‘Greedy’ US natural gas producers face political heat

Plus: UK malaise, Germany’s coalition, Russian Arctic, wind curtailment + MORE

FIRST UP: The Biden administration’s release of oil from the Strategic Petroleum Reserve captured the headlines this week, but the move is one big distraction. Releasing the equivalent of ten hours of global oil consumption over a matter of weeks was never going to dent a hyper-bullish oil market.

The debate around the SPR release prompted speculation that the White House could ban oil exports in a bid to tame gasoline prices over Thanksgiving. This would probably backfire spectacularly: US refiners cannot immediately shift operations to receive and process the lighter grades of crude produced in the US, potentially leading to fuel shortages.

In this case, wiser heads prevailed. But now there are early signs that calls to halt or curb exports of natural gas are gaining traction among prominent Democratic lawmakers. That’s the lead story right here in this issue. 👇

  • ICYMI: Woodside Energy has finally pulled the trigger on Scarborough LNG, Australia’s first new liquefied natural gas project in a decade, and shouldered a tonne of market risk in the process. Could this prove to be a pyrrhic victory for Woodside, and if so what does it say about the gas industry’s ability to meet rising demand for their fuel?  That’s this week’s breakout story (7½ minute read):

Energy Flux
Woodside goes it alone on Scarborough LNG
Not even a global gas shortage can convince investors to put their faith in newbuild liquefied natural gas projects, it seems. Australia’s Woodside Energy made big, risky concessions with private equity financiers to get its flagship Scarborough LNG project off the drawing board. Scarborough is a drop in the global LNG ocean, but the trouble faced by Woodside to get this far speaks volumes about the challenges of building greenfield plants today…
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IN THIS EMAIL:

💥Warren turns up heat on ‘greedy’ US natural gas producers

💥Cold snap puts Russia’s Arctic hydrocarbons dreams on ice

💥Coal blamed for ‘unnecessary’ wind power curtailment

💥Germany gets serious about coal-to-clean via gas

💥UK leans on gas peakers as energy crisis claims biggest scalp yet

🌎Global headlines by key topic (20+ links)

🧠Energised minds: ‘Stop trying to get Big Oil to accelerate the energy transition’

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💥Warren turns up heat on ‘greedy’ US natural gas producers

I wrote recently that the Biden administration is unlikely to cap LNG exports, but an intervention from Democratic Senator Elizabeth Warren suggests the political winds *might* be shifting.

Warren has written to “greedy” energy companies asking why they are exporting record volumes of natural gas while domestic prices rise for American consumers. She might find their answers a little embarrassing. US LNG exports were actively promoted by the Obama-Biden administration, which issued the first export licences to Gulf Coast liquefaction projects.

Her letter is a real gem. She blames major upstream gas producers for not selling gas below market price to utilities and industrial consumers while forking out on bonuses, share buybacks and dividends. Perhaps she should also be asking energy-intensive consumers and city gas suppliers why they chose not to hedge their exposure to global price movements.

The serious question is this: Could pressure from Warren and other Democrats convince the Biden administration to cap or curb US LNG exports using powers enshrined in the Natural Gas Act? If the White House decides exports are no longer in the public interest, things could get messy.

Most at risk are operators that export LNG to countries without a free trade agreement with the US. The Natural Gas Act requires gas exports to non-FTA countries to pass a ‘public interest’ legal test. If it fails, export authorisation can be revoked.

Non-FTA countries are the biggest recipients of US LNG and, as the Industrial Energy Consumers of America (IECA) told Energy Flux recently, are “the same countries that often create barriers to the importation of US manufactured goods”:

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