Mostly related to the fact that dirtier, heavier forms of Crude have nearly Zero value in today’s Market despite recent Court victories (if you can get Brent for $25 why would you buy anything else?).
TransCanada Pipeline from the Alberta Tar Sands Canceled!
Trump Administration Takes Keystone XL Dispute to Supreme Court
Associated Press, Pipeline & Gas Journal
6/16/2020
The Trump administration has asked the U.S. Supreme Court to revive a permit program that would allow the disputed Keystone XL pipeline and other new oil and gas pipelines to cross waterways with little review.
Earlier this year, a Montana judge suspended the U.S. Army Corps of Engineers’ permit program when environmental groups seeking to block construction of the Keystone XL oil pipeline argued the permit process allows companies to skirt responsibility for damage done to water bodies.
The permit program, known as Nationwide Permit 12, allows pipelines to be built across streams and wetlands with minimal review if they meet certain criteria.
Canadian company TC Energy needs the permit to build the long-disputed pipeline from Canada across U.S. rivers and streams. Industry representatives said U.S. District Judge Brian Morris’ ruling blocking the program could also delay more than 70 pipeline projects across the U.S. and add as much as $2 billion in costs.
Morris ruled that Army Corps officials in 2017 improperly reauthorized the program, which he said could harm protected wildlife and wildlife habitat.
Last month, the 9th U.S. Circuit Court of Appeals denied an emergency request to block Morris’ ruling filed by the U.S. government, states and industry groups.
On Monday, U.S. Solicitor General Noel Francisco asked the Supreme Court to do what the 9th Circuit court wouldn’t: block Morris’ ruling and let the permit program operate again while the lawsuit plays out in court.
The government’s application to the court says Morris shouldn’t have blocked the program, which has been in effect since the 1970s, and the Army Corps and private companies “rely on it for thousands of activities annually,” the solicitor general wrote.
“The district court had no warrant to set aside NWP 12 with respect to Keystone XL, let alone for the construction of all new oil and gas pipelines anywhere in the country,” Francisco wrote.
One of the plaintiffs in the lawsuit, the Center for Biological Diversity, said in a statement that the Supreme Court should reject the Trump administration’s request.
“Pipelines like Keystone XL are a disaster waiting to happen,” senior attorney Jared Margolis said in the statement.
In May, TC Energy built the first piece of the disputed oil sands pipeline across the U.S. border. But with Morris’ ruling on the permit program, it would be difficult for the company to complete the $8 billion project.
The 1,200-mile (1,900-kilometer) pipeline from Alberta to Nebraska was stalled for much of the past decade before President Donald Trump was elected and began trying to push it through to completion.
Dakota Access Pipeline
Federal judge orders Dakota Access pipeline to close
By BEN LEFEBVRE, Politico
07/06/2020
A federal judge on Monday ordered the Dakota Access Pipeline in North Dakota to stop delivering oil and vacated a key federal permit that had allowed it to operate, a dramatic setback for the controversial pipeline.
The order is the second major setback to the U.S. pipeline industry in as many days, coming less than 24 hours after backers of the Atlantic Coast Pipeline canceled that natural gas project after years of legal challenges. The order is also another rebuke to the Trump administration’s attempts to move quickly to approve pipelines, which critics have said leaves them open to legal challenges from environmental groups.
Judge James Boasberg for the U.S. District Court District of Columbia ruled that the Dakota Access pipeline must be emptied while the Army Corps of Engineers conducts the environmental impact review that it should have completed before it granted an easement that allowed Energy Transfer Partners to build the pipeline bringing North Dakota crude oil to Illinois in the first place.
Native American tribes had challenged the easement as part of their years-long legal battle against the pipeline, which they have said poses an environmental threat to Lake Oahe, a reservoir on tribal land that the pipeline passes under. “It took four long years, but today justice has been served at Standing Rock,” Earthjustice attorney Jan Hasselman, who represented the Standing Rock Sioux Tribe, said in a statement.
A spokesperson for Energy Transfer Partners did not immediately reply to questions. The company’s board of directors includes former Energy Secretary Rick Perry, and its CEO Kelcy Warren has been a supporter of President Donald Trump.
The company must close the pipeline within 30 days.
Atlantic Coast Pipeline
Atlantic Coast Pipeline Canceled as Delays and Costs Mount
By Ivan Penn, The New York Times
July 5, 2020
Two of the nation’s largest utility companies announced on Sunday that they had canceled the Atlantic Coast Pipeline, which would have carried natural gas across the Appalachian Trail, as delays and rising costs threatened the viability of the project.
Duke Energy and Dominion Energy said that lawsuits, mainly from environmentalists aimed at blocking the project, had increased costs to as much as $8 billion from about $4.5 billion to $5 billion when it was first announced in 2014. The utilities said they had begun developing the project “in response to a lack of energy supply and delivery diversification for millions of families, businesses, schools and national defense installations across North Carolina and Virginia.”
The two energy companies won a victory just last month in the Supreme Court over a permit from the U.S. Forest Service, but said that “recent developments have created an unacceptable layer of uncertainty and anticipated delays” for the pipeline. They cited the potential for further legal challenges.
Dominion also said on Sunday that it was selling all of its gas transmission and storage assets to an affiliate of Warren Buffett’s Berkshire Hathaway in a deal valued at $9.7 billion.
Environmental groups have long criticized Dominion and Duke for their continued development of fossil fuel projects. The two companies have argued that they have increasingly added renewable energy sources to produce electricity that include wind, solar and hydro power, but they also contend that they need natural gas for the times when those clean energy resources are not available.
“For almost six years we have worked diligently and invested billions of dollars to complete the project and deliver the much-needed infrastructure to our customers and communities,” executives for Dominion and Duke said in a prepared statement. “This announcement reflects the increasing legal uncertainty that overhangs large-scale energy and industrial infrastructure development in the United States.”
Gillian Giannetti, a lawyer with the Sustainable FERC Project at the Natural Resources Defense Council, quickly issued a statement in support of the utilities’ move. “The costly and unneeded Atlantic Coast Pipeline would have threatened waterways and communities across its 600-mile path,” she said. “As they abandon this dirty pipe dream, Dominion and Duke should now pivot to investing more in energy efficiency, wind and solar — that’s how to provide jobs and a better future for all.”
Speaking of a Green Economy- Nobel Laureate Joseph Stiglitz
Invest in the green economy and we’ll recover from the Covid-19 crisis
by Joseph Stiglitz, The Guardian
Thu 2 Jul 2020
Although it seems like ancient history, it hasn’t been that long since economies around the world began to close down in response to the Covid-19 pandemic. Early in the crisis, most people anticipated a quick V-shaped recovery, on the assumption that the economy merely needed a short timeout. After two months of tender loving care and heaps of money, it would pick up where it left off.
It was an appealing idea. But now it is July, and a V-shaped recovery is probably a fantasy. The post-pandemic economy is likely to be anaemic, not only in countries that have failed to manage the pandemic (namely, the US), but even in those that have acquitted themselves well. The International Monetary Fund projects that by the end of 2021 the global economy will be barely larger than it was at the end of 2019 and that the US and European economies will still be about 4% smaller.
The current economic outlook can be viewed on two levels. Macroeconomics tells us that spending will fall, owing to households’ and firms’ weakened balance sheets, a rash of bankruptcies that will destroy organisational and informational capital, and strong precautionary behaviour induced by uncertainty about the course of the pandemic and the policy responses to it. At the same time, microeconomics tells us that the virus acts like a tax on activities involving close human contact. As such, it will continue to drive large changes in consumption and production patterns, which in turn will bring about a broader structural transformation.
We know from economic theory and history that markets alone are ill-suited to manage such a transition, especially considering how sudden it has been. There is no easy way to convert airline employees into Zoom technicians. And even if we could, the sectors that are now expanding are much less labour-intensive and more skill-intensive than the ones they are supplanting.
We also know that broad structural transformations tend to create a traditional Keynesian problem, owing to what economists call the income and substitution effects. Even if non-human-contact sectors are expanding, reflecting improvements in their relative attractiveness, the associated spending increase will be outweighed by the decrease in spending that results from declining incomes in the shrinking sectors.
Moreover, in the case of the pandemic, there will be a third effect: rising inequality. Because machines cannot be infected by the virus, they will look relatively more attractive to employers, particularly in the contracting sectors that use relatively more unskilled labour. And, because low-income people must spend a larger share of their income on basic goods than those at the top, any automation-driven increase in inequality will be contractionary.
On top of these problems, there are two additional reasons for pessimism. First, while monetary policy can help some firms deal with temporary liquidity constraints – as happened during the 2008-09 Great Recession – it cannot fix solvency problems, nor can it stimulate the economy when interest rates are already near zero.
Moreover, in the US and some other countries, “conservative” objections to rising deficits and debt levels will stand in the way of the necessary fiscal stimulus. To be sure, the same people were more than happy to cut taxes for billionaires and corporations in 2017, bail out Wall Street in 2008 and lend a hand to corporate behemoths this year. But it is quite another thing to extend unemployment insurance, healthcare and additional support to the most vulnerable.
The short-run priorities have been clear since the start of the crisis. Most obviously, the health emergency must be addressed (such as by ensuring adequate supplies of personal protective equipment and hospital capacity), because there can be no economic recovery until the virus is contained. At the same time, policies to protect the most needy, provide liquidity to prevent unnecessary bankruptcies and maintain links between workers and their firms are essential to ensuring a quick restart when the time comes.
But even with these obvious essentials on the agenda, there are hard choices to make. We shouldn’t bail out firms – like old-line retailers – that were already in decline before the crisis; to do so would merely create “zombies”, ultimately limiting dynamism and growth. Nor should we bail out firms that were already too indebted to be able to withstand any shock. The US Federal Reserve’s decision to support the junk-bond market with its asset-purchase programme is almost certainly a mistake. Indeed, this is an instance where moral hazard really is a relevant concern; governments should not be protecting firms from their own folly.
Because Covid-19 looks likely to remain with us for the long term, we have time to ensure that our spending reflects our priorities. When the pandemic arrived, American society was riven by racial and economic inequities, declining health standards, and a destructive dependence on fossil fuels. Now that government spending is being unleashed on a massive scale, the public has a right to demand that companies receiving help contribute to social and racial justice, improved health and the shift to a greener, more knowledge-based economy. These values should be reflected not only in how we allocate public money, but also in the conditions that we impose on its recipients.
As my co-authors and I point out in a recent study, well-directed public spending, particularly investments in the green transition, can be timely, labour-intensive (helping to resolve the problem of soaring unemployment) and highly stimulative – delivering far more bang for the buck than, say, tax cuts. There is no economic reason why countries, including the US, cannot adopt large, sustained recovery programmes that will affirm – or move them closer to – the societies they claim to be.
Keep It In The Ground (It Doesn’t Pay To Pump It Anyway)
BP and Shell will keep (some of) it in the ground
by Emily Pontecorvo, Grist
July 6, 2020
One of the biggest liabilities on the world’s climate balance sheet right now is all of the oil, gas, and coal sitting in the ground, discovered, but not yet dug up. For more than a decade, environmentalists and scientists have argued that we’re going to need to practice some restraint and keep those fossil fuels buried if we want a livable planet.
Now, the “keep it in the ground” movement may be getting its most significant victory to date. In recent weeks, BP and Shell, two of the biggest fossil fuel companies in the world, indicated they plan to lower the official value of their assets by several billion dollars due to declining oil and gas prices. That means these companies are looking at their reserves, looking at the price of oil and the state of the world, and saying, this is not worth nearly as much as it was before. And the economics of digging it up are changing.
BP was the first, announcing in mid-June that it expects to write down up to $17.5 billion of its oil and gas holdings in its next quarterly report, a 12 percent drop from the previous valuation. Playing into that is the expectation that oil prices, currently deeply depressed from the global economic slowdown caused by the pandemic, may never fully rebound as some countries, including the entire E.U., prioritize a “green recovery.” Previously, BP assumed its oil was worth $70 per barrel, but now the British multinational has lowered that estimate to $55.
The move renders some of BP’s assets completely worthless. Sources told Reuters the company would be writing off reserves in the Canadian oil sands and ultra-deepwater wells off Angola because they are too expensive to develop.
Shell joined the club on Tuesday, saying it would write down between $15 billion and $22 billion of its assets next quarter. The Dutch-British corporation, the world’s largest non-state owned oil and gas company, had a slightly different outlook than BP on oil prices, saying it was dropping its expectations to $35 a barrel this year, with a slight rebound to $40 next year, and a long-term recovery to $60.
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Meanwhile, ExxonMobil is resisting pressure to acknowledge economic realities and write down its own assets. Several oil and gas accounting experts have filed complaints with the Securities and Exchange Commission alleging that the American company’s inaction amounts to arrogance … and potentially accounting fraud.
The European/American divide, with BP and Shell on one side and Exxon on the other, echoes those companies’ recognition of their responsibility when it comes to climate change. Indeed, the write-downs reflect not just the current economic slowdown, but also the larger shift these companies are undergoing to make sure they are still relevant in a low-carbon economy. “Both are in this unique position of trying to figure out what is the next 20 to 30 years for our business and our business model, while also trying to navigate in a world that’s clearly heading towards a low-carbon future,” said Michelle Manion, lead senior economist at the World Resources Institute, a global research nonprofit. “But at the same time being beholden to these quarterly expectations about making profit. It’s a pretty tough spot to be in.”
Both Shell and BP pledged earlier this year to become net-zero companies by 2050. However, their plans are still light on the details and have been scrutinized for not being in line with the goals of the Paris Agreement. In a statement about BP’s write-down, CEO Bernard Looney said it was “rooted in our net zero ambition and reaffirmed by the pandemic.” BP is expected to release a clearer roadmap for reducing its emissions later this year. Manion told Grist that the World Resources Institute has been working with Shell on its greenhouse gas accounting and that the company is starting to think seriously about a portfolio that includes low-carbon assets.
The same pandemic-induced price dynamics pressuring oil majors to write down their assets are also leading to outright bankruptcies. The latest to go under is Chesapeake Energy, which led the fracking boom in the U.S. a decade ago. The New York Times estimated that roughly 20 American oil and gas producers have filed for bankruptcy so far this year.
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