It has been an exceptionally busy period since the last issue of BIC Magazine.
Thomas Brinsko
Thomas Brinsko, CEO, BIC Alliance
BIC Alliance hosted an industry appreciation event — our 16th Annual BIC Crawfish Boil — where we prepared 3,500 pounds of crawfish for almost a thousand guests. Additionally, we co-hosted our semiannual industrial procurement breakfast with Economic Alliance-Houston Port Region. Since the beginning of May, our team attended six major conferences, covering refining, hydrogen, storage terminalmidstream, upstream, environmental and safety sectors. As you know, BIC Magazine comprehensively covers the energy sectors, and conference season is a critical time for us to gather data, collect intelligence and discern emerging trends. The Biden administration has also been notably active, implementing a series of energy policies that span the entire spectrum of the energy industry. Three significant actions affecting the upstream, storage and power generation sectors include:
Upstream: Restrictions on new O&G leasing
The Biden administration has imposed restrictions on new O&G leasing across 23 million acres of the National Petroleum Reserve in Alaska (NPR-A). This move followed the contentious approval of ConocoPhillips' Willow project, which will produce 180k b/d of oil at its peak on Alaska's North Slope in the NPR-A. The project drew severe criticism from environmentalists who felt it contradicted President Biden's climate pledges. Now, nearly half of the federal petroleum reserve is off limits for petroleum leasing. This decision has sparked significant backlash in Alaska, with Senators Dan Sullivan and Lisa Murkowski labeling it as illegal and predicting ensuing lawsuits. The original purpose of the petroleum reserve was to bolster energy security; however, this action seems to be steering us toward energy insecurity.
Energy storage: Sale from the Northeast Gasoline Supply Reserve
Recently, the DOE's Office of Petroleum Reserves reported the sale of 42 million gal of gasoline from the Northeast Gasoline Supply Reserve. Established in 2014 after damage caused by Superstorm Sandy in 2012, this reserve was intended to provide emergency fuel supplies to the Northeast in the event of future natural disasters. However, the timing and nature of this sale appear to be politically motivated, aimed at influencing gasoline prices ahead of upcoming elections rather than addressing a genuine supply emergency. This move is reminiscent of the depletion of the Strategic Petroleum Reserve, which has seen its levels halved since President Biden took office. Despite claims by U.S. Energy Secretary Jennifer Granholm that refilling the SPR is a priority, the administration's actions suggest otherwise.
Power generation: New emission rules for power plants
The EPA has introduced new rules to significantly cut emissions from power plants. These regulations require all coal-fired plants and new natural gas plants to reduce GHG emissions by 90% through the installation of carbon capture technology within eight years. Existing coal-fired units operating past 2039 must achieve the same reduction by 2032, while units retiring before 2039 must begin co-firing with natural gas by 2030. These stringent requirements pose two major challenges. First, the cost of implementing carbon capture technology is prohibitively high, potentially leading to plant closures and discouraging new construction. Second, CCUS technology is not yet commercially viable on a large scale. The rules are already facing formidable legal challenges from several states and the Edison Electric Institute, which argues that the technology is not ready for widespread deployment.
The implications of these regulations are profound, potentially leading to the premature retirement of coal-fired power plants, which currently provide around 20% of the nation's electricity. This comes at a time when power demand is soaring due to the growing adoption of electric vehicles and the expansion of data centers. Relying solely on intermittent power sources like wind and solar could jeopardize the reliability of our aging power grid. Given these developments, I have scheduled a meeting with my Generac generator dealer. Backup power seems more crucial than ever. Here's hoping for a business-friendly outcome in the next election! In the meantime, stay informed, friends; it's going to be a roller coaster year.
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Best regards, Thomas Brinsko
