WHAT’S HAPPENING TODAY: Good afternoon, readers, and Happy Wednesday! In today’s edition of Daily on Energy, Callie and Maydeen take a look at U.S. oil refiners’ Q3 profits and Argentina’s plans to boost oil exports.
We also examine new data that shows nations seeking to bolster their renewable energy capacity are being hindered by a slow rollout of wind power. Also, top turbine manufacturer, GE Vernova, says it found problems with several of its turbines months after an incident where one of its blades shattered off the coast of Nantucket.
Meanwhile, power utilities settled with the EPA over violations of coal ash regulations. California officials also touted that the EPA is likely to approve its plan to end the sale of gasoline cars by 2035. Lastly, Sen. Bill Cassidy announces grant funds for pipeline safety in Louisiana.
In today’s election countdown, we take a look at an environmental advocacy group that released a new ad connecting Former President Donald Trump to extreme hurricane events.
Welcome to Daily on Energy, written by Washington Examiner energy and environment writers Callie Patteson (@CalliePatteson) and Maydeen Merino (@MaydeenMerino). Email cpatteson@washingtonexaminer dot com or mmerino@washingtonexaminer dot com for tips, suggestions, calendar items, and anything else. If a friend sent this to you and you’d like to sign up, click here. If signing up doesn’t work, shoot us an email, and we’ll add you to our list.
OIL MARGINS DROP: U.S. oil refiners are expected to report a slump in profits for the third quarter of 2024 compared to last year, amid increased fuel supply and lower demand.
The details: Using the 3-2-1 crack spread, U.S. refinery margins dropped to $14.28 last month, the lowest level since early 2021, according to estimates from Reuters. Crack spreads for gasoline and diesel also dipped to record levels throughout the third quarter. The U.S. gasoline crack spread dropped to $11.73 a barrel in September, while the diesel crack spread fell to $17.98.
As a result, large oil refiners, such as Valero Energy, Marathon Petroleum, and Phillips 66, are expected to report earnings much lower than they were this time in 2023. The profits don’t come as a complete surprise, as industry players have pointed to decreasing demand for fuel. TD Cowen Analyst Jason Gabelman told Reuters fuel demand sits at around 5% below levels from before the coronavirus pandemic, while supply has risen.
A reminder: The 3-2-1 crack spread approximates the theoretical yield at a typical refinery in the U.S. that produces two barrels of gas and one barrel of diesel for every three barrels of crude oil.
ARGENTINA’S OIL BOOM: Argentina has seen oil production soar, with output projected to reach more than 1 million barrels per day by 2030, thanks to new pipelines running across the oil-rich country.
The details: Argentina is home to Vaca Muerta, the fourth-largest shale oil and second-largest shale gas deposit in the world. The nation’s government, under libertarian President Javier Milei, has been pushing for greater investments in oil and gas infrastructure to boost exports. Multiple projects are ongoing to expand the Vaca Muerta pipeline network, including one expected to carry oil nearly 600km (over 372 miles) to the Atlantic Ocean, according to the Financial Times.
Construction for these pipelines has ramped up in recent years, with one finishing in 2023, restarting oil exports to Chile for the first time in 17 years. Another pipeline is expected to be completed by the end of this year, stretching 130 km (80 miles) from Vaca Muerta. A second stretch of this pipeline is set to be built by 2026, carrying oil another 440 km (273 miles).
Since 2019, Argentina has seen oil output increase four times over from 90,000 barrels per day to 369,000 barrels per day as of August. At this rate, the country may reportedly produce more than 1.1 million barrels – paving the way for the export of nearly 700,000 barrels per day. Energy experts have indicated that this could easily make Argentina a major player on the global energy stage.
Key quote: “We’ve proven the quality of Vaca Muerta’s formation is second to none, [even greater] than the US’s Permian Basin,” Miguel Galuccio, founder of Argentina shale investor Vista Energy, told the outlet. “In the US they have 500 drill rigs working; we have just 30. We have to think about how much potential we still have.”
DEAD CALM FOR WIND POWER BUILDOUT: As dozens of nations seek to triple renewable energy capacity by 2030, a slow rollout for wind power is reportedly hurting overall progress.
The details: New data from the International Renewable Energy Agency reviewed by Bloomberg indicate that the current rate of wind turbine deployment isn’t enough to reach the global renewable energy targets. In 2024, wind installations only grew by 5%, compared to a 34% increase for solar power. If wind growth continues at this rate, by 2030, the power source is expected to only hit 77% of necessary capacity needed to reach 2050 net-zero goals Meanwhile, solar will have hit more than 90% of necessary capacity the same year.
This slow growth can largely be attributed to insufficient materials, supply chain bottlenecks, and high costs to build wind farms – and the cost of wind power itself. Bloomberg reported that at the end of 2023, the cost of wind power in the U.S. jumped 40% from 2021.
Key quote: “One of the big problems here is wind,” Oliver Metcalfe, head of wind research at BloombergNEF, said. “The slow pace of wind progress is affecting the efficacy of that tripling renewables target.”
WIND TURBINE COMPANY HITS ANOTHER GUST OF BAD LUCK: GE Vernova, one of the top turbine manufacturers in the world, has reportedly found problems with several of its turbines months after it saw one of its blades shatter off the coast of Nantucket.
The details: The company revealed on Wednesday that several of its blades were found to have a “manufacturing deviation” that was similar to that of the nearly 300-foot-long blade that broke and fell into the ocean in July, according to the New York Times. GE Vernova did not specify how many blades had the problems, but said it was a “low single-digit” number. The blades are reportedly believed to have been made at a factory in Quebec.
Blade failures have resulted in $700 million in losses for the company across several offshore wind projects, including Vineyard Wind off Nantucket and Dogger Bank off the coast of England. The latter reportedly recently saw two blade failures that GE Vernova attributed to installation and operation errors.
“We’ve had a difficult four months and are disappointed given the impact on our customers and on our financial results,” CEO Scott Strazik reportedly told analysts on a call.
COAL ASH POLLUTION SETTLEMENTS: Several power and utility companies across the U.S. and Puerto Rico have agreed to settle with the Environmental Protection Agency over violations of coal ash regulations.
The details: On Wednesday, the EPA revealed the four companies have agreed to pay civil penalties as high as $278,000 after violating the Resource Conservation and Recovery Act’s regulations for coal ash surface impoundments and landfills. These regulations are meant to protect communities from coal ash contamination in groundwater, drinking water, and the air, which can occur when the ash is not managed and contained properly.
Among the violations, the EPA accused the four companies of failing to comply with certain ground water monitoring system requirements, failing to meet groundwater monitoring system performance standards, failing to install groundwater monitoring systems that look at the quality of water passing waste boundaries of coal ash units, and failing to monitor certain groundwater wells at least twice a year.
As part of the settlements, AES Puerto Rico, L.P. has agreed to pay a civil penalty of $71,845, Pennsylvania-based Keystone-Conemaugh Projects, LLC has agreed to pay a civil penalty of $185,927, the Alabama Power Company has agreed to pay a civil penalty of $278,000, and the Public Service Company of Colorado has agreed to pay a civil penalty of $134,500.
CALIFORNIA EXPECTS EPA TO APPROVE ITS ZERO EMISSION VEHICLES PLAN: California Air Resources Board Executive (CARB) executive officer Steven Cliff told Reuters he expects the EPA to approve the state’s plan to end the sale of gasoline cars by 2035.
State regulators in 2022 set rules to ensure that all new cars and light trucks sold in California to be zero-emission vehicles or plug-in hybrids by 2035. California needs the EPA to approve its waiver to set its own emission policies under the federal Clean Air Act.
“We certainly made it clear that we expect EPA to grant these waivers,” Cliff told Reuters. “What’s important is we cannot enforce a rule without that waiver in place.”
The EPA has also sought to cut vehicle emissions through its final rule on light- and medium-duty vehicles starting with mode year 2027.
ICYMI – MILLIONS FOR PIPELINE SAFETY IN LOUISIANA: Sen. Bill Cassidy announced Tuesday new federal funding to go toward pipeline safety in his state of Louisiana. The state will receive almost $13.7 million of grant funding from the Infrastructure Investment and Jobs Act.
“Pipelines play a crucial role in delivering the energy that powers our everyday lives,” Cassidy said. “This investment from the Infrastructure Law will significantly improve the safety and efficiency of Louisiana’s infrastructure and build our economy for 2050.”
ELECTION COUNTDOWN – NEW LCV AD: The League of Conservation Voters, an environmental advocacy group released a new ad connecting Former President Donald Trump to extreme hurricane events and calling climate change “a hoax.”
The ad comes weeks after Hurricanes Milton and Helene hit parts of Florida, Georgia, and North Carolina. It lists the names of newborn baby girls and then quickly cuts to clips of hurricanes, asking, “What will be the name of the storm that impacts her life?”
“Will it destroy her home? Devastate her community? Donald Trump doesn’t believe in climate change,” the ad said. It continues to say that there needs to be a leader to “protect us,” adding, “Her name is Kamala.”
Watch the ad here.
There are 12 days until the election.
RUNDOWN
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