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Energy

Every two weeks Viohl & Associates publishes an Energy Update, which provides summaries of significant federal and state energy news.  

Energy Update, March 25

March 28, 2016

In the States

AK – Governor Bill Walker will seek the state legislature’s approval to sell a significant part of the state’s royalty crude oil. The current plan would sell oil of up to 25,000 barrels per day to Tesoro Alaska, one of the country’s largest refining companies, under a five year contract. The state Department of Natural Resources (DNR) recently concluded that the sale, which is projected to generate about $45 to $56 million in revenue, is in the state’s best interest. The DNR’s decision follows a favorable recommendation to the state legislature from the Alaska Royalty Oil and Gas Development Board, which oversees proposed royalty sales. Alaska is currently facing a $3.8 billion budget deficit,  largely attributable to low oil and gas prices. Walker administration plans to sell much of state’s royalty oil to TesoroThe Alaska Dispatch News

MA – Governor Charlie Baker said he would support efforts by the General Court, the state’s legislature, to pass an omnibus energy package that helps “to spur the development of offshore wind.” The Governor, in his message to legislators, also reiterated his primary focus of allowing the state’s utilities to solicit up to 2,400 megawatts of Canadian hydroelectricity, which the Governor notes will help the state meet its carbon emissions targets. Concurrent with the Governor’s announcement, three former secretaries of energy and environmental affairs, all under former Governor Deval Patrick, announced their support of Governor Baker’s plans. The state House of Representatives is expected to begin debate on a comprehensive energy bill in April. Baker amenable to offshore windThe Commonwealth and Former Patrick secretaries have Baker’s back on hydropower pushWWLP 22

WY – Governor Matt Mead published his administration’s updated statewide energy strategy. The Governor’s new plan, which builds upon previously-issued goals in 2013, seeks to “make coal a more viable resource and [includes] efforts to grow the state’s wind-energy sector.” Comparing the original and updated energy strategies, Governor Mead noted that 29 of the 47 energy-, conservation-, and economic development-focused initiatives listed in the initial plan were completed, including promoting liquefied natural gas and updating requirements around oil and gas operations. The 2016 strategy features 11 new initiatives, including completing an inventory of state and federal cooperative agreements, reviewing state oil and gas environmental regulations, and executing timely energy audits to improve efficiency. “Wyoming has a track record of excellence in energy development and stewardship,” said Governor Mead. “The energy strategy provides a systematic approach. The strategy is dynamic and this update continues this important work.” Mead unveils a new energy strategy to reflect the timesThe Casper Star Tribune

Federal and Regional

The Obama administration released a revised proposed offshore leasing plan that “eliminates the administration’s initial plan to auction off drilling rights in as many as 104 million acres of the mid- and south-Atlantic in 2021.” The modified program, however, allows for the selling of oil and gas leases in the Gulf of Mexico and in the Arctic waters, namely in the Chukchi and Beaufort seas. The policy change followed months of lobbying by both environmentalists and coastal communities in favor of the alteration and those opposed, including the oil industry and some Governors, principally Nathan Deal of Georgia, Nikki Haley of South Carolina, and Terry McAuliffe of Virginia. The revised proposal, which does not affect the oil industry’s existing drilling rights, is subject to public comment, which may further impact the final leasing plan that is expected to be completed by the end of this year. “This is a balanced proposal that protects sensitive resources and supports safe and responsible development of the nation’s domestic energy resources to create jobs and reduce our dependence on foreign oil,” said Interior Secretary Sally Jewell. Obama bars Atlantic offshore oil drilling in policy reversalBloomberg

A bipartisan group of 19 Senators wrote to Environmental Protection Agency (EPA) Administrator Gina McCarthy, urging her to set higher blending targets under the national Renewable Fuel Standard (RFS) in 2017. The EPA retroactively set blending targets for the RFS for 2014, 2015, and 2016 last November and is expected to issue the 2017 targets in the coming weeks. According to the Senators, the EPA’s setting of low blending targets in previous years, primarily due to concerns that higher percentages could cause vehicle issues and the lack of distribution infrastructure, does not follow congressional intent. “We need a strong RFS, and we need more biofuels. “We expect that you get the program ‘back on track’,” wrote the Senators, “and we look forward to seeing a proposed rule released on time that removes the distribution waiver and re-establishes the United States as a leader in the biofuel sector.” Senators want higher blending targets for RFS in 2017Morning Consult

Energy Update, March 11

March 28, 2016

In the States

ME – Governor Paul LePage announced his opposition to a proposal to expand solar power capacity in Maine. The proposal, which was supported by solar power companies, the state’s Office of the Public Advocate, and utilities Central Maine Power and Emera Maine, seeks to “grow solar capacity in Maine from about 28 megawatts to 250 megawatts in five years, or two percent of the state’s power needs.” According to supporters, the plan would have created an estimated 800 jobs and allowed net metering through 2029 by encouraging the growth of community, industrial, and commercial solar farms. “We’re not opposed to solar,” said Lisa Smith, a senior planner in the Governor’s energy office. “But we’re looking out for the cost to all ratepayers. We were in favor of a mechanism that went in a market-based direction, but this isn’t it.” LePage opposes compromise to rapidly expand solar powerThe Portland Press Herald

NH – The House of Representatives supported a bill to raise the cap on the state’s net metering program, which permits solar power-generating residents and businesses to sell their excess energy into the greater electric grid. The current cap on reimbursement for residents is set at 50 megawatts (MW) while the recently-passed measure would double the cap to 100MW. The state Senate, earlier in the current session, backed a measure to increase the cap to 75MW. Governor Maggie Hassan supports lifting the cap to 100MW, a step she called a “critical part of New Hampshire’s move toward a clean energy economy.” NH House votes to raise cap on net meteringNHPR

OR – The Legislative Assembly approved a measure to exclude coal from the state’s energy supply by 2030 and to double mandates for renewable energy by 2040. Specifically, the bill requires the state’s utilities – Portland General Electric (PGE) and Pacific Power – to follow timelines to remove coal-fired electricity generation while also mandating a 50% renewable energy standard, up from a 25% standard by 2025 that was set in 2007. PGE, which serves more than 900,000 customers across the state, projects the change will increase costs for the average consumer by about 1.5% annually between 2017 and 2040. Known as the Clean Electricity and Coal Transition Plan, the legislation received bipartisan support in both the House and the Senate and now heads to Governor Kate Brown’s desk for her signature. Governor Brown indicated earlier that she would support the legislation, noting she believes it "equips Oregon with a bold and progressive path towards the energy resource mix of the future." Oregon Senate passes bill to scrap coal power by 2030Associated Press/KTVZ

TX – Net Power, a collaboration between Exelon Corporation, CB&I, and 8 Rivers Capital, broke ground on a “first-of-its-kind” natural gas power plant near Houston. The 50-megawatt pilot project, which is projected to be operational in 2017, is unique because it will send carbon dioxide emitted from the power plant into a sequestration pipeline that will allow the gas to be stored, used for oil recovery, or employed in industrial practices. The $140 billion pilot plant will utilize the Allam Cycle, a thermodynamic cycle technology that generates power from fossil fuels by burning natural gas with oxygen and high-pressure carbon dioxide. “Net Power is the first technology that allows policy and economics to work together, instead of against each other, to ensure the world meets our climate targets,” said Net Power CEO Bill Brown. Net Power beaks ground on demonstration plantsYahoo News

UT – The State Legislature passed legislation to invest at least $50 million for a deep-water, coal shipping facility at the Port of Oakland, California. Supporters believe the bill, which now heads to Governor Gary Herbert’s desk for his consideration, will assist Utah in selling coal and other products overseas. The bill transfers sales-tax revenue funds along with federal mineral royalties to a new infrastructure fund to be controlled by the state’s Permanent Community Impact Board. The Board traditionally has loaned or granted funds to Utah’s rural coal counties to pay for local developments and projects. Before any money can be spent, the new facility requires the approval of Governor Jerry Brown of California and the Oakland City Council. Utah Legislature Oks $53 million case swap to fund Oakland coal portThe Salt Lake Tribune

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