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DOE sounds alarm on coal retirements; 2 Permian drillers to merge in $9.5B deal

Top News

DOE sounds alarm again on pending US coal, nuclear plant retirements

After a failed attempt to secure market support for certain coal-fired and nuclear power plants, the U.S. Department of Energy released a study March 27 that said future retirements of those plants could have an adverse impact on grid reliability during severe weather events.

Sell, hold, drop: Shale drillers weigh 3 options to cash in on midstream assets

Executives at Appalachian shale driller Eclipse Resources Corp. had some decisions to make on how they would get to market the natural gas and liquids they produced using some of the longest laterals in the business. It is a particularly difficult decision because Eclipse's newest target area, called Flat Castle, is hundreds of miles east of its Ohio wells.

US coal sector unlikely to be harmed in potential trade war with China

The U.S. coal industry, a sector key to President Donald Trump's campaign and policy platforms, would likely be shielded from direct impacts of a trade war with China.

Permian drillers Concho Resources, RSP Permian to merge in $9.5B all-stock deal

Concho Resources Inc. agreed to acquire its fellow Permian Basin producer RSP Permian Inc. in an all-stock merger deal worth about $9.5 billion, creating a combined company that will run the largest drilling program in the shale play.


* Legislation encompassing a nuclear plant subsidy and changes to clean energy programs in New Jersey has been split into three separate bills: one on nuclear, a second on clean energy and a third on offshore wind.

* South Carolina lawmakers can temporarily lower the electric rates of South Carolina Electric & Gas Co. by at least 13% without pushing the utility to bankruptcy, The Post and Courier of Charleston, S.C., reported, citing a study conducted by consulting firm Bates White for the state Senate.

* Europe's wind powerhouses are turning to solar and storage technologies in an effort to diversify their revenue streams and capitalize on changing energy markets.

* Hydro One Ltd. and Avista Corp. have filed an all-parties, all-issues settlement agreement with the Washington Utilities and Transmission over their pending merger. Sierra Club, a party to the settlement, said the settlement includes an agreement to pay down eight years' worth of the outstanding debt on the Colstrip coal-fired plant in Montana.

* A new Gallup poll found that partisan gaps across global warming measures were slightly wider in 2018 from last year, with Democrats viewing global warming seriously and Republicans viewing it skeptically.

* Local advocacy groups want the California Energy Commission to reject a request to put on hold review of the proposed Mission Rock Energy Center and end the proceeding altogether.

* Utah Gov. Gary Herbert recently signed into laws two bills that will help protect solar consumers and extend the $1,600 tax credit for those who adopt solar systems, according to the Solar Energy Industries Association.

* Japanese conglomerate SoftBank Group Corp. signed a nonbinding agreement to develop a $200 billion solar power project in Saudi Arabia, The Wall Street Journal reported. The project would receive an initial $1 billion investment from the joint Saudi-SoftBank Vision Fund.

* A Chinese official claims that the country has achieved its 2020 carbon emissions target in 2017 through its carbon trading system, state news agency Xinhua reported.

* EDF Group plans to invest €8 billion during the 2018-2035 period to develop 10 GW of additional energy storage capacity around the world. The company currently operates 5 GW of storage capacity.

Natural gas/Oil

* Almost 60% of the LNG produced at Cheniere Energy Inc.'s Sabine Pass export terminal was sold on a spot basis in 2017, according to data from the U.S. Energy Information Administration.

* Alaska Gasline Development Corp. has selected Bank of China Ltd. and Goldman Sachs & Co. LLC to assist the company in raising equity and debt financing for the planned Alaska LNG project.

* Columbia Gas Transmission LLC applied for a project to replace an aging natural gas pipeline system in Ohio and West Virginia in anticipation of future growth from Appalachian Basin producers, increasing capacity along the pipeline by 275,000 Dth/d.

* Targa Resources Corp. is extending its Grand Prix natural gas liquids pipeline into Southern California. The company said it also entered into long-term, fee-based agreements for natural gas gathering and processing services in the Delaware Basin and for downstream transportation, fractionation and other related services.

* XTO Energy Inc. agreed to pay a $320,000 civil penalty and improve operations on the Fort Berthold Indian Reservation in North Dakota to reduce air pollution, as part of a settlement with the U.S. Department of Justice and the U.S. Environmental Protection Agency on alleged Clean Air Act violations.

* Financing for extreme fossil fuels went up to $115 billion in 2017, a year after the adoption of the Paris climate pact, according to a new report from green groups. The overall increase was largely driven by a 111% increase in tar sands sector financing.


* Approved lease expansions, a strong export market and tax royalty savings helped boost year-over-year coal production in Colorado 18.6% in 2017 after years of decline.

* Federal officials met with the public in the heart of the Powder River Basin, the most productive coal mining region in the country, for one of four public listening sessions on a proposed repeal of the Clean Power Plan.


* U.S. natural gas prices will fall further, to $2.25/MMBtu, starting in 2021 as demand from Mexico and LNG export terminals levels off at the same time gas associated with Permian Basin shale oil wells crashes into gas coming from Appalachia, a team of commodity and equity analysts at Sanford C. Bernstein & Co. LLC predicted in a series of March 27 notes.

* Natural gas prices will need to move closer to $3/MMBtu this summer to stave off an increase in coal-to-gas switching that would result in an inadequate rebuilding of the natural gas supply ahead of the next winter heating season, Barclays analysts said.

* Taking the lead from the April gas contract that rolled off the board in the prior session with a 7.3-cent gain at $2.691/MMBtu, NYMEX May natural gas futures seesawed in search of direction ahead of the Wednesday, March 28, open, supported higher by end-of-season storage expectations and midrange weather outlooks but pressured by impending warming.

* Price action for power dailies could be choppy Wednesday, March 28, in tandem with varied demand prospects for the latter part of the workweek. In natural gas action, the new front-month May contract is kicking off its first day in the lead position following the prior-day gain of 5.7 cents with losses. Last trades at 7:03 a.m. ET were done at $2.705/MMBtu, down 0.9 cent overnight.

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New from RRA

* The Georgia Public Service Commission on March 20 approved Georgia Power Co.'s proposed reduction to the nuclear construction cost recovery tariff associated with two new units being built at its Vogtle plant. As a result, rates collected under the tariff will decline by $50 million, effective April 1.


"I think the issue in cybersecurity is not so much to dwell on the dream [of innovation], but rather to prevent the nightmare. I am focused on preventing the existential threat: that is, for well-organized entities to essentially take out our American way of life," Southern Co. Chairman, President and CEO Tom Fanning said at the Energy Thought Summit in Austin, Texas.

The day ahead

* Early morning futures indicators pointed to a mixed opening for the U.S. equity markets. To view more SNL equity market indexes, click here. To view more SNL Energy commodities prices, click here.

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