Endangered Lizard Threatens Oil and Gas Development in the Permian Basin

IT'S THE OTHER WAY AROUND
 Irina Slav - May 20, 2024


• 
  
• The U.S. Fish and Wildlife Service listed the dunes sagebrush lizard as endangered, threatening oil and gas development in the Permian Basin.
• 
  
• The oil and gas industry argues they've made conservation efforts and the lizard's habitat is minimal in the basin.
• 
  
• Environmentalists see the listing as a win but worry about delayed protection and future development restrictions.

A rare lizard that lives in Texas and New Mexico has become the latest potential threat to oil and gas production growth in the Permian.

The dunes sagebrush lizard was granted endangered status by the U.S. Fish and Wildlife Service last week, prompting an outcry from the industry, which warned the change in the lizard's status would be detrimental to its activity in the most prolific shale play in the country.

According to the Fish and Wildlife Service, the dunes sagebrush lizard occurs in about 4% of the lands that comprise the Permian Basin. The service also acknowledged that many oil and gas operators are already taking part in voluntary conservation efforts to preserve the species' habitat. Yet now, these appear to have been deemed insufficient, prompting a sharp response from the industry.

"We are extremely disappointed in the U.S. Fish and Wildlife Service (Service) decision to again list the Dunes Sagebrush Lizard as Endangered in the Permian Basin," the president of the Permian Basin Petroleum Association told energy analyst and consultant David Blackmon for a story published in Forbes.

"In spite of the successful conservation efforts on the ground for over a decade and that less than two years ago approving a conservation plan for the Lizard that all parties agreed would conserve habitat," he added.

The president of the U.S. Oil and Gas Association was even blunter, telling Blackmon that "Anti-energy activists have been desperate to shut down drilling in the Permian Basin for years," despite voluntary efforts and investments on the part of oil and gas operators in the area to save the rare species.

"Texas oil and gas operators spent tens of millions of dollars in voluntary conservation efforts to protect the dunes sagebrush lizard. Environmental groups meanwhile added nothing to the conservation efforts but petitions and lawsuits," Tim Stewart said.

At first glance, the reaction of the oil and gas industry may seem excessive in the context of how little of the Permian the dunes sagebrush lizard actually inhabits. But this perception may be wrong, with the Fish and Wildlife Service noting that oil and gas activity is the prime suspect for the species' "functional extinction" across almost half of its habitat.

There is also a recent example of how environmentalists can interfere with the energy industry's activities: the suspension of new liquefied natural gas export terminals that President Biden signed earlier this year was the direct result of activist pressure.

"Even if there were no further expansion of the oil and gas or sand mining industry, the existing footprint of these operations will continue to negatively affect the dunes sagebrush lizard into the future," the Fish and Wildlife Service said in its announcement and it is little wonder that the industry took this as ominous.

Even more ominously for oil and gas operators, the USFWS may yet add to its decision a designation of critical habitat for the dunes sagebrush lizard. That would be a move that, Blackmon warns, "could become extremely limiting to any future development of the massive oil and natural gas resources known to exist beneath the region."

While the energy industry fumes at the decision, environmentalists were understandably happy. "The dunes sagebrush lizard spent far too long languishing in a Pandora's box of political and administrative back and forth even as its population was in free-fall towards extinction," a regional director for Defenders of Wildlife said, as quoted by the AP.

"I'm relieved the precious dunes sagebrush lizard is finally on the path to protection," Michael Robinson, senior conservation advocate at the Center for Biological Diversity, said, as quoted by Forbes. "I'm saddened and disgusted, however, that the Service allowed the lizard's habitat to be destroyed for decades."

What follows next would become clear in two months. One thing is for sure, however. Activists will likely become bolder like they did after the LNG approval suspension. They have now focused their efforts on making sure the Federal Energy Regulatory Commission enforces new air pollution rules approved by the EPA earlier this year.

According to these rules, the maximum level of fine particulate matter in the air is now 9 micrograms per cubic meter, down from 12 micrograms previously—and FERC already tapped one LNG producer as its first target. Venture Global was recently served with a request to provide proof its particulate matter emissions were below 9 micrograms per cubic meter.

"FERC is going to have to take this issue seriously and is going to have to analyze whether these projects are in the public interest given this new reality," a Sierra Club attorney told the Financial Times.

"We plan to hold FERC's feet to the fire to ensure that it follows through and satisfies its legal obligations," Tom Gosselin also said.

One question that might be worth asking is when conservationists would become this vocal about the fate of bats and birds of prey that are being killed by onshore wind turbines and the whale deaths linked to offshore wind development.

By Irina Slav for Oilprice.com

Dunes sagebrush lizard now an endangered species

Adrian Hedden, Carlsbad Current-Argus
Thu, May 23, 2024

A lizard native to southeast New Mexico’s Permian Basin was afforded the highest level of federal protections aimed at preventing its extinction, triggering concerns that landowners and industries in the area could see added restrictions on access to the land.

The dunes sagebrush lizard was listed as endangered under the federal Endangered Species Act, per a decision issued May 17 by the U.S. Fish and Wildlife Service. An endangered listing means the agency believed extinction of the species was imminent, and requires the federal government establish and recovery plan and potential “critical habitat” where the lizard would be recovered.

This could restrict some uses of the land, namely oil and gas drilling and farming and ranching, and the move drew fears that the economic drivers of the region could be stymied for environmental conservation.

Emily Wirth, executive director of the Center for Excellence (CEHMM) said voluntary conservation practices intended to protect the lizard were underway by industry since 2008. She said candidate conservation agreements (CCAs) facilitated by CEHMM saw 3.1 million acres in New Mexico enrolled in the agreements, including 90 oil and gas companies.

Via CEHMM, enrollees moved 650 oil wells out of lizard habitat, Wirth said, aside from other wells operators moved on their own.

The dunes sagebrush lizard is a small, light brown phrynosomatid lizard (family Phrynosomatidae, genus Sceloporus). Shinnery oaks provide food, shade and a breeding ground for the Dunes sagebrush Lizard.

She said it was “disappointing” that these efforts did not prevent a listing which Wirth worried could negatively impact land access.

“I think it’s very disappointing given the conservation efforts that have been ongoing since 2008,” she said. “The biggest thing we can do for the lizard is avoidance of habitat. “The industry has proactively been doing that on their own. It’s really disappointing the conservation efforts were not taken into account.”

With said landowners and operators can still enroll in CEHMM’s contracts ahead of the listing taking effect about 30 days after the announcement, and those enrolled will face no additional restrictions.

She pointed to a previous listing of the lizard in 2012, which was overturned, Wirth said, due to the ongoing conservation efforts taken by industry.

“Nothing has changed. To me, it doesn’t really make sense for the current listing in New Mexico specifically,” Wirth said. “We’re keeping industry on the ground working in the face of a listing. They have protections. Our agreements are the perfect balance by allowing conservation and economic development on the land.”

More: White nose syndrome kills millions of bats each year. Now it's in Lincoln National Forest.

Lizard protection opposed by oil and gas industry

The decision to list the lizard came after a 90-day public comment period, and a “rigorous review” of the scientific and commercial information, read the U.S. Fish and Wildlife Service announcement. The agency said critical habitat was expected to be designated, but not at the time of the listing decision.

The lizard is found only in the shinnery oak and sand dune ecosystems in southeast New Mexico and West Texas, occurring in about 4% of the 86,000 square miles that make up the Permian Basin, read the agency’s report. Key threats to the species were oil and gas development, mining and climate change, the report read.

The Fish and Wildlife Service said about 85% of the lizard’s range are covered by voluntary enrollments in programs like CEHMM’s, noting horizontal drilling techniques can often target underground oil reserves without locating wells within lizard habitat.

Amy Lueders, southwest regional director with the Services said the federal government expected to continue working with industry and landowners to conserve the species and restore its population.

“The Endangered Species Act is an important tool in preventing the extinction of imperiled species like the dunes sagebrush lizard,” she said. “The Service will continue working collaboratively with Tribes, industry, stakeholders, and private landowners while ensuring protections for the lizard and its habitat.”

Listing the dunes sagebrush lizard as endangered was celebrated by conservation groups, arguing stronger efforts were needed to prevent extinction. Michael Robinson with the Center for Biological Diversity in Silver City said the listing decision was delayed for decades but would help save the lizard.

“After four decades of the government sitting on its hands, these lizards are finally protected from oil spills and giant machines scooping up sand,” Robinson said. “Designating critical habitat will close any loopholes that might still allow the destruction of the beautiful oak-dotted dunes where these animals live.”

The listing was opposed by oil and gas industry leaders in New Mexico. In comments submitted Oct. 2, 2023 the Independent Petroleum Association of New Mexico (IPANM) argued oil and gas was produced “responsibly” in dunes sagebrush lizard habitat, pointing to the CCAs the trade group’s member companies already participated in.

IPANM was joined by national fossil fuel groups the American Petroleum Institute and Western Energy Alliance in submitting comments against the listing when it was proposed last year.

IPANM Executive Director Jim Winchester wrote that the Fish and Wildlife Service should withdraw the listing decision as he said it would increase costs for operators, delay projects and create regulatory uncertainty for company’s operating in New Mexico.

“An endangered listing will have a significant impact on the IPANM members business planning and operations by increasing operational costs, delaying project timeframes, and limiting or precluding operations in certain areas, he wrote.

“In particular, the proposed rule makes arbitrary conclusions based on use of inaccurate habitat mapping, and significantly outdated forecasts on energy development based upon development practices no longer employed in west Texas and eastern New Mexico.”

Adrian Hedden can be reached at achedden@currentargus.com or @AdrianHedden on the social media platform X.

This article originally appeared on Carlsbad Current-Argus: Oil and gas against dunes sagebrush lizard protection in New Mexico

Texas lizard added to endangered species list over the oil and gas industry’s objections

The dunes sagebrush lizard lives in the same West Texas land that supports the state’s biggest oil and gas fields, and industry leaders say the new designation will hurt drilling and production.

BY ALEJANDRA MARTINEZ AND CARLOS NOGUERAS RAMOS
MAY 22, 2024

The dunes sagebrush lizard, which lives in the oil-rich Permian Basin, has been listed as endangered after a decades-long effort. Credit: Ryan Hagerty/USFWS

\
ODESSA — The dunes sagebrush lizard burrows its coarse, spiny body to cool down and sometimes conserve heat way deep beneath the sand dunes in the Mescalero-Monahans ecosystem 30 miles west of this West Texas city.

But the 2.5-inch-long lizard’s home — sandy mounds studded with low-lying shinnery oak trees — is being disrupted as the oil and gas industry expands, posing a grave threat to its survival, federal regulators and scientists said.

After four decades of warnings by biologists about the existential threat that oil and gas exploration and development poses on the reptile’s habitat, the U.S. Fish and Wildlife Service declared the rare lizard endangered last week.

Industry representatives have for years fought against the designation saying it would scare off companies interested in drilling inside the nation’s most lucrative oil and natural gas basin.

The listing requires oil and gas companies to avoid operating in areas the lizard inhabits, but the Fish and Wildlife Service has yet to determine where those areas are because it is still gathering information, according to Beth Ullenberg, a spokesperson for the Service.

Should the energy industry encroach on the lizard’s habitat, they could incur fines up to $50,000 and prison time, depending on the violation. However, Ullenberg said the agency would work with companies to avoid penalties.

In a statement, the Fish and Wildlife Service said oil and gas operators can use horizontal drilling to reach oil and gas deposits without disrupting the lizard’s habitat.

The lizard only lives in about 4% of the 86,000-square-mile Permian Basin, which spans across Texas and New Mexico, according to the Fish and Wildlife Service. In Texas, the lizard has been found in Andrews, Crane, Gaines, Ward and Winkler counties.

Lee Fitzgerald, a professor at Texas A&M University who has studied the lizard since 1994, said that drilling a single oil well does not impact the lizard’s survival, but the fragmentation of its habitat by the oil and gas industry’s infrastructure — including the roads leading to drill sites — isolates the reptiles and prevents them from finding mates beyond those already living close by.

Fitzgerald compared the oil and gas infrastructure to urban sprawl.

“If you build one house, it's not a problem,” he said. “But you build 1,000 houses, and every one of them has a driveway, and every one of them has a street, connecting it to more houses then you get urban sprawl. And if you do that in the shinnery oak sand dunes then the lizards disappear.”

There are few remaining lizards and they are hard to find, making it difficult to count them accurately. According to a 2023 analysis by the Fish and Wildlife Service, the lizards are “functionally extinct” across 47% of its range.

Fitzgerald said the population estimates of the lizard don’t matter.

“The lizard is just one piece of the puzzle that is disappearing,” he said. “It's out there, it's alive. We should be proud of it, that we have it, and it's so special. So, it's more about the non-monetary values of the lizard as it is part of the big picture of biodiversity.”
Listing could cause disruption in oil production

The decision to categorize the lizard as a species in danger of extinction was unwelcome news for oil and gas industry leaders, who said federal regulators provided insufficient guidance for operators to evaluate how to decide where to build service roads and where to drill. Members of the industry also said they’re skeptical of the science supporting the designation.

“I think that the lizard is not in danger of extinction,” said Ben Shepperd, president of the Permian Basin Petroleum Association.

The ramifications of the listing won’t be immediate, but it could have lasting impacts on the future of oil and gas extraction, Shepperd said, adding that it could affect a company’s ability to drill without running afoul of federal requirements under the Endangered Species Act.

“Not overnight, but over the coming months, we believe that that's going to lead to a decrease in drilling. We believe it's going to lead to … job losses,” Shepperd said.

In a joint statement with the Texas Oil and Gas Association, delivered to the federal agency last year, energy industry leaders argued that oil and gas companies were already taking measures to prevent further disturbing the lizard’s habitat: a 200-meter buffer between their operations and the lizard’s home, minimizing their presence in the area and using existing service roads as opposed to building more.

Industry representatives also said that oil and gas companies had been participating in voluntary conservation agreements, a program in which companies and private landowners pledge to protect the lizard’s habitat. Environmentalists have criticized the agreements because there is no enforcement or penalties if companies do not comply — or a way to determine whether the plans are effective.

State and nationwide oil and gas associations have not ruled out litigation, Shepperd said.

Scott Lauermann, a spokesperson for the American Petroleum Institute, said the decision could delay the permits that companies need for every phase of oil and gas exploration and extraction.

Such permits could authorize companies to build the infrastructure necessary to pump oil like oil rigs and service roads. Federal officials encouraged companies to consult the agency early in their planning.
The lizard wars

Ten generations of lizards have lived and died while a battle ensued between environmental groups, the oil and gas industry and the federal government over their protection.

Fish and Wildlife first identified the dunes sagebrush lizard as needing protection in 1982. Since then, it has been removed and added multiple times from the candidate list for endangered species, but the proposals fell through because the Fish and Wildlife Service said it could not afford to evaluate whether the lizard should have been placed on the list, said Michael Robinson, a senior conservation advocate at the Center for Biological Diversity. The Center has petitioned and sued the Fish and Wildlife Service several times over almost two decades regarding the lizard.

In 2002, the center delivered a scientific petition to the Fish and Wildlife Service, asking the agency to add the lizard to the endangered species list. The Service did not act, citing a lack of resources, Robinson said.

The Service proposed adding the lizard to the endangered species list again in 2010 but withdrew the proposal 18 months later.

Instead, then-Texas Comptroller Susan Combs assembled voluntary conservation agreements — a pledge by landowners and operators to avoid activities like removing shinnery oak trees and building roads — to convince the federal government to avoid listing the lizard as endangered, a decision that drew praise from the oil and gas industry and rebuke from environmentalists and wildlife conservation groups.

State and federal officials argued the move would be enough to protect the lizard. More than 200 ranchers and oil and gas companies between Texas and New Mexico, federal officials said.

Shepperd said that among them were Chevron, ExxonMobil and Occidental Petroleum.

Robinson argued that the agreements shielded the oil and gas industry from making modest changes to their daily operations.

“It’s a sad case of a federal agency that has been captured by the industries they’re supposed to hold to account,” Robinson said.

In 2018, the Center for Biological Diversity petitioned again for the lizard’s protection. In 2022, the Center sued the Fish and Wildlife Service again, a lawsuit that resulted in a settlement agreement, which led to another proposal to add the lizard to the endangered species list.

Ullenberg, the Fish and Wildlife Service spokesperson, said that petition prompted the agency to conduct a review of the species and ultimately add it to the endangered list last week.

Robinson said it's an important first step.

“At least the government’s attention will be focused on the project of [recovering] the species, and that’s no small thing,” he said.

Disclosure: Ben Shepperd, Exxon Mobil Corporation, Permian Basin Petroleum Association and Texas A&M University have been financial supporters of The Texas Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in the Tribune's journalism. Find a complete list of them here.


Information about the authors


Alejandra Martinez
ENVIRONMENTAL REPORTER
alejandra.martinez@texastribune.org
@alereports

Carlos Nogueras Ramos
PERMIAN BASIN REPORTER
carlos.nogueras@texastribune.org
@criacuervosvibe

 The Texas Tribune’s 

BIDENOMICS
Climate Funding Helps U.S. Farmers Slash Their Energy Bills


Tsvetana Paraskova - May 21, 2024

America’s family farms had just recovered from the diesel and other energy price shocks of 2022 when rising interest rates started to increase their cost of credit.


Incentives and subsidies from the Agriculture Department and the federal tax credits in the IRA can add up to paying in full for the renewable energy that agricultural companies and farms in the U.S. use.

For farms in rural areas like Mr Howle’s, 70% of the costs for the solar project are covered by tax credits and 50% by Agriculture Department grants.

After reeling from soaring energy costs in 2022, when diesel prices in the U.S. hit a record high, American farmers are taking advantage of provisions in the Inflation Reduction Act from the same year that help small farms install solar power at virtually no cost.

Demand for the Rural Energy for America Program of the U.S. Agriculture Department is overwhelming as farmers seek to slash their energy bills by having solar power installed at their farms.

For rural America, incentives and subsidies from the Agriculture Department and the federal tax credits in the IRA can add up to paying in full for their renewable energy, especially if the farms are in low-income areas.

Following a major squeeze on farm and ranch profits during the soaring energy prices in 2022, the installation of solar panels in disadvantaged communities which are in former fossil fuel producing areas can be fully covered by federal tax credits and incentives programs. And farmers are taking notice and applying to have renewable energy power as part of their operations.

“The demand has just been skyrocketing and there’s a lot of excitement,” Basil Gooden, the Agriculture Department’s undersecretary for rural development, told The Wall Street Journal.



Small Farm Hardships

America’s family farms had just recovered from the diesel and other energy price shocks of 2022 when rising interest rates started to increase their cost of credit and limited farmers’ ability to use it.

“Operating loans and other forms of financing cost farmers a whopping 43% more in 2023 than in 2022 and are forecast to remain elevated for much of 2024, causing working capital (cash) stocks to decline faster and forcing farmers to lean on expensive credit to provide liquidity,” Bernt Nelson, an economist at the American Farm Bureau Federation (AFBF), wrote earlier this year.

“The amount of income being used to pay interest on farm debt in the U.S. has increased at a rate not seen since the 1980s.”

In the high interest-rate environment, any reduction in other costs is a welcome relief.

Therefore, lower energy bills are incentive enough for small farm owners to seek the federal tax credits under the IRA.

Rich Federal Incentives

Jerry Howle, profiled in the Journal’s feature article on farmers installing solar panels, is set to see his annual $10,000 utility bill on his chicken farm eliminated after accessing the rich federal incentives.

For farms in rural areas like Mr Howle’s, 70% of the costs for the solar project are covered by tax credits and 50% by Agriculture Department grants.

This means that small farm owners can now afford to install renewable energy generation sources on their premises and land.

But the upfront costs are high while the credits and grants don’t start flowing until a full month of operations of the project. So, farmers still need investors and renewable energy developers to help them with the initial costs. But after the project is up and running, it is expected that not only will farmers have zero energy bills, but will be able to sell excess energy to their local utilities, making additional income.

According to USDA Census of Agriculture from 2022, a total of 1.9 million farms dot America’s rural landscape, and 95% are operated by families – individuals, family partnerships, or family corporations.

Farmers are also embracing and growing renewable energy. In 2022, a total of 153,101 farms and ranches used renewable energy producing systems compared to 57,299 in 2012, a 167% increase over 10 years, per AFBF data. On-farm renewable energy systems include geothermal, solar panels, windmills, hydro systems, and methane digesters.

USDA is granting millions of U.S. dollars in funding for loan and grant awards through the Rural Energy for America Program (REAP). The program, which can cover up to 50% of a renewable energy installation, is designed to help agricultural producers and rural small business owners make energy efficiency improvements and renewable energy investments to lower energy costs and generate new income by selling energy to utilities.

Earlier this year, USDA and the U.S. Department of Energy (DOE) launched a new initiative to help farmers cut costs and increase income using underutilized renewable technologies. USDA has an initial goal of helping 400 individual farmers deploy smaller-scale wind projects.

Federal funding is also supporting research and development in agrivoltaics – the combination of solar panels and agricultural production at the same location.

In April this year, the U.S. Environmental Protection Agency (EPA) announced its selections for $20 billion in grant awards under two competitions funded by the Inflation Reduction Act. The grants will create a national clean financing network for clean energy and climate solutions across sectors, ensuring communities have access to the capital they need.

One of the selected applicants is Climate United Fund, whose program “will focus on investing in harder-to-reach market segments like consumers, small businesses, small farms, community facilities, and schools—with at least 60% of its investments in low-income and disadvantaged communities, 20% in rural communities, and 10% in Tribal communities,” EPA said.

By Tsvetana Paraskova for Oilprice.com

WoodMac Sees $1 Trillion At Risk for Clean Energy Investments Under Trump

  Alex Kimani - May 21, 2024

• 
  
• WoodMac projects ~$7.7T in overall spending by the U.S. energy sector through 2050 under current policies.
• 
  
• The overall spending on renewable energy could be cut by $1 trillion under a new Trump presidency.
• 
  
• Analysts have predicted that less spending on low carbon energy could boost demand for natural gas by 6% or 6B cf/day by 2030.
• 
  

A second Trump presidency could place a huge part of renewable energy investments at risk, increase carbon emissions by 1 billion tonnes more by 2050 and delay peak fossil fuel demand by 10 years beyond current forecasts, energy analytics firm Wood Mackenzie has predicted.  

WoodMac projects ~$7.7T in overall spending by the U.S. energy sector through 2050 under current policies, a figure that could be cut by $1T under Trump through reduced policy support for low carbon energy and infrastructure improvements. 

Analysts have predicted that less spending on low carbon energy could boost demand for natural gas by 6% or 6B cf/day by 2030.

WoodMac says that whereas Trump would lack the power to unilaterally repeal the Inflation Reduction Act enacted during the Biden presidency, he could bring changes to environmental rules and executive orders that would roll back many of Biden's environmental policies.The research firm also projects that the total number of EVs on U.S. roads in 2050 would be 50% lower than under current policies because automakers would likely favor the production of hybrid vehicles over pure electric cars. 

There’s a lot at stake here. The auto industry has unveiled more than $100 billion in EV investments, with potential to create 100,000 American jobs. 

Three years ago, the Biden administration signed the Infrastructure Investment and Jobs Act (IIJA), with the act authorizing $1.2 trillion in spending for transportation and infrastructure; $43 billion (not including loans and tax incentives) in flexible spending could be used for battery manufacturing, retooling auto industry facilities, retraining and rehiring existing auto workers and grid updates while more than $7.5 billion will support the buildout of EV infrastructure.

Wood Mackenzie has also noted the need to address U.S. debt, saying it could limit government spending in the future. The Congressional Budget Office has projected that U.S. national debt will climb from 97% of GDP in 2023 to 109% of GDP by 2030 and 155% by 2050.

Energy Under Biden

A second Biden term would likely see him double down on his pro-renewables policies, including investments in hydrogen tech and advanced nuclear energy; however, his administration would likely face even deeper legislative gridlock if Republicans retain control of at least one house of Congress. Last October, Biden announced the locations of seven regional hydrogen hubs set to receive $7 billion from the government under the bipartisan infrastructure law. The hubs will produce green hydrogen as well as hydrogen from natural gas and nuclear energy. Passed by Congress in 2021, the law allocated up to $7B to launch the Regional Clean Hydrogen Hubs program to fund 6-10 regional clean hydrogen hubs across the country. The hydrogen project is part of Biden’s ambitious climate goals wherein he has pledged to cut the country’s greenhouse gas emissions by 50%-52% below its 2005 emissions levels by 2030. 

But this does not necessarily mean that the fossil fuel industry will face a bleak future under another Biden term. Indeed, it’s quite ironic that fossil fuel production under Biden has surpassed Trump levels while oil and gas investors have fared far better than their clean energy brethren. 

According to the U.S. Energy Information Administration (EIA), crude oil production in the United States, including condensate, averaged 12.9 million barrels per day (b/d) in 2023, breaking the previous U.S. and global record of 12.3 million b/d, set in 2019. Average monthly crude oil production set a new monthly record high in December 2023 at more than 13.3 million b/d.

Meanwhile, the oil and gas favorite benchmark, the Energy Select Sector SPDR Fund (NYSEARCA:XLE), has more than doubled in the time Biden has been in office while the iShares Global Clean Energy ETF (NASDAQ:ICLN) has tanked nearly 70%. The current year is following the same playbook with the oil and gas sector up 12.2%, the third highest return amongst 11 U.S. market sectors, while clean energy stocks are in the red with a -8.5% return. Big Oil investors, in particular, have been laughing all the way to the bank during Biden’s tenure: 

According to data compiled by Reuters, profits of the top five publicly traded oil companies, namely Exxon Mobil Corp. (NYSE:XOM), Chevron Corp.(NYSE:CVX), BP Inc.(NYSE:BP), Shell Plc (NYSE:SHEL) and TotalEnergies SE (NYSE:TTE) rocketed to $410 billion during the first three years of the Biden administration, a 100% increase compared to the corresponding period of Donald Trump’s presidency.

By Alex Kimani for Oilprice.com

 

Why Kinder Morgan is Targeting This Texas Oil Field

By Charles Kennedy - May 22, 2024

American oilfield services provider and pipeline operator Kinder Morgan has acquired nearly 12,000 acres of Texas oil and gas producing assets in its quest to take advantage of carbon capture incentives designed to boost output from producing fields, Reuters reported on Wednesday, citing unnamed sources familiar with the deal. 

According to Reuters, the Kinder acquisition indicates the attractive nature of incentives laid out in the U.S. Inflation Reduction Act, which offers a tax credit for carbon sequestration of $60 per metric ton. That incentive has rendered aging oil and gas fields far more attractive to companies that have the technology to improve production. 

Sources cited by Reuters said that Kinder Morgan already produces around 50,000 barrels of oil per day through the process of injecting carbon dioxide into wells to aid the path of oil to the surface. According to Reuters, that deal, which includes around 265 wells in a large, mature oilfield, is with Avad Energy Partners. One of the unnamed sources said the deal demonstrates that Kinder Morgan is “staying in the E&P business” and has “huge CO2 sources in West Texas”, which the company plans to use to further improve oil output. 

In April, Kinder Morgan said it expected natural gas demand to increase significantly over the next six years. 

The company’s Q1 2024 earnings report showed a 10% increase in earnings per share, though this increase fell slightly below expectations. Kinder Morgan also reported a net profit annual increase, from $679 million in Q1 2023 to $746 million in Q1 2024, with income from the gas pipeline playing a significant role in those numbers. 

Last November, Kinder Morgan also announced its plans to buy NextEra Energy Partners’ natural gas pipeline portfolio for $1.82 billion last November. The NextEra pipeline assets have a 4.9 billion cubic feet per day capacity, according to a Q4 2023 press release from Kinder Morgan.

In November, these assets were described by Kinder Morgan as “highly contracted”, with average contracts running for eight years and with 75% of capacity already under contract. the average length of contract at eight years and that 75% of the capacity was subject to take-or-pay contracts. 

NextEra’s pipeline network sends gas to Mexico as well as to oil producers in Southern Texas.

By Charles Kennedy for Oilprice.com

 

Petrobras to Stop Selling Refineries

By Charles Kennedy - May 23, 2024

Brazil’s state oil major Petrobras has agreed with the country’s antitrust regulator to stop selling refineries in order to boost its processing capacity.

Five years ago, Bloomberg recalls, Petrobras had announced plans, coordinated with the watchdog, to sell a total of eight refineries. Now, after three sales, the company has ended the divestment, again in coordination with the regulatory organ.

The change in plans comes as the Brazilian government exerts growing pressure on Petrobras to expand its operations and create more jobs, boosting the Brazilian economy in the process. The pressure recently led to the ousting of the company’s chief executive Jean Paul Prates and his replacement with the former head of Brazil’s oil and gas industry regulator, Magda Chambriard.

The change at the top came last week, a day after Petrobras reported a 38% decline in net profits for the first quarter of the year on 15% lower revenues. It also adds to bad news about shareholders after late last year outgoing CEO Prates informed them dividend payments would be kept lower for a while as Petrobras tried to expand into low-carbon directions.

"In our view, the exit of Prates is a deterioration of Petrobras governance and a downside risk for the investment thesis," Citi analysts said in a note quoted in a Reuters report at the time.

"The new CEO arrives with the pressure to fulfill the investment plan and accelerate the capex expansion, which may negatively impact the company's dividend payment."

The Bloomberg report noted that investors were concerned about the reshuffle at the top after Prates had prioritized cost reductions and a focus on only the most profitable business of the company. In contrast, the government wants Petrobras to invest more in things like wind and solar, refining, and fertilizer production.

In fairness, Prates was the one who announced plans to have 50% of Petrobras’ future revenues come from wind and solar. He also cut the company’s dividend payout in order to invest more money into this shift into transition energy tech—which understandably did not sit particularly well with shareholders.

By Charles Kennedy for Oilprice.com