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Renewables in the Trump era; Big midstream stocks outperform peers in 2016


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Renewables in the Trump era; Big midstream stocks outperform peers in 2016

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Renewables in the Trump era

Shortly after Donald Trump was elected president, Tanuj Deora, an executive at the nonprofit Smart Electric Power Alliance, urged renewable energy analysts, advocates and state officials who had gathered at a Washington, D.C., hotel for an industry conference to keep their congressional representatives on speed dial in case the new administration tried to cut funding for the national laboratories.

Big midstream stocks outperform peers, broader market in rebuilding year

The largest U.S. gas and oil pipeline companies have bounced back in 2016, outperforming their midstream peers and the benchmark S&P 500 but underperforming gas producers, which rallied back from a deeper trough. A basket of the top 10 midstream companies and master limited partnerships by market capitalization, weighted equally, gained 27% when accounting for dividend distributions for the year through Dec. 27, according to S&P Global Market Intelligence data.

Congressional coal advocates ready agenda for life under Trump

Equipped with majorities in the Senate and House and a vocal advocate in the White House for the first time in nearly a decade, congressional coal advocates are preparing an agenda that intends to assist the ailing industry and those who have left it behind. As 2016 comes to a close, coal supporters in the U.S. Congress are gearing up for life under a Trump administration assisted by congressional majorities that could make it easier to push back on federal regulations often cited as detrimental to the sector.


* Duke Energy Corp. completed the sale of its international business in Brazil to China Three Gorges Corp. for about $1.2 billion enterprise value. The sale is part of the company's plans to exit the Latin American market to focus on its domestic regulated business. Earlier this month, Duke closed the sale of its Latin American power generation business to New York-based infrastructure fund I Squared Capital, a deal worth $1.2 billion in enterprise value.

* A group of Democratic state attorneys general wrote a letter to President-elect Donald Trump and warned him against repealing the Clean Power Plan. "[W]e advocate that you reject misguided advice that the Clean Power Plan be discarded; advice that, if followed, would assuredly lead to more litigation," they wrote in the letter. "Instead, we urge you to support the defense of this critically-important rule and the implementation of its carefully-constructed strategies to reduce emissions from the nation's largest sources."

* U.S. energy-associated CO2 emissions are projected to fall to 5,179 million tonnes in 2016, the lowest annual level since 1992, according to the U.S. Energy Information Administration's Short-Term Energy Outlook. The nation's energy-related CO2 emissions totaled 2,530 million tonnes in the first six months of 2016, the lowest emissions level for the first six months of the year since 1991, as the country's coal consumption fell 18% compared with the first six months of 2015.

* Climate change activist Kathleen Kenealy will serve as California's acting attorney general until the next attorney general assumes the role, according to Reuters. The news comes as California's current Attorney General Kamala Harris is set to take oath as a U.S. senator early next month. California Gov. Jerry Brown plans to nominate U.S. Representative Xavier Becerra to replace Harris.

Natural gas/midstream

* The outlook for the midstream sector in 2017 is one of tempered optimism as the oil and gas industry benefits from strengthening commodity prices but pipelines still face regulatory hurdles, restrained M&A activity, shifting investor preferences and scrambles for capital as interest rates rise.

* Oil and natural gas M&A activity picked up in the second half of 2016 given the stabilization of oil prices, which makes it easier for investors to value potential M&A and IPO targets, according to Bloomberg News. The sector saw about 185 takeovers comprising $147.5 billion in the second half of 2016, compared to $36.58 billion in 170 deals in the first half of the year.

* Geraldine Nesbitt contended in a filing that Williams Cos. Inc. and Williams Partners LP are "compromising" the planned Atlantic Sunrise expansion project by proposing a route that is "far inferior to the route (ALT-12W) currently under federal review." Geraldine Nesbitt is an intervenor in the project, which is under review by FERC and the U.S. Army Corps of Engineers.


* Coal advocates look forward to seeing the federal coal lease moratorium lifted under the incoming administration of President-elect Donald Trump, but applications might not come pouring in if action is taken. "We're certainly hopeful that that can be done as a day-one action," Travis Deti, the executive director of the Wyoming Mining Association, told S&P Global Market Intelligence. However, he said, "I don't think anybody will move on that immediately."

* Conuma Coal Resources Ltd. plans to reopen the Wolverine metallurgical coal mine in Tumbler Ridge, British Columbia, on Jan. 2, 2017, The Canadian Press reports. The company expects to bring the mine to full production levels by April 2017 and export 1.5 million tonnes of coal annually. The mine is expected to create 220 jobs.

* Arch Coal Inc. filed a motion seeking a final decree closing its Chapter 11 cases. The motion, filed Dec. 28 with the U.S. Bankruptcy Court of the Eastern District of Missouri, says the outstanding claims in each case "have been fully resolved or will be fully resolved by Jan. 27, 2017."


* The U.S. Energy Information Administration reported that a net 237 Bcf was withdrawn from natural gas inventories in the Lower 48 for the week ended Dec. 23, which was above market expectations as well as historical averages. The latest pull left total U.S. working gas supply at 3,360 Bcf, or 413 Bcf below the same week in 2015 and 79 Bcf below the five-year average of 3,439 Bcf.

* After settling its debut session 9.6 cents lower at $3.802/MMBtu, February 2017 natural gas futures seesawed overnight in a $3.752/MMBtu to $3.857/MMBtu spread ahead of the Friday, Dec. 30, open and the New Year's holiday weekend. The front-month contract was last seen struggling near unchanged, 0.3 cent higher at $3.805/MMBtu.

* Day-ahead power markets are likely to see choppy moves in the week's and the year's closing session Friday, Dec. 30, as traders look to varied demand projections after the New Year's holiday and recent losses for natural gas. Markets will be closed Monday, Jan. 2, in observance of the New Year's holiday.

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New from RRA

* On Dec. 28, Gov. Mark Dayton, a Democrat, appointed Katie Sieben, a Democrat, to a six-year term on the Minnesota Public Utilities Commission that commences in January 2017. Sieben will replace Commissioner Beverly Jones Heydinger, who did not seek reappointment. Dayton also named Commissioner Nancy Lange, a Democrat, as PUC Chair. Both changes will be effective Jan. 23, 2017.


"I don't think you're going to see the industry just completely torn to bits by a Trump administration. I just think that there's not a lot of political reason to do so," Jack Bertuzzi, principal at project developer Ecogy Solar, said.

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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