Apr 28, 2017

Axios Generate

By Ben Geman
Ben GemanAmy Harder

Happy Friday and welcome back to Generate, where your host is hopeful that readers won't be baffled by that first image, which comes from one of the funniest movies ever. If you are, shoot me a note at ben@axios.com. If you're not, confidential tips and feedback are nonetheless welcome at the same address. Let's dive in . . .

On tap Friday: earnings numbers and Trump's offshore move

From the world of oil markets and policy...

In business: Big oil earning season gets rolling in earnest as ExxonMobil and Chevron both report this morning.

Investor's Business Daily has a preview noting that both companies are expected to report "relatively strong" results on the strength of the oil price rebound.

  • Shale surge: Both companies have been expanding their position in the booming Permian Basin region. Exxon shelled out billions to acquire more acreage in January, and analysts expect questions about future M&A on the call.

In Washington: President Donald Trump is slated to issue an executive order aimed at opening more offshore regions to oil-and-gas drilling.

It will begin a long Interior Department process to pare back Obama-era policies that largely prevent new offshore drilling in federal waters outside the Gulf of Mexico.

  • My Axios colleague Shannon Vavra has more on the order here.
  • Your Generate host also previewed the action earlier in the week.

One level deeper: Industry groups and advocates who have chafed at Obama's restrictions will welcome the move. But The Washington Post nails it with this summary of why the order may not usher in new real-world development, especially in Arctic waters, where there's not much industry interest now in hugely expensive projects."[L]ocal political considerations and the global energy market are likely to influence future exploration far more than an executive order in Washington." Their piece notes that there's more interest in the Atlantic Coast, but even that "could be complicated by long-standing resistance from coastal communities."

In preview: Trump hints at staying in Paris pact

President Trump hinted he might side with top aides and officials who say the U.S. should remain in the Paris climate accord — if the U.S. can negotiate new terms of engagement.

"I can say this, we want to be treated fairly," Trump told Reuters. He said he would announce a decision in about two weeks on whether Washington would remain in the accord.

Why it matters: Top officials have differing views over the U.S. posture toward the 2015 pact that's aimed at preventing runaway global warming.

Some want Trump to stick with his campaign promise to begin pulling the U.S. out. Others want to stay in while altering the terms of engagement with steps including a softening of the U.S. emissions-cutting pledge.

  • Jared Kushner, Secretary of State Rex Tillerson, David Banks and Energy secretary Rick Perry all support staying in the agreement. National security adviser H.R. McMaster is in that camp too, according to Reuters.
  • If Trump sides with officials pressing to remain at the table (albeit under altered circumstances), it would be a defeat for top adviser Steve Bannon and EPA administrator Scott Pruitt, who both support bailing.

What else Trump said: He "complained that China, India, Russia and other countries were paying too little to help poorer countries battle climate change under the agreement's Green Climate Fund," Reuters reports.

Quick take: While Trump is mercurial, the comments signal that the "remain" camp has the upper hand in the internal discussions.

One level deeper: Trumps comments came the same day as a closed-door meeting among senior officials on the climate pact.

What they're saying: While the meeting did not produce a resolution, an administration source familiar with the discussion told Axios that there's consensus among the players that staying in the deal under the Obama-era commitments is not acceptable.

  • "Everybody came away from the meeting feeling like there was agreement," the source said.
Trump getting a pass from GOP on Paris climate deal

Nine House Republicans led by Rep. Kevin Cramer, who advised President Trump on energy during his campaign, are urging him to remain in the Paris climate accord, but under altered conditions that better promote U.S. fossil fuels.

  • Their Thursday letter arrived ahead of a closed-door White House meeting about the agreement. A decision is expected by late May about whether to begin pulling the U.S out of the 2015 global pact.

Reality check: The letter, while in circulation for weeks, attracted only a small slice of the House GOP. Four Republicans signed on to a more explicitly pro-Paris letter, while a letter calling on Trump to abandon Paris received 12 signatures.

Why it matters: The small numbers publicly pressing Trump either way suggests it's not a major priority for most members — at least not one they want to take a public stand on ahead of the decision.

What they're saying: Cramer's letter says the U.S. should soften Obama's emissions pledge, while using U.S. involvement in the accord to promote U.S. fossil fuel and manufacturing interests. It also pushes for international focus on tech to trap carbon emissions from coal, among other things.

To be sure: As we noted here, a member of the Senate GOP leadership team is publicly agitating for the U.S. to bail on Paris. Sen. John Barrasso made the case to his Republican colleagues earlier this week, which Generate covered here.

Thought bubble: Pruitt could win even if he loses on Paris. He has emerged as a highly vocal advocate of abandoning the pact that he calls economically harmful. That could ease conservative ire with Pruitt over his lack of action to overturn EPA's 2009 finding that greenhouse gases are a threat to humans, which provides a key legal underpinning to emissions regulations.

Lightning round

Tesla: Reuters has the backstory on last month's departure from Tesla of Klaus Grohmann, whose advanced manufacturing firm was acquired by the electric automaker last year, describing a clash with CEO Elon Musk.

  • Grohmann disagreed with Musk's demands to focus management attention on Tesla projects to the detriment of Grohmann Engineering's legacy clients, including Tesla's direct rivals Daimler and BMW, two sources familiar with the matter told Reuters.

LNG: The Associated Press reports that Poland has inked its first deal to buy liquefied natural gas from a U.S. supplier, a move officials called a way to ease the country's reliance on Russian gas.

Oil: Bloomberg uses comments by the head of Saudi Aramco as a window into disputes over when global oil demand might peak.

Finding oil: Via the Houston Chronicle, BP says advances in exploration technology have enabled a new discovery of 200 million barrels in the deepwater Gulf of Mexico.

  • "Long obscured by a salt dome, which distorts seismic waves that oil companies use to map features below the earth, the oil reserves were revealed by using a supercomputer and mathematical algorithm to interpret the seismic data in a new way."


My colleague Shannon Vavra

looks at

how a top coal producer is responding to Trump's trade dispute with Canada.

From Amy's notebook: Climate push in Congress and on Spotify

Ahead of the big climate march on Saturday, a group of the nation's most liberal Democratic senators introduced legislation Thursday that aims to transition the U.S. off fossil fuels by 2050.

Why it matters: The bill has zero chance of passing, but that's not what this is about. It's about rallying the despondent environmental movement in the wake of Trump's presidency.

What they're saying: Jamie Henn, a spokesman for 350.org, an activist group helping to rally Democrats in support of the bill and mobilize the crowds for Saturday's march, says the bill "can help reset the climate agenda for Democrats and build out a populist coalition to take back power."

Getting the word out:

Organizers of Saturday's march are advertising the event on Spotify, calling on listeners to support action tackling climate change. This is the first time organizers of a climate march (there have been numerous past ones) have advertised on Spotify, Henn says.

Ben GemanAmy Harder

Thanks for reading! Have a great weekend.