Mon. Oct 18th, 2021

One thing to start with: EU carbon prices rose to € 60 per tonne yesterday set a new record as traders bet this winter on greater demand for coal.

Welcome back to Energy Source, and return to your inbox today for a summer vacation.

Hurricane Ida wreaked havoc while running along the U.S. Gulf Coast over the weekend, millions in Louisiana were left without electricity and knocked about 15 percent of the country’s gross production out of the field.

Ida is the focus of today’s newsletter. Justin Jacobs looks at the outage in America’s power grid.

We also take a look at tomorrow’s Opec + event.

For now, the group is likely to stick to its current plans to gradually restore production. But analysts say speed bumps in the post-pandemic economic recovery could cause it to be reconsidered soon.

Data Drill outlines the increase in ESG commitments by oil and gas groups.

Thanks for reading.

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US power grid does not match Hurricane Ida

America’s power grid was put to the test again when Hurricane Ida, a strong storm that packed storms of 150 km / h and brought storms up to 9 m in magnitude, through Louisiana.

Again, the grid seems to have failed.

The governor of Louisiana, John Bel Edwards, calls Ida the worst storm to hit the state “in modern times”, and the damage caused by floods and winds was great, so power outages had to be expected.

But the damage looks huge and Entergy, Louisiana’s largest power provider, warns it could take weeks to repair service.

Scenes of millions of Americans stranded without power for days or weeks in the midst of another natural disaster are echoing across the country.

Hurricane Ida left more than 1 million customers without power, meaning closer to 2 million individuals were plunged into the dark and without air conditioning amid suffocating heat from the Gulf Coast in August, according to Edwards. There was a collapse of the infrastructure that provided power to New Orleans, in which all eight transmission lines came down to the city. One tower collapses into the Mississippi River.

Hospitals, which have already risen due to an increase in Covid-19 cases, are now dependent on generators and officials have warned that water and sewer systems that depend on the network could fail in the coming days in areas where power is down .

This is, of course, just the latest in a series of recent failures of the increasingly treacherous power grid in America.

California struggled to turn on lights record wildfires and heat raged this summer while the Texas power system was brought to his knees in February by a winter storm, which left millions to brave Arctic skies in the dark.

The role that climate change plays played or not the power of the storm will be in front and in the middle.

Hurricane Ida intensified at an “unprecedented” rate as it approached Louisiana, Governor Edwards said. It passed over a bag of unusually hot water in the Gulf of Mexico, which gave the storm extra steam when it hit the coast. The rapid warming gave residents and emergency services little time to prepare for a very strong storm.

It will also put the spotlight on Washington DC’s efforts to continue funding for the network in a new infrastructure bill currently being debated in Congress.

“Extreme weather events, such as Ida, demonstrate the value of investing in local transmission projects to replace outdated transmission infrastructure with a stronger, more resilient expansion,” said Larry Gasteiger, executive director of WIRES, a trade advocate group. for new long-distance transmission networks.

“The fact is that we now need a big boost in transmission investments, and we are far behind where we need to be.”

(Justin Jacobs)

Opec is holding on to production increases. . . for now

Opec and its allies are likely to stick to plans to restore output cuts when they meet tomorrow. But as the recovery of the Covid era grows, analysts say the group may need to adjust the rate before the year is out.

The Opec + group entered into an agreement last month to pump an extra 400,000 barrels per day each month from August, eventually bringing production back to pre-pandemic levels by the end of next year.

But concerns that rising contagion rates could derail the economic recovery from the pandemic have prompted the plan to be reviewed.

‘I do not think there is a realistic prospect [Opec] can continue to put the oil they predicted back on the market, ”Bill Farren-Price, a director at Enverus and longtime Opec watcher, told ES.

“I think they will have to stop at some point, but I would be a little surprised if they did in September.”

Kuwait oil minister caused a stir over the weekend by giving an indication of stop the agreed increase was possible, given the latest spate of infections sweeping some countries.

His comments mean that talk of a decline will certainly appear in the meeting, Commerzbank analysts said. But most observers agreed that any change to last month’s agreement would be unlikely.

“We are always wary of the dangers of predicting a meeting without an event,” said Helima Croft at RBC Capital Markets.

“However, we believe that, despite the exhausting efforts to reach a joint compromise around benchmark adjustments and the relative health of the market, despite the persistently high cases of Covid cases and mobility restrictions in some key geographical areas, it will remain steadfast. for September. “

Biden’s call to be sent directly to voicemail

Oil prices have fluctuated in recent weeks as rising infection rates have forced traders to reconsider the risks posed by the recovery in demand.

Brent crude, the international brand, dropped from about $ 76 a barrel last week to less than $ 65 last week. This has sparked speculation about a rapid turnaround of Opec. But a rally in recent days left the benchmark at about $ 73 yesterday.

The $ / barrel line graph showing oil prices was amid uncertainty over demand recovery

Meanwhile, the White House has in recent weeks called on Opec to pump more oil because it scares him for domestic inflation and high gasoline prices.

But analysts said those calls were more on political stance than any serious pressure to give a boost.

“We think the group will send the request directly to the voicemail,” Croft said. “This is mainly because we believe that the request was largely aimed at domestic political consumption and was not a tough diplomatic question.”

Opec said last month it will take stock in December and ‘assess market developments and performance of the participating countries’. But since the prospect of demand seems unclear, the process may take place sooner.

“The thing that will stick their hand out is price behavior,” Farren-Price said.

“At the moment, prices are healthy for some reason. But if we look at how Brent got into the low 60s, I think their enthusiasm for the state of the planned pace of stock recovery would probably increase [fade]. ”

(Myles McCormick)


A new recording of the law firm in Texas, Haynes and Boone, found that 83 percent of oil and gas producers announced ESG policies, up from 70 percent in March.

More companies are also disclosing greenhouse gas emissions in public and promising net-zero commitments, the analysis found. Since March, the number of oil and gas companies targeting net emissions has grown by 150 percent by 2025.

Yet a general lack of clarity about how these goals will be achieved has, in some cases, caused skepticism about how serious businesses are about ESG.

The move comes as the U.S. Securities and Exchange Commission consider whether mandatory disclosure requirements should be imposed for greenhouse gas emissions, as well as other climate statistics – a step that many businesses are undertaking peeked against it.

(Amanda Chu)

Bar graph of the number of enterprises in the sample showing ESG commitments on oil and gas increased by almost 20 percent

Power points

  • European countries are set record of solar power.

  • Algeria, home to the world’s last lead petrol refinery, has officially depleted his stock, which was a milestone in global development.

  • Interview: How Boston Consulting Group’s Rich Lesser led his business on climate change.

  • The Biden Administration announced a new office for climate change and equitable health. (NEW)

Energy Source is a twice-weekly Financial Times newsletter. It was written and edited by Derek Brower, Myles McCormick, Justin Jacobs and Emily Goldberg.

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