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California braces for PG&E bankruptcy; analysts look to crude oil price recovery

Q2: U.S. Solar and Wind Power by the Numbers

Essential Energy Insights - September 17, 2020

Essential Energy Insights September 2020

Rate case activity slips, COVID-19 proceedings remain at the forefront in August


California braces for PG&E bankruptcy; analysts look to crude oil price recovery

Top News

Concerns grow as California braces for PG&E bankruptcy

In the wake of PG&E Corp.'s Jan. 14 disclosure that it and its utility subsidiary Pacific Gas and Electric Co. are preparing to seek Chapter 11 bankruptcy protection related to billions of dollars of potential liabilities from devastating 2017 and 2018 wildfires in Northern California, Gov. Gavin Newsom, along with state lawmakers and regulators, vowed to keep the lights on while protecting ratepayers and fire victims.

As bankruptcy looms, PG&E's gas utility offers complex mix of strength, risks

As PG&E Corp. heads toward a bankruptcy filing, the company will be contemplating an array of restructuring options. Potentially on the table is a sale of its gas utility division, a business with a sizable customer base in a tumultuous regulatory environment.

Analysts look to 2019 crude oil price recovery after 2018 routing

The price of crude oil jumped in the first two weeks of 2019, and forecasts point to more gains as the supply and demand worries that plagued the market to close out 2018 begin to dissipate.

Texas coal mining could end within a decade as renewables take over

As renewable energy sources increasingly displace coal-fired power generation in Texas, the state's lignite producers and Powder River Basin thermal coal miners could see a key market dry up.

Quoted

"This has nothing to do with politics. This is just pure economics," said Fred Beach, assistant director for policy studies at the University of Texas at Austin's Energy Institute, who estimates that Texas coal mining will shut down entirely within a decade if plant retirements continue.

Power

* While PG&E Corp. and utility subsidiary Pacific Gas and Electric made clear that they intend to seek bankruptcy protection later in January as wildfire liabilities mount, their outlook is hard to pin down because it ultimately may require a political solution with state lawmakers, according to attorneys and analysts with experience in the industry.

* PG&E Corp. and Pacific Gas and Electric saw their credit ratings cut by all three major rating agencies following news that the companies plan to seek Chapter 11 bankruptcy protection related to billions of dollars of potential liabilities from devastating 2017 and 2018 wildfires in Northern California.

* Citing official estimates, the Houston Chronicle reports that the U.S. could see the retirement of 8.3 GW of generation capacity this year, including 4.5 GW of coal capacity and 1.5 GW of nuclear capacity. The projected addition of 23.7 GW of new capacity would offset those retirements.

* Supply chain bottlenecks could cost the U.S. wind industry up to 1,100 MW in lost capacity, and $2.1 billion in lost revenue, through 2020 if the sector does not adapt to the growing scale of the market and turbines' expanding size, a new study found.

* FirstEnergy Corp. utilities Pennsylvania Power Co., Pennsylvania Electric Co. and Metropolitan Edison Co. are launching a request for proposal to purchase 120,500 solar photovoltaic alternative energy credits annually over a two-year period. Qualifying applications are due by Feb. 5.

* Houston area residents saw a 17.8% surge in electricity prices in 2018 over 2017, with the Lone Star State residents paying more for wholesale electricity than any other states in the U.S., the Houston Chronicle reported.

* EDF Renewables' 80-MW Copenhagen Wind Farm in New York has started supplying power to Narragansett Electric Co. under a 15-year power purchase agreement.

Natural gas

* A federal appeals court turned down an environmentalist challenge to a Clean Water Act permit issued by Virginia for the 1.5-Bcf/d Atlantic Coast pipeline project, which has faced a number of lawsuits over federal and state permits.

* The U.S. is in talks with Qatar to supply LNG to European buyers, including Germany, as part of its efforts reduce Russia's energy influence in the region, Reuters reported, Deputy U.S. Energy Secretary Dan Brouillette.

* Barclays PLC said in a statement that it is less likely to provide financing to oil and natural gas drilling projects in the Arctic, including the Arctic National Wildlife Refuge and the Coastal Plains.

* The oil and gas industry in Colorado won its second big victory in three months as the state's Supreme Court threw out a lower court's decision that would have required the state's oil and gas regulator to consider environmental and health matters before issuing a permit.

* Exploration and production companies continue to target the Permian Basin in West Texas, with the shale play attracting nearly three-fourths of the 245 drilling permit requests during the first week of 2019, the Houston Chronicle reported, citing state regulators.

Oil

* Even though 2018 was a fairly solid year for the oil and gas industry from a commodity price perspective, 29 North American producers with a combined debt of more than $13 billion declared bankruptcy.

* TransCanada Corp. is seeking a federal court order to continue preconstruction activities on the Keystone XL oil pipeline while the U.S. State Department completes a supplemental environmental review of the project, the Great Falls (Mont.) Tribune reported.

* China is set to receive the first batch of three U.S. crude oil cargoes between late January and early March, Reuters reported, citing trade sources. The shipments appear to be a trade breakthrough between the two countries after a 90-day pause in their trade war starting in December 2018.

* Par Pacific Holdings Inc. closed the previously announced acquisition of privately held downstream business U.S. Oil & Refining Co. for $358 million.

* Halliburton Co. former Executive Chairman Dave Lesar is looking to form a new oilfield services company that would receive funding from private equity firm CSL Capital Management LP, Bloomberg News reported. Lesar retired from Halliburton in December 2018.

* CME Group Inc. is planning to launch an electronic auction platform for the sale of U.S. spot crude oil export cargoes, Reuters reported. The first auction is scheduled to be held in early March with Enterprise Products Partners LP offering light sweet crude oil from Midland, Texas.

* North Dakota officials asked a federal judge to dismiss a lawsuit brought by two members of the Standing Rock Sioux tribe and a reservation priest over the closure of a section of highway during the protests against Energy Transfer LP's Dakota Access oil pipeline, The Associated Press reported.

* Epic Midstream Holdings LP said the EPIC Crude Oil Pipeline remains on schedule to begin interim service from Crane, Texas, to Corpus Christi, Texas, during the third quarter of 2019. The project is expected to be in permanent service beginning January 2020.

Coal

* B. Riley FBR discontinued coverage of dozens of companies in various industries, including struggling Powder River Basin coal producer Cloud Peak Energy Inc., as part of a "reallocation of resources toward higher-return opportunities."

* A subsidiary of General Electric Co. received the Federal Energy Regulatory Commission's approval to divest its 10.65% ownership interest in Homer City Generation LP to funds managed by Knighthead Capital Management LLC.

ChartWatch

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U.S. imports of solar panels continued to climb through the end 2018 after bottoming out in April as companies adjusted to tariffs President Donald Trump imposed last year and equipment prices that subsequently tumbled globally following policy changes in China that slowed the pace of growth in the world's biggest solar market.

New from RRA

* The Public Utility Division staff of the Oklahoma Corporation Commission recently said American Electric Power Co. Inc. subsidiary Public Service Co. of Oklahoma should be authorized a $56.9 million, or 4.2%, electric base rate increase premised upon a 9% return on equity (48.14% of capital) and a 6.78% return on a year-end rate base valued at $2.503 billion for a test year ended March 31, 2018.

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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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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