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FERC to further investigate Rover pipe; obstacles against coal still stacked

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What a US withdrawal from the Paris climate deal means for energy

President Donald Trump announced June 1 that he intends to pull the U.S. out of the Paris Agreement on climate change after putting the brakes on other domestic climate policies forged by the Obama administration. The decision, which may take over three years to take effect, could affect the U.S. and global energy sectors in a number of ways.

FERC 'to closely monitor' Rover Pipeline after diesel found in spill

In another complication for a troubled natural gas pipeline project, the Federal Energy Regulatory Commission will further investigate Rover Pipeline LLC's 3.25-Bcf/d project over a spill at the Tuscarawas River drill site in Ohio after diesel fuel was found in drilling fluids that leaked into wetlands. Acting FERC Chairman Cheryl LaFleur and Commissioner Colette Honorable issued a joint statement on June 1.

Obstacles against coal still stacked after Trump's Paris climate deal dump

Speaking at the White House on June 1, President Donald Trump emphasized that he happens to "love the coal miners" and implied that his pull-out from the Paris Agreement on climate change would bolster his campaign promises to put them back to work. "In short, the agreement doesn't eliminate coal jobs," Trump said from the Rose Garden. "It just transfers those jobs out of America and the United States, and ships them to foreign countries. This agreement is less about the climate and more about other countries gaining a financial advantage over the United States."


* In the final stages of a marathon June 1 session in the California Assembly, divided state lawmakers defeated a proposal to extend the state's cap-and-trade program through 2030, a key component of California's bid to slash greenhouse gas emissions 40% below 1990 levels by that time. The program's legal authority currently expires after 2020, a fact that has contributed to a recent slump in auctions of carbon emissions allowances.

* Former New York City Mayor Michael Bloomberg will provide up to $15 million in funding to the United Nations, which he claims the organization will lose due to President Donald Trump's move to leave the Paris climate accord. "Americans are not walking away from the Paris Climate Agreement," Bloomberg said in a statement. "Just the opposite — we are forging ahead. Mayors, governors, and business leaders from both political parties are signing onto a statement of support that we will submit to the UN — and together, we will reach the emission reduction goals the U.S. made in Paris in 2015."

* Four New England state governors, including Massachusetts Gov. Charlie Baker and Vermont Gov. Phil Scott, both Republican, have joined a "bipartisan coalition" to meet the climate goals set in the Paris climate agreement, The Associated Press reports.

* Connecticut's two electric utilities have come out against Connecticut legislation to throw a lifeline to Dominion Energy Inc.'s Millstone nuclear power plant to prevent a threatened shutdown despite calls by climate scientists and environmentalists for passage of the bill.

* John Horgan, head of the British Columbia New Democratic Party, wrote a letter to BC Hydro and Power Authority President and CEO Jessica McDonald urging her not to sign any new contracts on the controversial C$8.8 billion Site C hydroelectric project "until a new government has gained the confidence of the legislature," according to The Canadian Press.

Natural gas/midstream

* Ontario's gas utilities cost for complying with the province's carbon goals will heavily depend on whether Ontario links with California and Quebec's cap-and-trade program as planned. Ontario has said it hopes in 2018 to link its emissions market with the existing one with California and Quebec under the Western Climate Initiative.

* An investigation into Exxon Mobil Corp.'s public statements about climate change shows that the company may have misled investors by using two different sets of numbers to formulate the impact of climate change on its assets, Bloomberg News reported, citing a court filing by New York Attorney General Eric Schneiderman.

* Xcel Energy Inc. subsidiary Public Service Co. of Colorado plans to file a $900 million capital investment plan to upgrade and expand its natural gas distribution system through 2020, The Denver Post reports. If approved by Colorado regulators, typical customers would see increases in their bills of $2.73 per month in 2018, $2.19 per month in 2019 and $1.75 per month in 2020.

* The U.S. Bureau of Land Management has reversed its decision to sell oil and gas leases on 4,730 acres in Washington County, Utah, after Gov. Gary Herbert called on the agency to "protect these parcels, protect these public lands and not open them for leasing," The Salt Lake Tribune reports.

* Minnesota regulators have scheduled 22 public meetings to get public input on the draft environmental review for Enbridge Energy's planned project to replace its aging Line 3 pipeline, The Baltimore Sun reports. Opponents have already dubbed the project as "the next Dakota Access pipeline struggle."

* Fitch Ratings assigned investment grade first-time ratings to Enbridge Inc. and Enbridge Energy Partners LP, reflecting the entities' "beneficial" size and scale and stable cash flows. The rating agency gave Enbridge a long-term issuer default rating and senior unsecured rating of BBB+, while Enbridge Energy Partners received a long-term issuer default rating and senior unsecured rating of BBB.


* New metallurgical coal mine developments will fill in the bulk of supply to meet growing demand for the commodity, analysts say. "We believe that the low-hanging sources of U.S. supply are mostly back in the market and that the greatest potential for additional supply is coming from new mine developments, primarily from private companies," said Lucas Pipes and Ted Beachley with FBR & Co. in a June 2 note.

* The use of coal by the U.S. electric power sector has dropped to 677 million tons in 2016, which is the lowest since 1984, according to the U.S. Energy Information Administration. Overall, the power sector consumed more than 93% of all coal consumed in the United States. The consumption of coal by the electrical power sector was down 35% in 2016 compared to 2008.

* The Trump administration's proposed budget and withdrawal from the Paris Agreement on climate change delivered a one-two punch to the development of carbon capture technology in the U.S., according to proponents.

* South Korea's government intends to shift to natural gas and renewables from coal and nuclear in a move to put the environment at the center of the energy policy, Reuters reported. The plan if implemented will have a huge impact on coal and liquefied natural gas producers as South Korea's LNG imports will increase by more than 50% by 2030 and coal shipments will surge as early as 2018.


* In spite of growing shale gas production, average spot natural gas prices moved higher year over year in May, bolstered in part by storage levels that are more in line with historical averages. The U.S. Energy Information Administration expects that shale gas production growth will climb to a record 51.32 Bcf/d in June. That figure represents 7.9% growth year over year and is up 1.1% from the 50.76 Bcf/d estimated for May.

* After shedding 0.9 cent to settle at $2.999/MMBtu ahead of the weekend, NYMEX July natural gas futures posted gains in overnight trading leading up to the Monday, June 5, open, in technical buying and with renewed weather support. At 6:28 a.m. ET, the contract was 3.1 cents higher at $3.030/MMBtu.

* Power dailies could be jumbled in the week's opening session Monday, June 5, as predominantly weaker demand forecasts for Tuesday run counter to a fresh uptick at the natural gas futures arena. Ending the prior session just 0.9-cent lower, front-month July natural gas futures were ticking higher early Monday ahead of the opening bell.

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New from RRA

* Eversource Energy made a debut into the water sector on June 2 announcing the proposed purchase of Aquarion Water from a partnership led by Macquarie Infrastructure for $1.675 billion, comprised of $880 million in cash and $795 million of assumed Aquarion debt.

* On May 1, Aqua Illinois Inc. filed with the Illinois Commerce Commission, or ICC, for a $10.5 million (19.1%) water distribution rate increase premised upon a 10.85% return on equity (53.17% of capital) and an 8.18% return on an average rate base valued at $237.5 million for a test year ending Dec. 31, 2018.

* The Railroad Commission of Texas', or RRC's, May 23 gas distribution rate order for CenterPoint Energy Resources Corp., or CER, adopts a settlement that is consistent with other recent RRC actions, according to Regulatory Research Associates, an offering of S&P Global Market Intelligence.


"This will spur a tidal wave of climate action by U.S. states, cities, businesses and citizens. … So pulling out of Paris stiffens everyone else's resolve to act on climate, marginalizing Trump and the anti-climate headbangers. Sweet!" said Michael Liebreich, chairman of Bloomberg New Energy Finance's advisory board, in a Twitter post.

The day ahead

* Early morning futures indicators pointed to a lower 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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