wrong before -- the danger will be lower prices and production down the line.

The Saudis have so far convinced their allies the strategy will work. After a quick virtual meeting on Thursday, OPEC+ agreed to prolong its production cuts, defying expectations of an output hike. Russia, however, secured an exemption for itself and Kazakhstan, and will increase output marginally in April.

Brent crude jumped 5% to a one-year high of almost $68 a barrel after the decision. Front-month futures extended gains on Friday and a raft of banks updated their price forecasts, including Goldman Sachs Group Inc., which increased its estimates by $5 -- to $75 next quarter and $80 in the following three months.

“This is an incredibly bold move on the part of OPEC+ to extend the oil price rally,” said KPMG Global Energy Sector Leader Regina Mayor.

If history is a guide, however, trouble may be brewing. The OPEC+ coalition, which groups Saudi Arabia, Russia and almost two dozen other oil producers, has in the past underestimated its American rivals, who year after year produced more than most expected. From a low point of less than 7 million barrels a day in 2007, the U.S.’s total petroleum output more than doubled to hit an all-time high of almost 18 million barrels a day by early 2020, forcing the cartel to cede market share.

Risky Move

“This is a risky take,” Amrita Sen, chief oil analyst at consultant Energy Aspects Ltd., said Friday in a Bloomberg Television interview. While U.S. oil companies probably won’t raise output this year, in 2022 “there’s nothing really stopping them, especially the small and mid-cap producers.”

Sen sees prices hitting $70 a barrel as soon as next week, $80 by the end of the year and a possible climb to $100 in 2022.

For now, U.S. total oil output remains constrained, hovering at 16 million barrels due to the impact of last year’s slump, which briefly saw benchmark prices trade below zero.

Under pressure from shareholders, shale producers have promised restraint, putting profits before the growth they relentlessly pursued during the boom years. Although drilling has risen from the lows of 2020, it’s well below previous levels. In addition, President Joe Biden is trying to temper the worst excesses of the industry, including the indiscriminate natural gas flaring that’s a byproduct of shale’s success.

Under a different oil minister, Saudi Arabia attacked shale producers in 2014 and 2015, flooding the market and forcing prices lower -- a strategy that ultimately failed. Prince Abdulaziz is doing the opposite, because oil higher prices will eventually benefit shale producers. Yet, he’s convinced the industry won’t repeat its past excesses.

“Shale companies are now more focused on dividends,” Prince Abdulaziz told Bloomberg News in an interview after the OPEC+ meeting, saying that the kingdom wished the American industry well. “We’ve never had any issue with shale oil. It’s the shale companies which are themselves changing. They have had their fair share of adventure and now they are listening to the call of their shareholders.”

Shale executives agree with him -- at least for now.

“A couple years ago it was ‘drill, baby, drill,’” John Hess, the head of Hess Corp., said in Houston earlier this week. “Now, it’s ‘show me the money.’”

Ryan Lance, the chief executive officer of ConocoPhillips, echoed the sentiment: “I hope there’s discipline in the system. The worst thing that can happen right now is U.S. producers start growing rapidly again.”

As the industry cuts spending to pay shareholders fatter dividends, there’s not much left to finance increased production. Even Big Oil is scaling down its ambitions in shale. Exxon Mobil Corp. had been running 55 oil rigs in the Permian basin that straddles West Texas and southeast New Mexico, part of an effort to boost output to 1 million barrels a day by 2025. After tightening its belt, the U.S. oil giant is running just 10 rigs, and has cut its 2025 output target by nearly a third to 700,000 barrels a day.

Yet, there are also signs that higher oil prices may ultimately reactivate the U.S. shale industry. With benchmark West Texas Intermediate now changing hands above $60 a barrel, some companies believe they may be able to both grow and keep shareholders happy. EOG Resources Inc., the largest producer in the Permian, has announced a big spending increase for next year. And others are following suit.

But the reaction of the stock market made Prince Abdulaziz’s case: investors punished EOG for spending more on drilling, marking down its shares relative to more disciplined rivals.

(Updates with comments from Energy Aspects in 10th, 11th paragraphs.)

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©2021 Bloomberg L.P.

Alaska labor commissioner cancels proposed $450,000 fine for seafood processor over health and safety problems

James Brooks, Anchorage Daily News, Alaska
Fri, March 5, 2021

Mar. 5—The commissioner of the Alaska Department of Labor personally intervened earlier this year to reject a proposed $450,000 fine against Copper River Seafoods despite an investigation that concluded the company disregarded health and safety regulations.

The investigation was prompted by a COVID-19 outbreak last year that sickened more than three-quarters of the workers at an Anchorage processing plant and sent two people to the hospital. Investigators said Copper River acted negligently with its COVID-19 response and, beyond that issue, accused it of failing to fix known safety problems, including one that caused a man in Naknek to lose his arm during a gruesome conveyor belt accident in 2018.

In a memo issued Jan. 18 and first published by KTOO-FM public media, Commissioner Tamika Ledbetter said she was "denying the request to move forward" with the suggested fines because of concerns "with the way in which the citations were acquired and presented for my review" and problems with the documentation behind some allegations.

Joseph Knowles, director of the Labor Department's standards and safety division, said there were "missteps" in the way his division handled the complaint and that it "fumbled this administratively."

In a written statement Thursday afternoon, the company said, "Press accounts have incorrectly made the inference that CRS did something wrong and escaped responsibility corruptly. This is entirely false."

State law says an employer can only be cited within 180 days of a violation, and Ledbetter's decision came before an early-February deadline.

When asked why Ledbetter acted earlier than the deadline, Deputy Commissioner Cathy Munoz answered on her behalf in an email, saying, "by mid-January the Commissioner had the information needed to make a determination."

Critics said that if there were problems on the administrative end, she had time to work those out.

John Stallone was chief of enforcement for Alaska's Division of Occupational Safety and Health until 2006. Now retired, he said Ledbetter's intervention is extraordinary. In his decade of work with the department, he never saw a commissioner completely nullify the work of investigators.

"She could have said, 'OK, I think the COVID (fine) is a little high. Let's reduce it.' ... She could have done that with just a stroke of the pen. She didn't do that. She sat on it for 180 days, so the entire investigation went out the window. They don't have to fix one damn thing now," he said, referring to Copper River Seafoods.

Some current members of the Department of Labor have accused the commissioner of wrongdoing and have filed a whistleblower complaint with the federal Occupational Health and Safety Administration.

A preliminary response last month from OSHA said "there is insufficient evidence to conclude that the commissioner or deputy commissioner engaged in any wrongful act," but the federal agency will examine whether the state followed policies and procedures during the Copper River Seafoods investigation and a similar case involving a different seafood-processing company in Juneau.

Rep. Zack Fields, D-Anchorage, said he plans to hold a legislative hearing on the issue next week.

"I don't know why she did this thing, which is unprecedented and completely inappropriate, and frankly, dangerous," he said.

In its statement, Copper River Seafoods suggested that investigators may have provided documents to members of the media and the Legislature because of "disappointment or disagreement" with the decision to not issue a fine.

The state's investigation began in late July, after the Department of Health and Social Services asked the Department of Labor to investigate conditions at Copper River Seafoods' Anchorage plant. It was the first time health officials had made that kind of request because of COVID-19.

According to a Nov. 12 memo, health officials were investigating a COVID-19 outbreak that went on to infect 77% of the plant's employees. After interviewing employees and inspecting the plant on Aug. 7, Department of Labor investigators concluded "(Copper River Seafoods) has repeatedly displayed a plain indifference for the health and safety of its own employees" by failing to provide hand sanitizer, failing to keep employees adequately separated and failing to set up physical barriers between employees.

When employees became ill, Copper River management "dismissed this as being 'a normal type of sickness' at the time of the outbreak within the plant," investigators wrote. When the plant reopened after a two-week closure, "(regulators) documented with photographs, the same deficient workplace protections that contributed to the initial outbreak."

According to a case file obtained through a public records request, investigators also found "serious" problems with electrical safety, sprinkler systems, forklifts and procedures used to lock down equipment for maintenance. Copper River had been warned about so-called "lockout/tagout" issues before, after a worker's arm became caught in a conveyor belt at a plant in 2018 and had to be amputated.

"CRS was not ever cited, and so was unable to contest charges that had not been made," the company said in its written statement. "No government agency is able to assess a fine without a hearing or an opportunity to be heard and present evidence."

According to case documents, company employees signed a document acknowledging inspectors' findings, but regulations allow a challenge period only after a company is actually cited and presented with proposed fines. That never happened in this case because Ledbetter rejected the citations before they were issued.

Department of Labor investigators advanced their allegations in two batches: One was related to COVID-19 issues, and the other was related to safety issues. The COVID-19 allegations were sent to Ledbetter for review on Dec. 29 because they represented a "novel enforcement issue," according to the field operations manual used by health and safety inspectors.

It was the first time the state had considered fining a company for COVID-19 safety issues. Because the Department of Labor had no specific written standards for COVID-19 safety, investigators based their violations on a federal law that says companies have a "general duty" to keep employees safe from harm and cited recommended best practices.

The safety-related complaints not related to COVID-19 weren't sent to Ledbetter until "on or about January 12," Knowles said, because of a critical mistake. Officials had believed they didn't require commissioner approval because they were more typical of the department's work and the recommended fines were below a $250,000 benchmark. But because both the safety inspection and the COVID-19 inspection took place at the same time, the two batches of fines should have been considered together, not separately.

"We failed internally to follow our own procedures and submit to her both inspections in a single memorandum," Knowles said.

Ledbetter cited that mistake as part of the reason for rejecting the proposed fines.

"Well, shame on them. That was their mess-up," said Stallone, the retired safety expert. "But still, there was plenty of time."

He and several current employees assert that the commissioner had weeks to resolve that problem before the statute of limitations expired. Those employees declined to speak on the record, citing fear of retaliation, but speculated in a whistleblower letter to OSHA that Copper River Seafoods could have received special treatment from the commissioner.

"We are now in a situation where we have observed and documented hazards to employees, but we cannot require the employer to abate these hazards," the letter stated in part. "In this way, the commissioner is knowingly allowing employees to be exposed to workplace hazards and preventing them from being corrected."

In its statement, Copper River Seafoods rejected the whistleblowers' allegations: " Contrary to inferences made in these reports, CRS did not interfere or contact the Department of Labor nor any other member of the administration whatsoever in any attempt to influence its decisions. Any statement that CRS had anything to do with Department of Labor decisions made in this case is false."

The issue may extend beyond Copper River Seafoods.

Soon after investigating the Anchorage plant, Department of Labor officials performed similar inspections at an Alaska Glacier Seafoods Processing plant in Juneau. That case has not yet been closed, and Knowles declined to discuss it, citing ongoing work. But according to a memo dated Feb. 18, Ledbetter is preparing to dismiss fines related to COVID-19 safety failures at that plant as well.

Correction: Earlier versions of the story incorrectly described the nature of the recommended action against the company. The fines were proposed, not levied. An earlier version also incorrectly said what year John Stallone retired. He retired in 2006, not 2009.

INSIGHT-EV rollout will require huge investments in strained U.S. power grids

Nichola Groom and Tina Bellon
Fri, March 5, 2021, 

March 5 (Reuters) - During several days of brutal cold in Texas, the city of Austin saw its fleet of 12 new electric buses rendered inoperative by a statewide power outage. That problem will be magnified next year, when officials plan to start purchasing electric-powered vehicles exclusively.

The city's transit agency has budgeted $650 million over 20 years for electric buses and a charging facility for 187 such vehicles. But officials are still trying to solve the dilemma of power interruptions like the Texas freeze.

"Redundancy and resiliency when it comes to power is something we have long understood will be an issue," said Capitol Metro spokeswoman Jenna Maxfield.

Austin's predicament highlights the challenges facing governments, utilities and auto manufacturers as they respond to climate change. More electric cars will require both charging infrastructure and much greater electric-grid capacity. Utilities and power generators will have to invest billions of dollars creating that additional capacity while also facing the challenge of replacing fossil fuels with renewable energy sources.

Extreme weather events add additional layers of difficulty.

"Reliability keeps you awake," California Energy Commission member Siva Gunda said in an interview.

Rolling blackouts during a California heat wave last year prompted the state to direct its utilities to procure emergency generating capacity for this summer and to reform its planning for reserve power.

The state plans an aggressive phase-out of sales of gas- and diesel-powered cars and trucks by 2035 - which, if achieved, would require vast increases in electric grid capacity. (For a graphic on the extra power that will be needed for electric cars, click https://tmsnrt.rs/3rhyX4S )

The power and transport sectors combined make up more than half of U.S. greenhouse gas emissions. Their simultaneous greening is considered critical for the United States - the world's second-largest emitter behind China - to meet its obligations under an international accord to address global warming. (For a graphic on the energy sources that fuel U.S. transportation now, click https://tmsnrt.rs/387haFR )

The goal is to power electric cars with renewable energy rather than the coal and natural gas that currently dominate the U.S. power supply. To realize that vision, electricity from intermittent sources like wind and solar will need to be stored, probably through battery technology, so that cars can charge overnight or at other times when supply outstrips demand.

DOUBLING POWER CAPACITY

A model utility with two to three million customers would need to invest between $1,700 and $5,800 in grid upgrades per EV through 2030, according to Boston Consulting Group. Assuming 40 million EVs on the road, that investment could reach $200 billion.

So far, investor-owned companies have plans approved for just $2.6 billion in charging programs and projects, according to trade group Edison Electric Institute.

"The electrification of the transportation sector will catch most utilities a little bit off guard," said Ben Kroposki, director of the Power Systems Engineering Center at the National Renewable Energy Laboratory (NREL).

The organization estimates that, by 2050, the electrification of transportation and other sectors will require a doubling of U.S. generation capacity.

If not managed carefully, the needed investments could saddle consumers with higher energy bills, according to a report last month by California’s utility regulator. Another challenge: lower-income customers often can't afford to make the upfront investment in electric cars, home batteries and rooftop solar systems that could save them money in the long term.

'CHICKEN AND EGG' PROBLEMS

Utilities are embracing EV sales growth as both a promising new source of revenue and an opportunity to use excess wind and solar power generated at very windy or sunny times when supply exceeds demand.

Investments in both the grid and charging infrastructure that are recovered from ratepayers could add between $3 billion and $10 billion in cumulative cash flow to the average utility through 2030, according to Boston Consulting Group. The forecast also includes potential revenues from new products outside of utilities' regulated businesses, such as customer fleet routing or charging station maintenance.

The revenue opportunity is still nascent, however, with EVs making up less than 2% of all vehicles registered in the United States. And utilities must invest in infrastructure now for consumers to feel secure in their purchase of an EV, said Emily Fisher, general counsel of utility trade group Edison Electric Institute.

"There is definitely a chicken-and-egg situation with charging infrastructure," she said.

AUTOMAKERS BET BIG ON EVs

Major U.S. automakers General Motors and Ford have announced large investments in EV development to keep pace with electric-car pioneer Tesla Inc and to prepare for the prospect of tougher emissions regulations. EV share could grow to 15% by 2030, according to U.S. Department of Energy forecasts.

The electricity to power all those cars is expected to come primarily from renewable energy sources and natural gas, according to NREL. Even if natural gas generation increases to support electrified transportation, overall emissions are projected to decline, the organization said.

Large new investments may pose difficulties for utilities already experiencing weather-related problems. In Texas, many of the companies that would be making those investments face a financial crisis stemming from last month’s cold snap. Utilities and power marketers face billions of dollars in blackout-related charges, and several have filed for bankruptcy.

CHARGING UP

Daimler Trucks, the world's biggest maker of heavy-duty haulers, plans to sell electric vehicles in Europe, North America and Japan by next year. But the company is grappling with how to charge what will one day become hundreds of thousands of battery-powered trucks, said Daimler Trucks chairman Martin Daum.

The need for massive investments in grid infrastructure and charging stations "cannot be underestimated," Daum said.

Ford Chief Executive Jim Farley last week called on U.S. government leaders to support EV sales with favorable regulation and subsidies for the production of batteries and charging infrastructure.

But Robert Barrosa, senior director at Volkswagen AG's Electrify America, which is building out fast-charging stations throughout the nation, said the gradual pace of EV adoption will allow utilities to adapt.

"We're not in a doom-and-gloom situation," Barrosa said. "We're not going to 80% battery electric sales overnight...it will be a natural transition."

Barrosa said U.S. energy consumption decreases over the last 20 years, due to efficiency gains in appliances and the transportation sector, mean that the U.S. power system has enough established capacity to support EV growth without the immediate need for big investments. (For a graphic on U.S. power generation and consumption, click https://tmsnrt.rs/3e5f6SH) Utility Xcel Energy said EV adoption would likely not require capacity additions until after 2030, and that near-term investments would mainly be in distribution systems. The company is planning to accommodate 1.5 million electric vehicles in its Midwest and Western service territories by 2030, about 30 times more than its current capability.

The utility in December received approval to spend $110 million on electric vehicle charging infrastructure in Colorado, which passed a law in 2019 requiring utilities to develop plans for widespread transportation electrification. The plan is expected to add 65 cents a month to residential customer bills.

Electric vehicles - especially commercial ones with large batteries - can help stabilize the grid in the long run by feeding power back into the system during times of peak demand, using chargers that allow electricity to flow in both directions. Passenger cars that sit idle most of the day could one day earn money by feeding power back into the grid with the help of bi-directional chargers, utilities predict.

During the Texas outages, some Twitter users said they used their electric vehicles to power their homes. But wider applications of such vehicle-to-grid technology would require larger infrastructure changes and utility involvement.

"Planning is going to be more sophisticated," said Ryan Popple, co-founder of Proterra, which produced some of Austin's electric buses. "And as vehicle-to-grid becomes more common with our commercial fleets, it's actually going to make the overall technology even more attractive."

(Reporting by Nichola Groom and Tina Bellon; editing by David Gaffen and Brian Thevenot)

Big Trade in Oshkosh Shares Before Postal Award Spurs Questions

Ari Natter, Todd Shields and Ben Bain
Fri, March 5, 2021


Big Trade in Oshkosh Shares Before Postal Award Spurs Questions

(Bloomberg) -- A lawmaker is calling for an investigation of a $54.2 million, after-hours purchase of Oshkosh Corp. stock the day before the company won a blockbuster contract to build trucks for the U.S. Postal Service.

The transaction of 524,400 shares is bigger than Oshkosh trading volume for some entire days. The block itself amounted to almost 1% of the company’s publicly available shares and 74% of the firm’s 20-day average volume, according to data compiled by Bloomberg.

Oshkosh shares surged as much as 16% the next day, Feb. 23, and have risen further since. The holdings would be worth $59.6 million at Friday’s closing price of $113.65, or more than $5 million above the purchase price. The parties involved in the trade couldn’t be determined.


“It definitely stinks and needs to be looked into at the highest levels,” Representative Tim Ryan, an Ohio Democrat who is fighting the award to Oshkosh, said in an interview. “If that is not suspicious, I don’t know what is. Somebody clearly knew something.”

Ryan said he will ask the Securities and Exchange Commission to investigate. Representatives of the agency didn’t immediately respond to an emailed request for comment after normal business hours.

The Postal Service awarded the Wisconsin-based maker of military trucks a 10-year contract for as many as 165,000 vehicles worth as much as $6 billion.

Ryan is backing the losing bid of Workhorse Group Inc. which has a 10% stake in Lordstown Motors Corp., which makes electric vehicles at a facility in Ryan’s congressional district.

An Oshkosh representative didn’t respond to a voicemail and and email seeking comment.

The move to award Oshkosh the contract stunned Wall Street analysts who had predicted Workhorse’s proposal to make electric trucks would win at least some of the order. Workhorse is considering challenging the award.

Trades outside of normal market hours can have a significant impact on share prices because market activity is thinner.

Ryan, who said he is drafting a letter to the SEC, has joined with Ohio Democrats Marcy Kaptur and Senator Sherrod Brown in calling for the Biden administration to halt and review the Postal Service award to Oshkosh.

©2021 Bloomberg L.P.

Texas Bill Would Require Power Plants to Prepare for Cold

Mark Chediak and Naureen S. Malik
Fri, March 5, 2021, 

(Bloomberg) -- Texas state lawmakers introduced a series of bills designed to address last month’s energy crisis, including one that would require power plants to weatherize and another that would block retailers from exposing consumers to volatile wholesale electricity prices.

Owners of power generators, utilities and cooperatives would be required to make sure their facilities can operate during periods of sub-freezing temperatures and extreme heat, according to a bill filed Friday by State House Representative Chris Paddie.

More than 4 million Texans lost power for days last month during a severe winter storm that knocked out nearly half of the state’s generation capacity. A number of power plants failed during the event because of freezing instruments and valves, the state grid operator said. While the state put in place guidelines for power plants to weatherize after a winter storm in 2011, operators aren’t mandated to follow them.


Meanwhile, State House Representative Ana Hernandez introduced a bill that would ban any retail power provider from charging households and businesses rates that are tied to the wholesale market price for electricity. The measure comes after customers of retail provider Griddy Energy LLC saw their bills skyrocket to thousands of dollars during the extreme cold when prices on the grid surged to the $9,000 a megawatt-hour price cap.

Griddy, which has been found in default by the state’s power grid operator, charged customers a $9.99 monthly fee and then whatever the wholesale index price was for power.

Paddie also introduced a measure that would require all board members of the Electric Reliability Council of Texas, or Ercot, to be Texas residents after several out-of-state independent directors stepped down last week because of controversy over their residency.

Of those independent directors, three will be appointed by the governor, including one who will represent residential consumer interests, as well as one each by the lieutenant governor and speaker of the House.

©2021 Bloomberg L.P.