Biden’s new energy strategy: Drill, baby, drill

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Three things to start:

  1. The UAE ambassador to Washington said the state wants the OPC to start Produce more oil, faster. But his energy minister did not seem to agree, tweeting that the UAE did committed To the OPEC output programs.

  2. The President of Colombia told us that the United States No need to rely on Venezuela Correct the shortage of oil supply.

  3. And oil prices Fell hard Yesterday on hopes for peace in Ukraine and another supply of OPEC.

Welcome back to another bumper energy source, again live from CERAWeek.

The big news from Houston: by US Energy Minister Jennifer Greenholm Speech to oil officialsAsk them to increase productivity to fight rising prices.

The energy crisis dominated speech both on stage and in the corridors of Hilton America. Outside, protesters tried to remind managers inside that another crisis – climate – is no less urgent and even more devastating.

As Miles writes in our second comment, some of the delegates at the conference agreed.

Meanwhile, there is also talk of whether U.S. shale companies can meet the call for rising oil prices with a new drilling load. The U.S. government says they should. But, as Justin shows, investors still have a very different answer.

Bonus’s last note includes some insight into Russian sanctions, U.S.-Saudi relations and more by Amos Hochstein, the man who runs much of Biden’s foreign policy.All you need“To tame the prices.

Please note that the team will return to Houston again in April, for our Energy Source Live event. You still can To register Here.

Thanks for reading!

Biden’s climate policy is taking the back seat to an energetic ’emergency’

Jennifer Greenholm, the U.S. energy minister, told Houston oil executives on Wednesday that the state is now on a “war base” as it called for an immediate increase in oil production to prevent a price jump.

“We are on a war basis. We are in a state of emergency,” she told the CERAWeek conference. “It means releases from strategic reserves around the world, as we have done. It means you are producing more now, where and if you can.”

The comments mark a huge concrete change from a government that has in the past made climate policy the cornerstone of its energy strategy.

Restrictions on new parking leases on federal lands, along with a regulatory environment and a tighter balance for New pipesWere detrimental to an industry that has historically expressed skepticism about climate change.

But Greenholm noted that the administration would seek to minimize obstacles, saying the permits were “on the table.” The comment drew applause from oil executives.

Oil prices soared following Moscow’s invasion of Ukraine and sanctions by Western governments, including a US move to ban the import of Russian energy.

But U.S. oil production, which plummeted during the plague’s price crash, remained well below its historic highs, in part because investors told companies to prioritize dividends and cash flow over new drilling trips.

The shortage of manpower and other shortages of oilfield services have also delayed the growth of the new supply in the once fertile area.

“I know some of you are dealing with supply chain issues,” Granholm said. “At the moment of this crisis we need more oil supply.”

It also called on investors to start supporting the oil industry with a new boost in supply.

“I hope investors are listening – we can not have a single element that will stop the world,” said Granholm, who also appealed to the U.S. oil sector to form a new partnership with the federal government.

“We can not do that if we are fighting internal battles. Beltway lobbyists and politicians think it is time to recycle old talking points,” she said, referring to complaints that the Biden administration had blocked pipes and other infrastructure. “It’s the same old DC BS,” Granholm said.

(Derek Brewer)

. . . But climate policy is still at the forefront of oil heads

The last time I went to Houston, one issue alone was at the top of the oil companies’ agenda: climate.

From meetings with executives and panels on stage, to conversations in the hallways and drinks in the evening, the role of the industry in dealing with emissions (or their absence) was Dominant theme World Petroleum Congress three months ago.

But as Greenholm’s recent comments make clear, the narrative has changed. The war in Ukraine and the high prices it has caused mean that energy security has lowered the climate off the agenda.

Still, executives are eager to burn off their environmental authority to investors and pressure politicians to sit at the table when it comes to dealing with emissions.

Darren Woods, CEO of ExxonMobil, said the industry faces “two very important challenges: meeting the world’s energy needs and addressing climate change” – and should be given a role in deciding the approach to addressing both:

“With the challenge we have in relation to climate change management, I think the call is even greater for industry and governments to work together to make sure that policies are implemented and the direction we are going in is considerate and balanced.”

Ryan Lance, head of ConocoPhillips, was among many big names pushing for a carbon tax to shift the burden along the chain to consumers.

“We think the best way to influence the demand side of the equation is to make consumers understand the choices they make.”

Lance also attacked the idea that oil producers should be responsible for so-called scope emissions 3, these as a result of burning their products.

“We think it does not make sense to impose responsibility on our company or companies in our industry for scope emissions 3. These are consumer-oriented choices that are with the consumers who make these decisions.”

But it was Tangko Muhammad Tawfiq, CEO of Patronas owned by the Malaysian government, who set out the industry position in the most concise way: “We are not the villains in this work,” he said. “We are part of the solution.”

(Miles McCormick)

Wall Street is not yet ready to release shards

As oil prices rise, pressure on the U.S. oil industry to increase productivity increases. But do not expect Wall Street to give American shale drills a green light to stimulate new production soon.

Most major U.S. splitter manufacturers have adopted a strategy, pushed by major shareholders, of a much lower production growth quota than the industry has had in the past decade. Instead, manufacturers are investing cash for new dividends and repurchases of stocks to boost returns.

It has proven popular with investors and a sudden strategic change is unlikely, said industry executives and major energy investors at CERAWeek.

“The industry still regrets its past sins and so much of the problem has been a reactionary model of commodity price volatility,” said Mark Viviano, managing partner at Kimeridge Energy Management, a major investor in the split industry.

“Running a penny after companies just announced a budget in February and saying ‘in response to higher prices, we are going to increase spending’, is all that has harmed this industry,” he added.

Jeff Ritnor, CFO of Devon Energy, one of the leading makers of the split sticker, said he “has yet to hear calls from investors” to raise productivity and he did not expect the company to start plowing cash into growth.

The extreme uncertainty surrounding oil prices will deter any important decision given that any new investment today will not yield production for many months, he said.

“I think we need to sit tight and see how it undermines,” Ritnor said.

(Justin Jacobs)

Bonus item: Excerpts from a conversation with one of Biden’s top energy consultants

Amos Hochstein, Ambassador and Special Coordinator of the Biden Government in International Energy, Was not happy with the “dishonest” split managers. Blamed the federal government for the slow rise in U.S. production when I spoke to him in Houston.

“If there’s a bottleneck it’s on Wall Street. They need to call their financiers and tell them there’s a war. The American public is paying the price,” Hochstein told me.

I asked [shale executives], ‘Is there anything I can do now?’ “He said.” The answer is ‘no’. Some of them said, ‘Well, if you had sand or if you had work repairs.’ “

We also talked about sanctions and US-Saudi relations, which remained tumultuous. Here’s more from our conversation, slightly prepared for conciseness:

On changing the White House’s approach to banning Russian oil and gas:

“When we started these sanctions. The sanctions. “

2. Are secondary sanctions – an effort to impose a full embargo on Russian oil – next?

“Our intention is to continue to tell Vladimir Putin, the elites around him, the people who run industries and businesses and the Russian people that our sanctions will continue to escalate. And if they continue to hit Ukrainian cities, our reactions will continue to escalate, and there will be a price to pay. “They are as one-sided as possible, and two that are meant to punish Putin and Russia more than they affect us… We will have a price to pay. It will have a price.”

Another release of oil from strategic stocks is very much on the agenda.

“If necessary we will make further releases and do so with the international community.”

The U.S. has announced two strategic stock announcements in recent months – an unprecedented move anyway. More may appear later showing the depth of the administration’s anxiety about oil and fuel prices.

4. On the US-Saudi relationship:

Hochstein did not respond to reports that Saudi Crown Prince Muhammad bin Salman refused to receive a phone call from Biden. But he said recent discussions had been “productive.”

“This is not an oil-based relationship,” he said. “There are some differences between us that we need to work through.”

“This is a complicated system of circumstances that needs to be managed very carefully,” he said, referring to Saudi Arabia’s oil alliance Opec + with Russia.

Hochstein praised Saudi Arabia for pointing to the “side of angels” in a recent UN vote on Russia. (UAE abstained.) Referring to reports of further controversy, he said: “The president has spoken to the king. Most recently, Brett McGurk [Biden’s Middle East co-ordinator on the National Security Council] And I was in Saudi Arabia just two weeks ago. . . To take these developments as a negative sign is to take something that is moving in the right direction and try to force it in the wrong direction. “

So why did they not increase oil production in the face of a potential price shock?

“You’ll have to talk to them about it.” (Derek Brewer)

Data exercise

While Biden’s decision to ban oil imports from the US will tighten a limited market anyway, this is not a total embargo on Russian oil.

Of the nearly 8 million barrels a day that Moscow sends abroad, only 8% go to the US – which relies much more on Canada for import. In contrast, about 60% of Russian oil exports go to Europe, which explains why Brussels Choose not to follow Washington.

For more information on the significance of the decision for the global energy markets, the Energy Source team wrote an explanation, that you can do so Read here.

Energy Source is a twice-weekly Energy Newsletter. It was written and edited by Derek Brewer, Miles McCormick, Justin Jacobs and Emily Goldberg.

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