Top News

PG&E gas utility sale would not offset wildfire liability, analysts say

Pacific Gas and Electric Co. would realize few benefits from selling off its gas utility assets, even as the company stares down potential multibillion-dollar liabilities in the wake of wildfire devastation, analysts said.

Under fire, Appalachian shale driller EQT slashes workers, management

Facing pressure from investors for its disappointing performance since merging with neighbor Rice Energy in 2017, Appalachian shale gas driller EQT Corp. laid off managers and workers Jan. 7 in a bid to streamline its operations and deliver free cash flow with modest growth, EQT's new CEO, Robert McNally, said in a letter to shareholders.

Despite tough end to 2018, analysts see refining equities on solid footing

U.S. tax reform, a more favorable regulatory environment, access to cheap crude oil, and consolidation drove year-to-date U.S. refining sector total return toward 30% through the first three quarters of 2018, but a dismal fourth quarter—during which falling oil prices, macroeconomic concerns, and a gasoline glut spooked investors—saw U.S. refiners underperforming the broader market by the end of the year.

Diverse opponents challenge AEP justification for renewable energy in Ohio

American Electric Power Co. Inc. has attracted broad opposition to building out wind and solar projects in Ohio as the utility increasingly moves away from coal-fired power generation.

Quoted

"[The gas business] is so small ... it's not going to move the needle. I don't see that as something that would negate the liabilities that they're dealing with right now," said Guggenheim Partners analyst Shahriar Pourreza, explaining why Pacific Gas and Electric would realize few benefits from selling off its gas utility assets, even as the company stares down potential multibillion-dollar liabilities in the wake of California's devastating wildfires.

Power

* A total of 16,900 MW of U.S. power generation capacity retired in 2018, according to S&P Global Market Intelligence data, far more than the 11,569 MW that were retired in 2017.

* S&P Global Ratings downgraded its issuer credit ratings on PG&E Corp. and utility subsidiary Pacific Gas and Electric Co. to B from BBB- following the holding company's Jan. 4 announcement that it is looking for new directors for both companies to enhance safety expertise in addition to "assessing PG&E's operations, finances, management, structure and governance."

* The U.S. Department of Energy intends to invest $115 million over the next three years to help develop high assay low enriched uranium for advanced nuclear reactors, Sen. Rob Portman, R-Ohio, said in a statement.

* The biggest European utilities will continue to pour billions into their renewable businesses in the year ahead to gain an edge in a maturing sector, as large asset swaps and acquisitions are set to reshuffle the landscape at the top of the industry.

* A federal court ordered the U.S. Environmental Protection Agency to expedite the public release of approximately 20,000 pages of emails, as well as calendars, for acting EPA Administrator Andrew Wheeler, Air Office head Bill Wherum and 23 other political staff involved in Wheeler’s rollbacks of public health and environmental safeguards, according to a Sierra Club release.

* Efforts to update an over 40-year-old law requiring electric utilities to buy power from small renewable energy facilities may hit resistance in the new U.S. Congress that kicked off in early January.

* Former U.S. Rep. Ryan Costello, R-Pa., is joining the advocacy group Americans for Carbon Dividends as managing director to promote a federal tax on carbon dioxide emissions. "Climate change should be a top priority of Republicans in Congress, and that is why I am leaning in on this," Costello told the Washington Examiner in an interview. "The Republican Party needs to have a plan and lead on this issue."

* The U.S. saw an 80.8% year-over-year jump in electric vehicles sales to 361,307 in 2018, from 199,826 in 2017, according to InsideEVs.

Natural gas

* Money flowed into the oil and gas pipeline industry's largest exchange-traded fund in December 2018 even as slumping crude oil prices sent midstream shares into a tailspin.

* Dallas, Texas-based Discovery Midstream Holdings II LLC received an initial equity commitment of up to $1.0 billion from private equity firm Stonepeak Infrastructure Partners to pursue a suite of North American midstream opportunities.

* S&P Global Ratings upgraded Kinder Morgan Inc.'s corporate credit rating, citing the gas pipeline giant's decision to use the $2 billion of proceeds from the sale of a beleaguered Canadian project for debt repayment.

* The RCMP broke through checkpoints set up by a northern British Columbia First Nation to block workers' access to TransCanada Corp.'s planned Coastal GasLink pipeline project that would carry natural gas across British Columbia to a LNG Canada export facility near Kitimat, the Calgary Herald reported.

* Range Resources Corp. said its 2018 capital spending came in about $20 million lower than its budget of $941 million due to savings from drilling efficiencies and water recycling, among other cost savers.

* Carbon Energy Corp. completed its acquisition of Carbon Appalachian Co. LLC, becoming 100% owner and operator of producing properties, natural gas gathering pipelines and related facilities of Carbon Appalachian.

Oil

* The U.S. Supreme Court decided not to hear Exxon Mobil Corp.'s appeal of Massachusetts' top court order that the oil major hand over its records on climate change to the state attorney general, who is investigating whether the company misled consumers on climate impacts, according to Reuters.

* 2018 proved to be a tumultuous year for energy equities, with integrated oil and natural gas companies both under-performing and outperforming the broader market.

* A federal judge has allowed four Native American tribes, including the Standing Rock Sioux, to contest the U.S. Army Corps of Engineers' findings that a potential spill from Energy Transfer LP's Dakota Access oil pipeline "wouldn't unfairly affect" then, according to The Associated Press.

* An increase in long-term contracted rail shipments has resulted in a drop of $2.10 in the Western Canadian Select discount to West Texas Intermediate futures to $10.50 per barrel, Bloomberg News reported.

* Shares of QEP Resources Inc. skyrocketed Jan. 7, nearly meeting the hefty premium investment firm Elliott Management Corp. offered in a $2 billion takeover proposal for the Permian Basin-focused oil driller.

* Occidental Petroleum Corp. unveiled a CapEx plan for 2019 in the range of $4.4 billion to $5.3 billion, subject to the price of oil prices. The company expects to maintain its dividend and grow long-term production 5% to 8% based on a crude oil price scenario of $50 per barrel.

* Suncor Energy Inc. expects to post a 12% quarter-over-quarter increase in total upstream production to 831,000 barrels of oil equivalent per day for the fourth quarter of 2018. The company will release its fourth-quarter results Feb. 5.

* Royal Dutch Shell PLC unit Shell Chemical LP began production of the fourth alpha olefins unit at its Geismar, La., chemical manufacturing site. The 425,000-tonne-per-year capacity expansion brings total alpha olefins production at the facility to more than 1.3 million tonnes per annum.

* U.S. shale fracking activity dropped to 44 fracked wells per day in the period of September 2018 to November 2018 from 50 fracked wells per day in the period of April 2018 to August 2018, according to research firm Rystad Energy.

Coal

* A new study has found that portions of the energy portfolio investments of insurers in California are exposed to climate-related physical risks associated with flooding, water scarcity and wildfires.

* Navajo Transitional Energy Co. is exploring the purchase of Peabody Energy Corp.'s Kayenta coal mine as part of its plans to keep the Navajo Generating Station operational for another 10 years, the AP reported. The company had already expressed interest in acquiring the Navajo facility.

* Coal exports from the Hampton Roads port facilities in Virginia decreased 2% year over year to 3.1 million tons in December 2018 and increased by 0.4% from November's total, according to data provided by the Virginia Maritime Association Jan. 7.

ChartWatch

Power and natural gas prices in the eastern and western U.S. could continue to derive upside momentum from weather-related demand in 2019.

New from RRA

* More than the typical degree of uncertainty surrounds stock performance in 2019. Reasonably strong economic growth in the U.S. is plausible, but slowing growth in the eurozone and China may spill over into the U.S.

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.

Click here to read about today's financial markets, setting out the factors driving stocks, bonds and currencies around the world ahead of the New York open.

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