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Good morning and welcome back! I buried two song references from the 1980s today (sorry, it's where I'm most comfortable). One is from Run-DMC, the other is a snippet from a one hit wonder who charted in the U.S. in 1983. Ok, let's get to it . . .

Good listen: Russia and Nord Stream 2

One of the best things I've heard this week is the interview (available here) with Russian energy expert Tatiana Mitrova, director of the SKOLKOVO Energy Centre in Moscow. A couple of key points from her 40-minute chat on the Columbia Energy Exchange...

Fling, not marriage: Don't look for Russia's work with OPEC to limit output as a long-term relationship between the large producers. It may not even extend past the expiration of the current agreement that runs through March of next year.

  • The unity between Russia and Saudi Arabia, OPEC's dominant producer, depends in part on how fast U.S. shale production grows. "When you see this production increasing and you see that you cannot still move the prices up, the idea might come that, ok, let's forget about the deal and let's try to maximize our revenues right now, because it is important for the social and economic stability of each country."

Sanctions: They have little effect on current crude production capacity. Instead the big question is whether U.S. sanctions will ultimately affect future output, which depends on whether Russia can develop tech on its own to replace the know-how of western firms needed to tap unconventional and offshore resources.

  • "There is quite a high risk that post-2022, Russian oil output will start to decline," Mitrova said.

Nord Stream 2: Gazprom's controversial gas pipeline that goes to Germany is likely to be built, she added, despite U.S. opposition and the complex European politics of the project that would bypass Ukraine and other key states.

***

Speaking of Nord Stream 2: The Russian sanctions law that President Trump signed August 2 creates the option to impose sanctions against the project, and as Generate readers know, the Gazprom subsidiary working with several European energy companies to build Nord Stream has hired U.S. lobbying firms.

Plus, as Politico noted yesterday, the pro-pipeline European gas companies have also brought on a U.S. lobbying firm (McLarty Inbound).

My thought bubble: Maybe they should all just save their money. "Despite the Administration's stated opposition to Nord Stream 2, it has demonstrated little interest in taking a tougher line on Russian energy projects, even with the authority it already has to do so," Jason Bordoff, who heads Columbia's Center on Global Energy Policy, tells Axios in an email.

Amy’s notebook: Washington says coal is coming back, but not really

My Axios colleague Amy Harder passed along these observations about the current messaging about coal...

The National Mining Association, which represents coal miners, wrote a blog post Wednesday declaring: "Neither the dead nor the living read their obituaries. Coal isn't reading them because it isn't dead." That's being bolstered by a Wall Street Journal lead editorial: "Coal makes a comeback."

Let's contrast that with a story in the trade publication SNL (subscription required) that quotes several traditionally coal-based utility executives touting their transition away from coal.

My thought bubble: The talking points by industry in Washington often differ and are rosier than those made during earnings calls. I take what I hear on an earnings call over what I hear in Washington any day.

Bottom line: By repealing his predecessor's regulations, Trump is helping give a small boost to an industry that is never going to be back at its previous level. The increase in exports cited in both the blog post and the WSJ editorial are not due to Trump's actions, by the way. Flashback: Axios reported that this was going to happen back in April, when we quoted a coal mining CEO who said the expected rise was due to increased demand from Asia.

NAFTA’s energy and climate stakes

Giphy

It begins: As NAFTA renegotiation gets underway, much of the U.S. energy industry is taking a "do no harm" stance toward the agreement that they're basically happy with already.

Yes, but: A new paper from the think tank Resources for the Future finds that the NAFTA talks are a chance to solidify the North American energy and environmental relationship.

It also uses the talks as a jumping off point to look at the North American energy relationship more broadly. Among the areas ripe for more cooperation...

  • Oil-and-gas fiscal policies
  • Reforming fossil fuel subsidies (which has been a G20 goal for years)
  • Environmental standards around decommissioning wells and water use and disposal

Go deeper: The Center for Strategic and International Studies podcast has a new episode about the stakes for NAFTA renegotiation. Listen here.

Something to watch: Canadian Foreign Affairs minister Chrystia Freeland, heading into the talks that began this week, said one key Canadian goal is strengthening environmental provisions in NAFTA, and wants an agreement that "fully supports efforts to address climate change." Maclean's posted her broader remarks this week ahead of the talks here.

On my screen: climate reports

Not too late: A newly released Rocky Mountain Institute study makes the case that limiting the global temperature rise below 2 degrees Celsius is still within reach.

  • Yes, it will demand "urgent and extraordinary efforts" that go well beyond current actions by governments and the private sector. But the rapid and even exponential disruption this will demand in the energy system is hardly unprecedented and often underestimated in the technology space, and analysts already have a history of badly underestimating growth in renewables deployment.
  • One cool example: In 1980 AT&T commissioned McKinsey & Company to forecast U.S. cell phone deployment in 2000. They predicted a niche market with 900,000 subscribers. They were off by a factor of over 100 as usage already reached 109 million at the turn of the century.

It's tricky: An interesting new analysis from Carbon Brief seeks to specifically quantify the factors behind the 14% drop in U.S. carbon emissions since 2005. It turns out there are lots of reasons, even though the coal-to-gas transition in the power sector gets so much attention.

  • That's the biggest reason, accounting for 33% of the drop, but other factors include: wind and solar growth (combined 23%), lower electricity use, largely in industry (18%), and lower transportation emissions via more efficient vehicles and other factors (15%).

Latest in oil

Gulf of Mexico: Yesterday's Interior Department lease sale for tracts in the Gulf of Mexico drew $121 million in winning bids, with the largest total spending from Chevron, Shell, Exxon, and Total (in that order). Data here.

While the numbers weren't huge, the sale shows continuing interest in the region by a number of companies.

  • Context, via Platts: "The sale appeared to highlight majors' preferences for known deepwater areas, since shallow-water bidding accounted for a scant 10 blocks and offers received for these were mostly under $200,000 each."
  • Wood Mackenzie, in a short note, pointed out that companies "continue to focus on areas near existing infrastructure with a majority of bids close to existing hubs or appraised developments."

Markets: Dueling pieces of data on production and stockpiles are vying for the hearts of traders today. MarketWatch takes stock of the "seesaw" action here. And Reuters puts it like this:

  • "Oil prices steadied on Thursday after U.S. data showed a big fall in crude stockpiles but also an increase in production, taking U.S. crude output to its highest in more than two years."

OPEC: Bloomberg issued a QuickTake today with a helpful and brief primer on the cartel, including its history, recent weakened market influence, and renewed efforts to regain leverage. "[T]he group's inability to sustain higher prices in 2017 advances the view that OPEC lacks the control over the market that it had in the past," they note.

Exports: U.S. crude exports are slated to begin arriving in India, The Economic Times reports. India's embassy in the U.S. also tweeted about it.

Energy stats leader heads for the door, memories in tow

Howard's departure: A familiar name in energy policy circles is leaving government. Howard Gruenspecht, acting head of the Energy Information Administration, told colleagues he'll leave the Energy Department's independent stats and forecasting arm at the end of August.

He's been there 14 years and served as acting chief three times. I contacted former EIA administrator Adam Sieminski for some thoughts on his former colleague, and he responded quickly that American policymakers and taxpayers will miss him.

Here's a few of Sieminski's recollections...

  • "He would surprise EIA employees with his disarming question 'Are you sure about that figure?' That was generally a signal that somebody's math was wrong and it was not usually Howard's — even when he was not an 'expert' in the specific topic."
  • "Howard is a master at making Fermi estimates, named after the famous physicist, Enrico Fermi, who understood that a series of independent guesses about the value of variables in an equation could result in a nearly instantaneous and often very good approximation of an answer that might take a modeler days or weeks to calculate."

Sieminski, now at the Center for Strategic and International Studies, credits Gruenspecht with helping to usher in some important advances at EIA, noting he knew how to get things done in a large bureaucracy. He says Gruenspecht particularly helped his efforts to get EIA to adapt to the age of big data, such as by playing a key role in ushering in the collection of hourly power generation stats.

What's next: Per Gruenspecht's memo to colleagues, EIA senior adviser John Conti will be appointed deputy administrator and serve as acting administrator when Gruenspecht departs. It's unclear when the White House will nominate a new administrator, but Gruenspecht, in the memo, said he's been informed that the process to find one is "well along."

One cool thing

NASA

Earth below us: Check out this new primer and video about NASA's Ice, Cloud and land Elevation Satellite-2 (ICESat-2), which is slated to launch next year with a system that will precisely measure the elevation of ice sheets, sea ice, and glaciers — and how they're changing.

  • How? "By sending fast-firing laser pulses to the surface and timing how long it takes individual photons to return." It fires a lot — 10,000 times per second.

Why it matters: Getting such exact measurements of topographic features will help track the effects of climate change.

  • "Climate change is amplified in the polar regions. ICESat-2 is designed to measure those areas and will help us to understand what is going on with our planet," says Thorsten Markus, a scientist on the project, in the short video explainer.