Issue 3, 2020
"The Florida Supreme Court ruled to keep the 'Energy Choice' initiative off the Florida ballot in the upcoming general election, siding with investor-owned utilities and quashing an effort to break up their electric monopolies."

Why this is important: The article details how Florida’s regulated electric utilities coordinated an effort to keep an “Energy Choice” initiative off of Florida’s general election ballot. The initiative was designed as a first step toward allowing consumers of electricity the ability to choose the supplier of their electricity in a competitive power market. Ratepayers in Florida, as in many other states like West Virginia, are currently captive customers of the electric utility monopolies. The regulated electric utility model is more than 100 years old and arguably has become outdated and subject to manipulation by powerful and politically connected utilities to the detriment of ratepayers, including large manufacturing and industrial ratepayers. The Florida Supreme Court’s ruling is, therefore, a blow to ratepayer interests and the free market ideals of competition and customer choice. --- Derrick Price Williamson
"Mining giant BHP Group said poor air quality caused by smoke from Australia’s bushfires is hurting coal production, as authorities said a reprieve from hazardous fire conditions would end within days."

Why this is important: Massive wildfires in Australia are reducing coal production. The fires have burnt an area one-third the size of Germany and show no signs of letting up. That has caused Australian coal producers to predict lower production from smoke affecting the mining process and the fires causing employees to leave the mines to protect their properties. The fires also have increased public interest in stopping global climate change in a country that is one of the world’s largest coal producers. --- Mark E. Heath
"The first precept that reporters learn while traveling through the United Arab Emirates is that oil has a finite life and that the country is getting ahead of that curve by focusing now on clean energy." 

Why this is important: The United Arab Emirates, a large producer of global oil supplies, has created an experimental city outside of Abu Dhabi to study alternative forms of energy. Currently the city, known as Masdar, is powered by a 10-megawatt solar farm connecting to a local grid that can use natural gas when solar energy is not available. The buildings in the city are “smart” -- able to regulate energy consumption. The UAE government recognizes that oil production has a finite limit and is seeking to sustain its society in the event oil production declines due to supply loss. --- Bryan S. Neft
"Evolution Well Services announced a two-year deal to provide electric hydraulic fracturing services to an unnamed exploration and production customer in the Marcellus Shale of Pennsylvania beginning this quarter."

Why this is important: Electric fracturing uses power generated from turbines driven by natural gas produced on-site, while traditional fracturing uses diesel powered generators. Electric fracturing reduces the common complaints of traditional fracturing: noisy, air-polluting operations that require endless fuel truck runs. Air and noise pollution coupled with excessive truck traffic are the standard allegations of nuisance complaints by landowners neighboring completion activities. Reduction, or even elimination, of the primary components of nuisance complaints greeting completion activities is a quintessential win/win for the industry and landowners. --- Matthew P. Heiskell
"U.S. coal-fired power plants are facing the perfect storm, with a mild winter and slumping natural gas prices adding to their long-term problems with competitiveness and pushing more towards retirement."

Why this is important: Lower gas prices continue to damage coal-fired electric generation. Natural gas prices have fallen over $1 in the past year — from $2.94 a year ago to $1.92 last month. (It’s down 32 cents in a month). These prices along with mild winter weather are causing coal-fired plant usage to decline. Further, it takes 10,000 BTUs of coal to generate a kilowatt of electricity compared to 7,600 BTUs of gas. These economics have caused gas generation to rise sharply, while coal-fired generation declines. In 2017, gas generated 246 GW of electricity and in 2019 it was up to 268 GW. Coal-fired generation was 258 GW in 2017 and dropped to 234 GW in 2019. In addition, coal plant usage, including usage as a peaking plant, dropped from 47 to 39 percent in that same time period. And, gas turbines normally used for peaking plants are now moving into base load generation. These factors will continue to reduce steam coal demand and pricing. --- Mark E. Heath
"Shale drillers are extracting so much gas that it’s overwhelming demand."

Why this is important: Natural gas production has been a boon to economies where shale fracturing is occurring including Pennsylvania, New York, Texas and New Mexico. However, a global glut of natural gas supplies threatens to depress these sources of energy. Natural gas prices have hovered around $2 per million BTU’s and is not expected to rise significantly. Already, companies have been divesting gas operations, including Chevron, which has placed its natural gas operations on the market. Chesapeake Energy is struggling with $9 billion in debt and is likely to file for bankruptcy. EQT, which recently underwent significant corporate restructurings, took a $1.8 billion charge in the fourth quarter due to low prices. Meanwhile, producers looking to export natural gas to China will need to wait until China lifts tariffs on U.S. natural gas. The market needs to contract significantly and, until that occurs, investment will be significantly decreased. --- Bryan S. Neft
"The Sino-U.S. trade dispute, which threatened the global economy for around two years, has come to an end with the much-anticipated Phase-One trade deal." 

Why this is important: Hopefully, Phase-One of the Sino-U.S. trade deal signals the potential easing of tariffs imposed by China on its imports of LNG and related natural gas liquids produced by U.S. exporters. As the world's single largest importer of both LNG and NGLs, China is an essential market for the success of our domestic natural gas industry. Cheap U.S. shale gas and its derivative liquids are a strong worldwide competitor for the growing Asian market. --- William M. Herlihy
"Asian seaborne thermal coal traders voiced concerns over near-term demand as more utilities consider the feasibility of a coal-to-gas switching amid languishing LNG prices, sources told S&P Global Platts."

Why this is important: Declining LNG prices are now affecting worldwide exports of steam coal. Demand for steam coal in Asia continues to drop as cheap natural gas supplants coal. India is working on developing gas-fired generation to allow it to switch between the two fuels. Japan is perhaps best set to switch as LNG may approach record low prices of $3 MMBTU. The article notes steam coal demand in Asia is tepid. That will further depress prices for U.S. exports of steam coal for the foreseeable future. --- Mark E. Heath
"It plans to achieve this by making use of the EU’s Market Stability Reserve, a mechanism that went into effect last year with the aim to take back excess permits from the market."

Why this is important: Germany continues to plan its exit from coal-fired electrical generation by 2038 and to reduce its 1990 greenhouse emissions levels by 55 percent by 2030. Now, it is trying to make sure that as it cancels emissions certificates from those plants, its actions do not undermine the European Union emissions trading system currently in place. Germany continues to find the exit from coal is difficult and plans to issue fewer emission credits as plants close to stabilize the EU trading system designed to reduce greenhouse gases. --- Mark E. Heath
● EIA Energy Statistics
What are your areas of interest? If there are particular industries or issues that you would like to hear about, email us ! We have a large number of attorneys willing to weigh in on the issues that impact you and your business.
If you would like to subscribe to this weekly e-blast or know someone who would, please email us with contact information and CURRENTS in the subject line. We will add you or your acquaintance to the email list.

If you have any energy questions, please feel free to contact us .
This is an attorney advertisement. Your receipt and/ or use of this material does not constitute or create an attorney-client relationship between you and Spilman Thomas & Battle, PLLC or any attorney associated with the firm. This e-mail publication is distributed with the understanding that the author, publisher and distributor are not rendering legal or other professional advice on specific facts or matters and, accordingly, assume no liability whatsoever in connection with its use.

Responsible Attorney: Michael J. Basile, 800-967-8251