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Coal seen riding out challenges; drillers get serious on shareholder returns

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Coal seen riding out challenges; drillers get serious on shareholder returns

Top News

'Glass two-thirds full' as coal seen riding out challenges through 2030

Both policy and market conditions have weighed heavily on the coal-fired power generation sector in recent years; however, a panel of experts speaking at CERAWeek by IHS Markit in Houston sees coal still playing an important role in the fuel mix for decades to come.

Drillers get serious about 'returns to shareholders' with Devon, Hess buybacks

Billion-dollar share buyback plans Devon Energy Corp. and Hess Corp. recently unveiled show that shale oil and gas companies know they are being evaluated under new rules that look beyond the traditional metrics of production and reserve growth, according to industry analysts. They said investors want to see some yield through dividend payments and share buybacks.

Fed plan for small coal plants puzzles some but hits on coal company priority

A federal plan to support the development of small-scale coal-fired power plants has puzzled some in the energy sector but may move the administration closer to fulfilling one coal producer's list of political priorities.

Power

* German energy companies E.ON SE and RWE AG agreed to a multibillion-euro asset swap on March 11 that will effectively overhaul the country's utility sector.

* White House Chief of Staff John Kelly stopped Environmental Protection Agency Administrator Scott Pruitt from moving ahead on plans for a "red team/blue team" debate on climate science, saying the idea was "ill-conceived and politically risky," The New York Times reported.

* NRG Energy Inc. plans to retire its three natural gas-fired power plants, namely Etiwanda, Ormond Beach and Ellwood, in California, according to the Sierra Club. The Etiwanda plant will close on June 1.

* Federal Energy Regulatory Commission Chairman Kevin McIntyre said his health is now stable, and he is able to devote his full energy to serving in his role, after he underwent a successful brain tumor surgery.

* Debra Reed is retiring as president and CEO of Sempra Energy on May. 1. She will remain chairman and member of the company's board of directors until her retirement from the company Dec. 1.

* Separately, the Sempra Energy chief told Bloomberg News that there could be "some good opportunities" for using excess wind energy to power electric vehicles in Texas.

* Feedback from the energy and utility sectors on a proposed sustainable accounting framework is providing institutional investors with key guidance as they pursue better disclosure of potential risks across carbon-intensive industries.

* Enmax Corp. reached an agreement with the Alberta government to transfer 166,667 carbon offset credits to the Balancing Pool and receive a payment of equivalent value for previously disputed and unpaid dispatch services and power purchase agreement transition matters.

* The amount of customer generation in South Carolina taking advantage of net metering arrangements is anticipated to meet state-imposed limits years before expected, prompting lawmakers to push competing bills in the state General Assembly to address this unanticipated growth.

* Another proxy firm, Institutional Shareholder Services, has come out against the proposed $2.6 billion stock award for Tesla Inc. CEO Elon Musk, saying it was too high, Reuters reported.

* FERC has issued a preliminary permit to study the feasibility of the proposed 1,200-MW Goldendale energy storage project in Klickitat County, Wash. and Sherman County, Ore.

* Georgia Watch filed a petition to challenge the state Public Service Commission's decision's to allow Georgia Power Co. to complete the Vogtle nuclear power plant expansion project. The consumer advocacy group is represented by a law firm headed by former Gov. Roy Barnes.

* New Jersey Gov. Phil Murphy has directed the state Board of Public Utilities to investigate on how state utility companies responded to the twin winter storms in early March.

* France President Emmanuel Macron announced a €700 million commitment to the International Solar Alliance, which seeks to mobilize $1 trillion in funds to promote solar energy development in 121 counties, Reuters reported.

* The full U.S. EPA Science Board has not met since August 2017, according to magazine Scientific American. Some board members say the lapse in board action was to not get in the way of Administrator Scott Pruitt's anti-regulatory agenda, but EPA officials said it was due to delayed paperwork and the lack of quorum.

Natural gas/Oil

* The U.S. oil and gas industry is hoping to get steel tariff waivers for some of the materials they use most, even after the president announced plans to exempt the country's closest neighbors from the tariff.

* President Donald Trump's offshore drilling proposal has the potential to add up to $590 billion to the economy within the next two decades, The Hill reported, citing four studies by the American Petroleum Institute.

* Pennsylvania's shale gas producers pulled 34% more drilling permits in February than they did a year earlier, as new wells are needed to feed two big pipeline projects that finish construction later in the year.

* Kinder Morgan Altamont LLC and Colorado Interstate Gas Co. LLC agreed to pay a $179,099 penalty to settle with the U.S. EPA on Clean Air Act risk management violations at Utah and Wyoming gas processing facilities. The companies also agreed to spend $387,500 to install a system flare at a gas compressor station in Duchesne County, Utah.

* Sen. Lisa Murkowski, R-Alaska, said the Trump administration's proposed tariffs on imported steel and aluminum could add $500 million to the estimated $45 billion to $65 billion cost of building a proposed natural gas pipeline in her home state, according to Bloomberg News.

* Saudi Arabian Oil Co.'s IPO will likely be delayed until 2019, the Financial Times reported, citing British officials in contact with their Saudi counterparts.

* The U.S. Bureau of Land Management has issued a draft environmental impact statement on EOG Resources Inc.'s proposal to drill up to 2,808 gas wells from its existing oil and gas leases within the Greater Chapita Wells Project Area in Uintah County, Utah.

* The Oklahoma Court of Civil Appeals is allowing a case alleging antitrust practices against Chesapeake Energy Corp. to proceed in state court, reversing an earlier decision by the trial court, The Oklahoman reported.

Coal

* S&P Global Ratings lowered Westmoreland Coal Co.'s credit rating to CCC- from CCC, citing a potential default or restructuring within six months after the company disclosed "substantial doubt" to its ability to comply with its covenants during the year ending Sept. 30.

* Teck Resources Ltd. cut its sales guidance on steelmaking coal for the first quarter to approximately 6 million tonnes from the previous range of between 6.3 million and 6.5 million tonnes.

Commodities

* After ending 2.4 cents softer at $2.732/MMBtu ahead of the weekend, NYMEX April natural gas futures ticked higher overnight leading up to the Monday, March 12, open, on the back of demand support associated with recent and anticipated late-season cold.

* Day-ahead power values could start the fresh workweek elevated Monday, March 12, as mostly supportive demand outlooks for Tuesday combine with mixed moves for natural gas.

* Renewable energy credit prices at many New England markets continued to work lower in value during the second week of March.

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New from RRA

* In a not unexpected move, Commissioner Richard Mroz, a Republican, announced his impending departure from the New Jersey Board of Public Utilities on March 7. The resignation, which takes effect April 14, provides new Gov. Phil Murphy, a Democrat, the opportunity to add another Democratic member to the BPU, which has in recent years consisted of a Republican majority.

Quoted

"Fusion is the true energy source of the future," said Eni SpA CEO Claudio Descalzi in announcing a new R&D project at MIT to commercialize fusion reactors within 15 years.

"There's a reason why coal plants are so big — because of economies of scale. If you try to move one railroad car of coal versus 100, there's a huge difference in price," said Matt Preston, Northern America coal markets research director for Wood Mackenzie, on a federal plan to support the development of small-scale coal-fired power plants

The day ahead

* Early morning futures indicators pointed to a higher 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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