Energy & Environment — Explosion leaves uncertainty in global energy market
- Oops!Something went wrong.Please try again later.
An explosion last week at a natural gas terminal is impacting the market, and President Biden prepares to visit Saudi Arabia.
This is Overnight Energy & Environment, your source for the latest news focused on energy, the environment and beyond. For The Hill, we’re Rachel Frazin and Zack Budryk. Someone forward you this newsletter? Subscribe here.
Explosion jolts natural gas market
Last week’s explosion at Texas natural gas terminal Freeport LNG has injected further chaos into international energy markets as the U.S. has stepped up to replace Russian gas exports to Europe.
Experts said that while the facility is offline, it will likely keep about
1.33 billion cubic feet (bcf) of liquefied natural gas (LNG) per day off the market for the next three weeks.Before the explosion, it had a daily capacity of about 2 bcf.
The new news: On Tuesday, the facility lengthened the forecasted shutdown period, saying it was aiming for a partial restart in 90 days, with full-service restoration not expected until late 2022.
Freeport, which said no one was injured in the incident, has attributed the explosion to a fire caused by the rupture of an over-pressurized pipeline.
This “will contribute to a possible tightening of the market as it coincides with some Asian and South American buyers coming to market for volumes,” said Eugene Kim, research director for American Gas at the energy consulting firm Wood Mackenzie.
The incident, which remains under investigation, comes at a pivotal moment for U.S. natural gas production in the international market.
The European Union sanctioned Russia’s gas industry in response to the Russian invasion of Ukraine.
As a result, European nations have grown increasingly reliant on the U.S. to make up the difference.
And the EU’s final agreement on an embargo of Russian oil, reached in early June, is likely to further heighten the need.
Natural gas prices plummeted Tuesday after the extension of the timeline. American natural gas dropped about 16 percent to $7.22 per million British thermal units.
Meanwhile, European gas prices increased by about 21 percent.
Mike Sommers, president and CEO of the American Petroleum Institute, said on a press call Tuesday that even in the absence of the Freehold terminal, other LNG producers may be able to fill in the gap.
However, Frank Macchiarola, the American Petroleum Institute senior vice president of policy, economics and regulatory affairs, added that Freeport is “a significant location” for LNG production.
“It’s about 17 to 18 percent of our current capacity, so that certainty is important in the tight market that we face right now,” he said.
VIRTUAL EVENT INVITE
Principled Profit: The Hill’s ESG Summit — Wednesday, June 15 at 1 p.m. ET
ESG investing is increasingly popular among investors seeking to make capital decisions based not only on likely financial return but also with an eye toward investing in companies perceived to be creating social good. Join The Hill for a conversation on the growing demand for ESG and how it is transforming the business and investment landscape. Former SEC chair Harvey Pitt, Rep. John Rose (R-Tenn.), Bank of America Merrill Lynch’s Savita Subramanian. RSVP now
Biden heads to Saudi Arabia amid high gas prices
President Biden will visit Saudi Arabia in July on a trip that will include a meeting with Saudi Crown Prince Mohammed bin Salman, a senior administration official told reporters Monday night.
The announcement that the president would meet Mohammed had been expected for weeks and has drawn scrutiny from human rights advocates and tacit approval from Democratic allies in Congress.
The meeting is part of a wider trip to the Middle East, from July 13-16, where the president will also travel to Israel and the West Bank before flying to Jeddah for a meeting of the Gulf Cooperation Council.
The senior official said that Biden’s meeting with the crown prince will take place as part of engagement with “over a dozen leaders,” to include Saudi King Salman, the official leader of the Kingdom.
The energy angle: The meeting comes as gasoline prices continue to rise, having reached a $5 national average in recent days. Although presidents tend to have little influence on gasoline prices, the situation has put pressure on the Biden administration as consumer feel pain at the pump.
During a White House press briefing on Monday, prior to the trip’s official announcement, White House press secretary Karine Jean-Pierre said that a trip would be about “diplomacy” and to “bring stability to the Middle East region.”
Asked more specifically about energy, she said: “To view engagement with Saudi Arabia on energy security as asking for oil is simply wrong and a misunderstanding of both the complexity of that issue and our multi-faceted discussions with the Saudis.”
But, she also said that the administration talks about oil with the Saudis. She said that given its role in OPEC+ and as a major exporter, “of course we discuss energy with [the] Saudi government as we do with oil producers around the world.”
The foreign policy piece: The president’s face-to-face with Mohammed marks a stark reversal from Biden’s promise on the campaign trail to make the kingdom a “pariah” and to make them “pay the price” over the gruesome killing of the dissident
Saudi writer and Washington Post contributor Jamal Khashoggi in 2018.
Biden approved the release of a U.S. intelligence report concluding that Mohammed had approved a plot to “capture or kill” Khashoggi — who was lured to the Saudi Consulate in Istanbul, where he was killed and dismembered. The president imposed bans on dozens of Saudi officials for the writer’s death.
The senior official on Monday night said that while the administration sought accountability for Khashoggi’s death, it did not seek to “rupture” relations with the kingdom completely. The official called the crown prince “critical” to extending a cease-fire agreement until at least August in Yemen’s catastrophic seven-year civil war.
Read more here from The Hill’s Laura Kelly.
POLLUTION CUTS GLOBAL LIFE EXPECTANCY, REPORT FINDS
Particulate air pollution is reducing life expectancy by 2.2 years globally compared to a hypothetical world that meets international health guidelines, a new report has found.
Worldwide exposure to fine particulate patter — PM 2.5, or particles with a diameter of 2.5 microns or less — has an impact on par with that of smoking, more than three times that of alcohol use and unsafe water, according to the University of Chicago’s 2022 Air Quality Life Index.
The life expectancy effect of this type of pollution amounts to six times that of HIV/AIDS and 89 times that of conflict and terrorism, researchers observed.
“It would be a global emergency if Martians came to Earth and sprayed a substance that caused the average person on the planet to lose more than two years of life expectancy,” Michael Greenstone, index co-creator and an economics professor at the University of Chicago’s Energy Policy Institute, said in a statement.
“This is similar to the situation that prevails in many parts of the world, except we are spraying the substance, not some invaders from outer space,” Greenstone added.
Despite the fact that the economy incurred significant losses during the first year of the coronavirus pandemic, average PM 2.5 pollution remained largely unchanged from the year before, the researchers stressed. Meanwhile, growing evidence has emerged that even low levels of air pollution can damage human health, the authors added.
Read more from The Hill’s Sharon Udasin here.
ON TAP TOMORROW
The Senate Environment & Public Works Committee will hold a hearing to examine a series of coastal and habitat conservation bills
The House Agriculture Committee will hold a hearing titled “The Role of Climate Research in Supporting Agricultural Resiliency”
WHAT WE’RE READING
Wind and solar power are ‘bailing out’ Texas amid record heat and energy demand (CNN)
Wall Street firms face W.Va. boycott over alleged fossil fuel bias (Politico)
Exclusive: OPEC sees global oil demand growth slowing in 2023, sources say (Reuters)
On Climate Change’s Front Lines, Hard Lives Grow Even Harder (The New York Times)‘Delusional’: UN chief slams new fossil fuel funding and warns of climate chaos (CNBC)
And finally, something offbeat but kind of on beat: Elephants aren’t people, apparently.
That’s it for today, thanks for reading. Check out The Hill’s Energy & Environment page for the latest news and coverage. We’ll see you tomorrow.
For the latest news, weather, sports, and streaming video, head to The Hill.
