Axios Archives

Troubles lurk for America’s emerging offshore wind boom

November 4, 2019 by Justin Williams

ATLANTIC CITY, N.J. — In a few years’ time, offshore wind could power the slot machines at this beachside gambling town.

Driving the news: As I reported for this week's "Axios on HBO," Danish company Ørsted, the world’s largest developer of this kind of energy, is planning to put nearly 100 massive turbines 15 miles into the Atlantic Ocean that could power a half-million homes — but opposition and delays could stymie that goal and the industry writ large.

The big picture: With New England and mid-Atlantic states enacting aggressive clean-energy policies, offshore wind in the United States promises to help combat climate change and create jobs. The numerous projects in the regulatory pipeline could power nearly 10 million homes.

But the only offshore wind farm operating in the country, near Rhode Island and operated by Ørsted, is tiny — just five turbines.
Proposals for far bigger farms, including this wind farm off Atlantic City, are piling up as one project is delayed and the Trump administration conducts a broad review of the cumulative impact of all of them.

Ørsted’s U.S.-based CEO, Thomas Brostrøm, said in an interview that this review is a “speed bump” — but he also acknowledged his company is making contingency plans if delays go on for too long.

“We've seen maybe a speed bump, which creates a little bit of uncertainty but that's following four or five years of very, very positive development. And obviously this is way too big to fail. We're looking at $70 billion to be invested over the next 10 years.”

— Thomas Brostrøm, "Axios on HBO" interview

Where it stands: The Interior Department, which regulates energy on federal lands and in federally owned waters, aims to complete the broader analysis of the industry’s impact, especially on commercial fisheries, early next year.

It’s part of an extended review of one particular project planned for Massachusetts, called Vineyard Wind. The project is backed by Avangrid, Inc., a U.S.-based subsidiary of Spanish energy firm Iberdrola and Copenhagen Infrastructure Partners, a Danish investment firm.
The Interior Department hasn’t publicized the scope of the broader review, including how many wind farms and other specifics. Department spokesperson Stephen Boutwell said the additional review “will help ensure the future success of all ocean users.”

What they’re saying: Even Sen. Sheldon Whitehouse (D-R.I.), an ardent climate-change advocate, recently signed onto a letter urging the Trump administration to conduct more comprehensive reviews.

Critics say such reviews could slow projects down, but Whitehouse contends they would ultimately speed up the process.
He also criticized Vineyard Wind for setting “a very bad example for the industry” by, according to Whitehouse, making a deal without getting input from area fisheries.

“If it was going to be the future of offshore wind to follow that example, they [the industry] were in for a long series of really difficult battles and long lawsuits and delays. So what we’re trying to do is head that off so that [the Interior Department] has a good process with a lot of good work upfront.”

— Sheldon Whitehouse, "Axios on HBO" interview

Read the full story here.

What oil price shock? American worries turn to the environment

October 4, 2019 by Justin Williams

Axios | Amy Harder | September 23, 2019

NEW YORK — The United Nations climate-change summit kicks off here today, a week after oil prices jumped more than they ever have in history.

The big picture: These two developments offer a window into how Americans view energy and the environment today — with relatively low oil prices making room to worry more about the environment.

Driving the news:

The Sept. 14 attack on Saudi Arabian oil infrastructure knocked out 5.7 million barrels, more than half of the country's entire daily production. That led to a nearly 20% spike in oil prices on Sept. 15, the biggest jump in history. Gasoline prices, which are largely determined by global oil prices, have spiked in more than half the country.
World leaders at the U.N. summit will commit more to drastically reduce heat-trapping emissions, which come largely from oil, natural gas and coal.

By the numbers: Oil prices have dropped and stabilized since the historic jump last week to hover around $60 a barrel. Pump prices, which rose a dime after the attacks to $2.66 a gallon, have also stabilized, according to AAA.

These prices are still lower than they were earlier this decade. Crude prices hovered around $100 a barrel from 2011 to 2014, and national average gasoline prices were bumping up against $4 a gallon.

Fuel prices would have to remain elevated for a while — we're talking many months or years — to alter the fundamental shift in Americans' attitudes that has been building since 2014: putting environmental problems above energy affordability.

Just 57% of Americans — a record low — say they are worried about energy affordability, according to Gallup data going back to 2001.
By contrast, nearly three-quarters say they are concerned about the environment. That's near the record of 77%, a level that has been reached 3 times since 2001.

One of the biggest drivers of this public opinion shift has been America's boom in oil production, which has more than doubled since 2008. That has helped lower oil prices and thus gasoline prices since about 2014, which has in turn lessened people's concerns about fuel prices precisely because they've been low.

America will never be wholly energy independent as long as we use oil and it's priced on a global market, but booming domestic production affords us a stronger security blanket, softening and limiting global impacts.
The Saudi oil attacks sent Brent crude prices jumping to a little more than $72 a barrel. That's where prices were organically several months ago, according to Kevin Book, managing director of the independent research firm ClearView Energy Partners.

Read the full story here.

Why U.S. offshore wind is finally going big

March 20, 2019 by Justin Williams

Axios | Ben Gemen | March 15, 2019

The stars in the U.S. flag replaced by offshore wind turbines — Illustration: Lazaro Gamio/Axios

HOUSTON — Power from offshore wind is finally poised for liftoff in the U.S.

Why it matters: The U.S. has long been a laggard, but that's poised to change thanks to a convergence of forces that analysts see bringing enough coastal wind online over the next decade to power millions of homes.

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What's happening: A huge energy conference here in the nation's oil-and-gas capital offers a window into what's prompting giant energy companies to plan multibillion dollar investments. It's a story of...

- Atlantic Coast states moving ahead with zero-emissions power procurement policies.

- Oil-and-gas majors expanding their low-carbon power portfolios.

- Technology evolution and falling costs.

The Trump administration supporting the development even as it abandons Obama-era climate programs.

What they're saying: "The missing piece for some time was actually an interest from the states up along the coast to acquire this power from this industry," says Christer af Geijerstam, who heads U.S. wind efforts for the oil-and-gas giant Equinor.

"That's where we have seen the significant shift the last 2–3 years being led by New York and Massachusetts," he tells Axios while at the big CERAWeek by IHS Markit conference.

ICYMI: In December, Equinor was among the winning bidders in a federal auction of development sites that are off the Massachusetts coast.

- This adds to another site in federal waters off New York that it had acquired in 2016.

- They paid $135 million for the Massachusetts site in the Interior Department auction that brought in a record-shattering $405 million.

I asked if Equinor would bid in federal lease auctions in the planning stages off New York and California. He said yes and offered no caveats.

The big picture: IHS Markit's current forecast sees 7 gigawatts of offshore wind coming online in the U.S. by 2030, up from almost nothing today. But that estimate could rise.

- "We will be looking carefully at what the outcome of solicitations in Massachusetts and New Jersey and New York is going to be," IHS associate director Max Cohen says.

Bloomberg NEF already projects 11.4 gigawatts of capacity by 2030. They've upped their estimate thanks to a combination of specific solicitations and long-term targets by state governments in Virginia, New Jersey and elsewhere.

Where it stands: Equinor is among several deep-pocketed companies in the space planning projects. Here are some other players...

- Danish wind giant Orsted bought the U.S. firm Deepwater Wind last year.

- A joint venture between Shell and EDP also had a winning bid in the recent Massachusetts sale. "The U.S. has a magnificent wind resource right next to a large population and highly densely populated areas," Enrique Alvarez Uria of EDP Renewables said at a panel here yesterday. He estimated EDP's effort with Shell could be a $4 billion to $6 billion capital investment.

Vineyard Wind, which is co-owned by Copenhagen Infrastructure Partners and Iberdrola's Avangrid Renewables, snapped up a lease that adds to their plans for a separate project in the region.

Full story here.

U.S. crude oil exports hit a record high

June 28, 2018 by Justin Williams

Axios | Ben Geman | June 26, 2018

U.S. exports of crude oil surged to average 3 million barrels per day for the week ending June 22, by far the highest level ever, according to newly released data from the federal Energy Information Administration (EIA).

Why it matters: The record signals how the U.S. has become an increasingly powerful force in global crude oil markets as domestic production, already at record levels, inches closer to reaching 11 million barrels per day.

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Background: The prior weekly average record was 2.57 million barrels per day in early-mid May, and the next highest was 2.37 million for the week ending June 15.

One level deeper: a number of forces have been pushing exports higher since the extremely heavy restrictions were lifted in a late 2015 law.

Rising domestic production of light oil, rising global demand, and the wide discount between the price of U.S. crude and the global Brent benchmark in recent weeks are all helping more U.S. crude find its way offshore.

Of the 10 times exports have averaged over 2 million barrels per day for a week, nine of them have occurred this year

Read the full story here.

The misguided notion of peak oil demand

November 8, 2017 by Justin Williams

Axios | Amy Harder | November 7, 2018

The new conventional wisdom suggests the world is approaching peak oil demand. That's a misleading term for a more stubborn dependency.

Bottom line: The world's appetite for oil is like a huge hill, and we're still going up it. The extent to which this hill flattens out, it will be a long, slow and gradual descent down. Short of an apocalyptic event that wipes out large swaths of the world economy, the moment that global oil demand peaks and falls will never happen. Our lives are too dependent upon the fuel.

Why it matters: Any reduction in the world's demand for oil in the coming decades has profound implications for the companies and countries built upon oil, and for global efforts to cut greenhouse gas emissions. More fundamentally, oil demand is driven by the everyday lives of more and more people on this planet, from the way we move around to the plastic products we use — which come from chemicals derived from oil and natural gas.

Driving the news:

The Organization of Petroleum Exporting Countries, the oil cartel of Middle Eastern countries that produce about 40% of the world's oil, releases its world outlook on Tuesday that will project oil demand to keep increasing through at least 2040.
IHS Markit, a consulting and information services company, in coordination with others, is set to release as soon as this week a report finding oil demand could flatten out -- but not decline -- in the 2030s.
The United Nations annual climate conference starts this week and goes through Nov. 17. It's not about oil, but the world's attempt to address climate change is one of the main drivers that is already starting to sap demand for oil in some developed countries.

The old conventional wisdom was that oil itself would peak — because the industry would run out of resources. Today, amid America's oil boom, persistently low prices and increased worries about climate change, that wisdom has reversed and become about peak oil demand. Projections, including by some oil companies, that find the world's demand for oil could peak within the next couple of decades, are often assuming advances in technologies and policy changes that are far from guaranteed.

The big picture

The global economy is growing at a surprisingly brisk and broad pace not seen in the last decade, which has been marred by recessions in Europe, the U.S. and elsewhere. That means more oil demand, even accounting for higher efficiencies in developed countries.

"It's funny to be talking about peak demand when demand has been so strong recently," Daniel Yergin, energy scholar and vice chairman of IHS Markit said in an interview. "I think people were taken by surprise at the strength of the synchronized economic growth. They've gotten so used to thinking Europe would never recover."

The International Energy Agency, a Paris-based group that advises nations on energy policy, keeps increasing its estimates for oil demand because of this economic growth. Oil demand is around 96 million barrels a day, with the IEA predicting an increase of approximately 1.5% over the next couple of years. Oil prices, in turn, have crept up to near $60 a barrel, a level not seen since 2015.

"Based on what we know now, we would need major technological breakthroughs or weak world growth, including for large emerging and developing economies, for oil demand to peak in the next 20 years," said Gian Maria Milesi-Ferretti, deputy director of the International Monetary Fund's research department.

Read the full story here.