HOUSTON — Last week’s 38th annual CERAWeek by IHS Markit brought together a record 4,300 global energy movers and shakers, including 35 ministers and other government officials, from more than 70 countries.
Panel discussions and speakers in more than 400 sessions focused on geopolitics, trade and costs, price volatility, environmental policy, disruptive technologies and the battle to attract the workforce of the future.
Energy Secretary Rick Perry was a ubiquitous presence during the week. He and his staff held bilateral meetings with 10 countries and also met with power CEOs, LNG exporters and U.S. National Lab representatives. When Perry wasn’t in meetings, he was glad-handing potential investors and customers for U.S. LNG and other petroleum products.
“I have the coolest job in the world. I have a front-row seat to some of the most astonishing examples of cutting-edge innovation,” he said during his keynote address Wednesday. “We’re approaching the dawn of a new American energy era, where we embrace new and smarter ways to reach our energy and environmental goals.”
Perry drew mild twitters of disbelief when he noted Texas, the state he governed for 14 years, now produces 15% of its total energy from wind and solar resources, “more, percentage-wise, than our friends in Europe.”
“We [the U.S.] expect to become a net energy exporter next year, and for the next 30 years,” he said. “Thanks to innovation, we’ve got more than enough energy to share with the world.”
Perry said the U.S. needs to emphasize innovation over regulation, referring to the administration’s all-of-the-above energy policy that focuses heavily on petroleum exports. Central to that is increasing exports of LNG to energy-hungry markets in Latin America, Europe and Asia, many of whose energy ministers pleaded with him to keep the U.S. in the Paris Agreement on climate change.
“We would go into the [bilateral discussions], and they would say, ‘How about [us] buying some of that LNG you guys got?’” Perry said, leaning over in his chair as if whispering to his moderator.
Meeting with the media after his keynote, Perry addressed the Green New Deal resolution being championed by freshman Rep. Alexandria Ocasio-Cortez (D-N.Y.). The resolution calls for, among other items, securing 100% of the nation’s power demand through “clean, renewable, and zero-emission energy sources.”
Naturally, the Green New Deal has drawn significant political and energy industry pushback.
“How we get there — is it this number or this number? — is where good negotiations start,” Perry said. “I don’t think [Ocasio-Cortez] should be castigated and pushed aside, just on the face of her comments, in that she wants to live in a place where’s there’s clean air and clean water. So do I. The question is, how do we get there?
“I hope to help her understand what we have done over the past decade with the shale revolution … what LNG has done, and how we can get that to China or India. How we can bring carbon capture or [other technologies] into countries where they don’t have it,” he said. “I think she and I would say those are both goals … places we can agree on, that we don’t have to be disagreeable. I’ve been in this business for a spell, and I’d rather be agreeable.”
Grid Resilience Still on FERC, DOE Dockets
LaFleur Announces Departure from FERC.)
The commission in early 2018 unanimously rejected the Department of Energy’s Notice of Proposed Rulemaking that it order RTOs and ISOs to compensate coal and nuclear generators with 90 days of on-site fuel their full operating costs (RM18-1). At the same time, FERC opened its own resilience docket (AD18-7) and directed grid operators to respond to questions on how they assess resilience. (See DOE NOPR Rejected, ‘Resilience’ Debate Turns to RTOs, States.) The commissioners said they will use the responses to determine whether additional action is necessary.
“We have a keen understanding of the urgency of doing this analysis, but this is so, so significant and important,” Chatterjee said during a media briefing in explaining there is no timeline for taking action. “This is about getting it done right, and doing this in a thoughtful and deliberate, evidence-based way.
“We have a rich and robust record before us. What are the attributes that are necessary to grid resilience? Once we make that determination, is there a long-term or short-term threat to grid resilience?” he said. “It’s just a really, really complex undertaking, so important we are being very thoughtful and making sure we get it right. Whatever action we take must withstand legal scrutiny and present a record that is fact-based.”
Chatterjee said Perry showed “leadership” by raising the issue of grid resilience.
“People are now talking about [grid] reliability and resilience in the same breath.”
For his part, Perry said he has “thrown a lot of Jell-O at the walls to find a solution the majority of us can support.”
“Yes, there are ways to generate power that is cheaper than coal and nuclear. With the prices of natural gas today, you can generate your electricity substantially cheaper than certainly coal or nuclear,” he said. “Gas is cheaper, but it’s interruptible. Are you willing to take the chance to save money on this side, with the chance to losing power over here?
“Is the money spent on baseload electricity worth it?” Perry asked. “I happen to think it is, to have an all-of-the-above energy structure. This is a really fascinating conversation we need to have. We are looking for the answer to a question that vexes us right now.”
DOE Trying to Make CCS ‘Sexy’
A panel debating carbon capture and sequestration agreed it’s not a sexy field right now, but help could be on the way.
DOE Under Secretary of Energy Mark Menezes took advantage of the moment to announce $30 million in funding opportunities for two front-end engineering design (FEED) studies for carbon dioxide capture systems. The projects will support FEED studies for CO2 systems on both coal and natural gas power plants.
“We’re looking for scale-up technologies,” Menezes said, saying the funds can be used for both retrofitting existing units and designs on new facilities. “All the new generation is natural gas or renewables. We need to take away minimizing economic incentives for the CO2 we produce every day. For so long, we’ve been pointing the finger at who’s responsible. We’ve got to stop that and understand it’s in the global interest to do something with these [generation] byproducts.”
Pratima Rangarajan, CEO of OGCI Climate Investments, followed Menezes’ announcement with one of her own: the organization’s annual Carbon Capture, Utilization and Storage Investments Day in September, at a date to be announced.
“We’re inviting the DOE to participate,” Rangarajan said. “We don’t think we can [make carbon capture a reality] without carbon capture storage in the United States. We need to stop [CO2] from going into the atmosphere, just like we do with plastic bottles so they don’t go into the ocean. We have to show it’s another way to have a low-carbon energy source that can create jobs and be an energy source, even if it’s not sexy.”
Stanford University professor Sally Benson called for a five-fold increase in CCS, saying a lack of governmental subsidies has stunted the sector’s growth. Many are waiting for the IRS to issue guidance on its Carbon Oxide Sequestration Credit, for those facilities using carbon-capture equipment “originally placed in service at a qualified facility before Feb. 9, 2018.”
“Why the resurgence of carbon capture sequestration now?” Benson asked. “For some people, it’s the financial incentive. For others, it’s, ‘Oh my God! This is really scary! Change is really upon us.’”
McNamee, Chatterjee Laud LNG Project’s Approval
FERC Commissioner Bernard McNamee, who joined the commission in December, said the commission’s recent order approving the Calcasieu Pass LNG export terminal showed some things still work in D.C. (See LaFleur Sides with Republicans on LNG Terminal as Glick Dissents.)
“It’s a great opportunity … to export the abundance of natural gas that we have. Everyone talks about so much dysfunction in Washington, but I thought it was also a great example that we were able to come together and compromise to make this work,” said McNamee, who was joined by fellow Republican Chatterjee and LaFleur in the 3-1 decision. (Democratic Commissioner Richard Glick dissented.)
“We have to determine whether [an order] is consistent with the public interest, but there are a lot of issues that go with that,” he said. “We have to take a hard look at the environmental issues … these are all important things that have been delegated to the government to make sure they’re in the public interest.”
Chatterjee credited McNamee and LaFleur with negotiating a computation of greenhouse gas emissions as the commission approved its first LNG project in two years. FERC has 12 more proposed LNG projects before it.
“I’m optimistic because the biggest speaking point in negotiations had been around greenhouse gas emissions,” Chatterjee said. “Now that we have the greenhouse gas question answered and a framework in place, I’m really optimistic it will enable us to approve some of the projects in front of us.”
NRG’s Gutierrez a Fan of Competitive Markets
NRG Energy CEO Mauricio Gutierrez may be a states’ rights advocate when it comes to environmental policy, but not when it comes to competitive markets and the grid.
“States have absolutely every right to determine their environmental policy. If they want to have a renewable portfolio standard, or a clean energy standard for their constituents, they have absolutely that right,” he said during a Thursday media briefing.
“Where I have a different opinion is they can’t do it at the expense of competitive markets. Competitive markets work, and they work very well,” Gutierrez said. “We have to define the attributes we want from the grid and let competitive forces determine the best way to meet those attributes. American history has told us that competitive markets are the most efficient way to provide consumer benefits. I think that’s the same in the electric markets.”
— Tom Kleckner
