[USA] U.S. gas prices reach all-time high

On May 11, 2022, gasoline and diesel fuel prices in the U.S. reached an all-time high.[1] According to the American Automobile Association (AAA), the nationwide average price for regular gasoline was $4.40/gallon, a roughly $0.17 increase from the previous week. Diesel prices hit $5.55/gallon. The price increase comes just two months after the last record-breaking prices were recorded. A year ago, gasoline was $2.99/gallon and diesel was $3.13/gallon. According to the Energy Information Administration (EIA), increasing prices are likely due to decreasing gasoline inventories.[2] Total U.S. gasoline inventories decreased by 8.2 million barrels (3.5%) from March to April, partially due to increased driving. The EIA estimates that gasoline consumption increased to 8.7 million barrels/day in April, a 1% increase from March. Gasoline prices at the pump will likely face upward pressure as oil prices remain above $105/barrel.

[1] https://gasprices.aaa.com/

[2] https://www.eia.gov/outlooks/steo/marketreview/petproducts.php

[USA] BLM approves $4 billion oil project in the National Petroleum Reserve-Alaska

On October 27, 2020, the Bureau of Land Management (BLM), an agency within the Department of the Interior (DOI), approved ConocoPhillips Alaska Inc.'s Willow Master Development Plan, a $4 billion oil project in the National Petroleum Reserve-Alaska (NPR-A).[1] The NPR-A is a 23-million-acre piece of federally managed land that lies west of Alaska's Prudhoe Bay oil field and the Arctic National Wildlife Refuge (ANWR). According to BLM, the project could produce up to 160,000 barrels of oil per day over its anticipated 30-year life which will equal approximately 590 million total barrels of oil. BLM estimates the project will generate up to 1,000 jobs during construction and 400 permanent positions to keep it operating. BLM’s decision allows construction of up to three drill sites and associated processing and support facilities. BLM says the decision also adopts modifications to the project based on input from tribal governments, cooperating agencies and various other stakeholders received during the comment period for the project’s environmental impact statement (EIS).

[1] https://www.blm.gov/press-release/trump-administration-approves-willow-master-development-plan

[USA] Interior Secretary signs a record of decision authorizing ANWR oil and gas leasing program

On August 17, 2020, Interior Secretary David L. Bernhardt signed a Record of Decision (ROD) approving the Coastal Plain Oil and Gas Leasing Program in the Arctic National Wildlife Refuge (ANWR) in Alaska.[1][2] The Tax Cuts and Jobs Act of 2017 (Public Law 115-97), passed by Congress and signed into law in late 2017, directs the Secretary of the Interior, through the Bureau of Land Management (BLM), to establish and administer a leasing program in the 1.46 million-acre Coastal Plain, a section within the 19.3 million-acre ANWR. Secretary Bernhardt’s August decision determines where and under what terms and conditions leasing will occur in the designated area.

The ROD makes the entire Coastal Plain program area available for oil and gas leasing, and for potential future exploration, development and transportation. The program adopted in the ROD also offers protections for surface resources and other uses through an array of lease stipulations that will apply to future oil and gas activities. Approximately 359,400 acres (23% of available lands) will be subject to No Surface Occupancy (NSO)[3] stipulations within barrier islands and important aquatic habitats, and that approximately 721,200 acres (46% of available lands) will be subject to operational timing limitations in the primary calving habitat area for the Porcupine caribou herd.

[1] https://www.doi.gov/pressreleases/secretary-bernhardt-signs-decision-implement-coastal-plain-oil-and-gas-leasing-program

[2]https://eplanning.blm.gov/public_projects/102555/200241580/20024135/250030339/Coastal%20Plain%20Record%20of%20Decision.pdf

[3] NSO prevents surface disturbing activities from occurring in specific areas

[USA] DOE to provide $30 million to develop small-scale solid oxide fuel cell systems and hybrid energy systems

On May 29, 2020, the U.S. Department of Energy’s (DOE’s) Office of Fossil Energy (FE) announced up to $30 million in funding for cost-shared research and development projects for Small-Scale Solid Oxide Fuel Cell Systems and Hybrid Energy Systems.[1] The new funding supports the development of technologies that can advance the present state of small-scale solid oxide fuel cells (SOFC) hybrid systems, which produce electricity directly from oxidizing a fuel, using solid oxide electrolyzer cell (SOEC) technologies. The development of advanced technologies will increase the commercial readiness of hydrogen production and power generation. The funding will solicit applications for multiple areas of interest, corresponding to the research outline in DOE’s 2019 Congress report, Report on the Status of the Solid Oxide Fuel Cell Program.[2] The three primary areas of interest are small-scale distributed power generation SOFC systems, hybrid systems using solid oxide systems for hydrogen and electricity production, and cleaning process for coal-derived syngas to be used as SOFC fuel.

[1] https://www.energy.gov/articles/doe-provide-30-million-develop-small-scale-solid-oxide-fuel-cell-systems-and-hybrid-energy

[2] https://www.energy.gov/fe/report-congress-status-solid-oxide-fuel-cell-program

[USA] New report finds oil demand may not recover until 2026

According to a report released by Wood Mackenzie on May 12, 2020, demand for crude oil will take until at least 2026 to recover under a full recovery scenario.[1] In its report, Wood Mackenzie examined several trends happening as a result of the pandemic: reduced travel and trade, greater government involvement, and increased automation. The analysts then developed three scenarios for how those trends could affect energy over the next two decades. In the ‘Full recovery’ scenario, there is a rapid return to pre-pandemic conditions. Under the ‘Go it alone’ scenario, economies are slow to recover from the pandemic, with mixed outcomes for coal, oil and natural gas. And finally, in the ‘Greener growth’ scenario, governments focus stimulus programs on supporting the energy transition.

While natural gas use and coal use are expected to trend upward and downward, respectively, across all scenarios, crude oil demand is less predictable. Under the ‘Greener growth’ scenario, for example, oil demand would slowly rebound over the next decade, followed by a sudden decline in 2030 as policies reinforce the energy transition and electric vehicles take hold. In the other scenarios, oil demand slowly increases over the next two decades.

[1] https://www.eenews.net/assets/2020/05/13/document_ew_02.pdf

[Japan] The Japanese Cabinet Decided to Revise the Electricity Business Act to Establish a Robust and Sustainable Electricity Supply System

On February 25, 2020, Japan’s Ministry of Economy, Trade, and Industry (METI) announced that the Cabinet had approved a bill enacting revisions to the Electricity Business Act, the Act on Special Measures Concerning Procurement of Electricity from Renewable Energy Sources by Electricity Utilities, and the Act on the Japan Oil, Gas and Metals National Corporation, Independent Administrative Agency (JOGMEC Act)[1]. The proposed revisions aim to establish a resilient and sustainable electricity supply system. The bill was submitted to the 201st ordinary session of the Parliament.[2]

The bill, which is now pending in the Parliament, requires electricity distribution companies to coordinate on disaster response; establishes a new system supporting the introduction of renewable energy; and adds additional operations at the Japan Oil, Gas and Metals National Corporation (JOGMEC) to enable a stable energy supply. JOGMEC (Headquarters: Tokyo) is a Japanese government Independent Administrative Institution that is responsible for securing a stable supply of nonferrous metals and mineral resources.[3]

Key highlights of the proposed revisions include:

· The revised Electricity Business Act will require distribution and transmission operators to develop a disaster coordination plan and a wide-area grid maintenance plan.

· The modified Act on Special Measures Concerning Procurement of Electricity from Renewable Energy Sources by Electricity Utilities will require the establishment of a FIP (Feed-in Premium) scheme, which adds a premium to the market price for renewable energy production. The act also imposes external funding obligations on solar power generation companies for disposal costs. Furthermore, the act will ask the Japanese government to establish a system to support the cost of inter-regional transmission lines, which is necessary to expand the introduction of renewable energy.

· The revision of the JOGMEC Act will require the JOGMEC to launch a business to procure liquefied natural gas (LNG) and other fuel for power generation at the request of the Minister of Economy, Trade, and Industry in the event of an emergency. Additionally, in order to diversify LNG suppliers and secure a stable supply of metal minerals, JOGMEC will invest in natural gas transshipment and storage bases and mining businesses.

[1] https://www.meti.go.jp/english/information/data/laws.html

[2] http://www.shugiin.go.jp/internet/itdb_gian.nsf/html/gian/menu.htm

[3] http://www.jogmec.go.jp/about/organization_001.html

[Japan] Chugoku Electric Power Received its First Supply of LNG from the U.S. Sabin Pass LNG Project

Chugoku Electric Power (Chugoku EPCo), headquartered in Hiroshima Prefecture, announced on January 7, 2020, that it has purchased and received liquefied natural gas (LNG) from the Sabin Pass LNG Project (SPL Project) at Yanai Power Station in Yamaguchi prefecture.[1] [2] [3] Chugoku EPCo signed a contract to purchase up to 400,000 tons of LNG annually for 17 years from Total Gas and Power Asia Ltd, a French energy company.

The SPL Project, operated by Cheniere, a U.S. LNG company, is located in Cameron Parish, Louisiana.[4] The LNG was loaded onto the carrier BW Tulip on December 9, 2019, in Louisiana. This is the first time that Chugoku EPCo has received LNG produced in the U.S., and the first time that it has received LNG containing shale gas. The LNG price index is based on the U.S. natural gas market price.

Chugoku EpCo is working to diversify its suppliers and procurement methods, alleviate its quality constraints, and reduce procurement prices, in order to improve the stability of its LNG procurement and reduce risks due to fluctuations in fuel prices.

[1] http://www.energia.co.jp/e/corp/pr/pr.html

[2] http://www.energia.co.jp/business/lng/lng1.html

[3] http://www.energia.co.jp/press/2020/12235.html

[4] https://www.cheniere.com/terminals/sabine-pass/

[Japan] JERA and Osaka Gas Began Commercial Operation at the Freeport LNG Train #1 in Texas, USA

On December 10, 2019, JERA (Japan’s Energy for a new eRA)[1] and Osaka Gas, owned by the Daigas Group and headquartered in Osaka[2], announced that the Freeport LNG Project in Texas, U.S., has begun commercial operations for its LNG Train #1 on December 8, 2019.[3] The two companies participate in the project through FLNG Liquefaction, a joint venture of JERA, Osaka Gas and Freeport LNG Development headquartered in Houston, Texas. JERA is a joint venture between Tokyo Electric Power Fuel & Power (headquartered in Tokyo)[4] and Chubu Electric Power (headquartered in Nagoya City, Aichi Prefecture)[5].

The two companies have participated in the project since October 2014. The Freeport LNG Project is operated by Freeport LNG Development, headquartered in Houston, Texas.[6] The LNG Train #1 has a liquefaction capacity of approximately 5 million metric tons per year, and Osaka Gas and JERA will receive about each 2.32 million metric tons of LNG per year under 20-year Liquefaction Tolling Agreements with FLNG Liquefaction.[7]

[1] https://www.jera.co.jp/english/corporate/

[2] https://www.osakagas.co.jp/en/aboutus/corporate_profile/

[3] https://www.jera.co.jp/information/20191210_439

[4] https://www7.tepco.co.jp/fp/about/index-e.html

[5] https://www.chuden.co.jp/english/corporate/ecor_company/ecom_outline/index.html

[6] http://freeportlng.com/about/corporate-history/

[7] https://www.osakagas.co.jp/company/press/pr_2019/1283872_40360.html

［USA］Seattle to Transition Municipal Buildings Away from Fossil Fuels

On January 8, 2020, Seattle Mayor Jenny Durkan signed Executive Order 2020-01 to advance a Green New Deal for the city.[1] The executive order’s goals mirror those in the city’s climate action plan, released in April 2018, and includes substantial provisions for transitioning municipal buildings away from using fossil fuels through electrification.[2] Under the executive order, all new or substantially altered city-owned buildings will be required to use electricity rather than fossil fuels for activities such as heating, cooling, or cooking. In order for buildings to be considered completed or altered during the 2021 or 2022 budget year, strategies for using electricity over fossil fuels must be submitted by June 1, 2020. An interdepartmental team is tasked with forming a strategy to electrify buildings by January 2021.

By electrifying its buildings, Seattle is taking a big step towards reducing its carbon emissions. According to the Sierra Club, buildings are responsible for 35% of Seattle’s emissions.[3] Although there are some concerns that electrifying buildings does not solve issues of fossil fuel reliance—79% of national energy production comes from fossil fuels—, Seattle is a unique case.[4] According to the city’s utility, Seattle City Light, 91% of the city’s energy mix is hydroelectricity while coal and natural gas make up 1% each.[5]

[1] https://durkan.seattle.gov/wp-content/uploads/sites/9/2020/01/Final-Executive-Order-2020-01-Advancing-a-Green-New-Deal-for-Seattle_.pdf

[2] http://greenspace.seattle.gov/wp-content/uploads/2018/04/SeaClimateAction_April2018.pdf

[3] https://www.sierraclub.org/washington/sierra-club-s-response-mayor-durkan-s-executive-order

[4] https://www.eia.gov/todayinenergy/detail.php?id=41353

[5] https://www.seattle.gov/light/FuelMix/

[Japan] Hokkaido Electric Power Company Restarted the Tomato-Atsuma Power Plant Unit 1 after Iburi Earthquake

Due to the Hokkaido Eastern Iburi earthquake that occurred on September 6, 2018, the Hokkaido Electric Power Company suffered damage at several of its power plants as well as its transmission and distribution infrastructure, causing a massive blackout in the region. On September 19, 2018, a regional power operator announced that it had restarted the Tomato-Atsuma thermal power plant Unit 1 after a trial operation was successfully performed to gradually increase the output. Prior to the restart of the power plant, the Hokkaido Electric Power Company had set power saving time from 8:30 am to 8:30 pm on weekdays by encouraging energy users to reduce their energy consumption as much as possible, targeting a 10% reduction in electricity demand. After restoring the Tomato-Atsuma power plant Unit 1, the company canceled the power saving time period and resumed its plans for energy saving for the winter season at normal levels. The company is working to bring two more Tomato-Atsuma power plant units back online soon.[1] 

Meanwhile, the earthquake caused significant damage to the transmission and distribution facilities that the utility owns and operates. As of September 16, 2018, the Hokkaido Electric Power Company has temporarily restored the No. 71 transmission tower on the Iwachishi line (66kv), and it has been working on repairs on the No. 107 transmission tower, which was destroyed by a landslide. The Hokkaido Electric Power Company expects to restore the No. 107 tower as well as the No. 52 transmission tower on the Karikachi line (275kW) by the middle of November. It also has considered changing to an alternative route for the transmission line, in order to avoid potential long-term landslide risks. There was also significant damage to distribution networks, with a total of 327 supporting facilities, 295 electric wires, and 428 transformers damaged. As of September 16, 2018, the blackout continued to affect 59 homes in Atsuma Town and Abira Town.[2]

[1] http://www.hepco.co.jp/pdf/18091901.pdf

[2] http://www.hepco.co.jp/pdf/18091601.pdf

[Japan] TEPCO and Mitsubishi Hitachi Power Systems Jointly Launched a Remote Monitoring Service to Improve the Operational Efficiency of Thermal Power Plants

On July 13, 2018, Tokyo Electric Power Company’s (TEPCO) subsidiary, Tokyo Fuel & Power and Mitsubishi Hitachi Power Systems (MHPS) jointly announced that they had begun to offer a remote monitoring service to improve the operational efficiency of thermal power plants. The service includes the early detection of abnormal conditions, remote monitoring, cause analysis, and countermeasures, by using an IoT platform integrated with data. Their initial customer for the service is the Pagbilao Power Plant in the Philippines, a coal-fired power plant operated by TeaM Energy Corporation. The service will enable the Pagbilao power station to improve its operational efficiency and reduce its future operation and maintenance (O&M) costs. The remote monitoring service is one of the O&M solutions and services that both companies would like to pursue in the region.

TEPCO and the MHPS are aiming to establish a joint business that will aggressively provide O&M solutions and services for coal-fired power plants in the Southeast Asia region, where each firm can utilize its own operational infrastructure and existing resources. In September 2016, both companies signed a business alliance agreement to improve the operational efficiency of domestic and overseas thermal power plants. Since then, they have been working together to jointly develop O&M solutions and services for thermal power generation. In April 2017, the two companies began to demonstrate a service for thermal power plants that applied a jointly developed abnormality prediction model. The model integrates TEPCO’s knowledge of O&M solutions with MHPS’ capabilities in design, construction and after-sales services.

[USA] “Interior Announces Region-Wide Oil and Gas Lease Sale for Gulf of Mexico”

(Department of the Interior, 12 July 2018)

Deputy Secretary of the Interior (DOI), David Bernhardt, recently announced that the Department of the Interior (DOI)’s will open up 78 million offshore acres spanning Texas, Louisiana, Mississippi, Alabama, and Florida –titled Lease Sale 251- for the exploration and development of oil and gas resources. This regional-lease will include “all available unleased areas in federal waters of the Gulf of Mexico.” This strategy is in line with Trump’s “America-First Offshore Energy Strategy.” It is speculated that the Gulf of Mexico holds around 48 billion barrels of “undiscovered technically recoverable oil and 141 trillion cubic feet of undiscovered technically recoverable gas.” Vincent DeVito, Counselor to the Secretary for Energy Policy, stated that US energy production can be both competitive and environmentally safe – and this lease will allow the US to have a secure energy future.