Analysis by Energy Workforce SVP Government Affairs Tim Tarpley
Natural Gas Prices Cooling
The benchmark European price of natural gas this week fell to a level that is more than 70 percent below its record high in August. This is a sign that the market believes that Europe has all of the gas that it needs for now. Fears of gas shortages in the continent appear to have cooled, at least for the time being.
Throughout Europe over the past few months, governments and businesses have aggressively replenished how much gas they are holding in storage. At the urging of European Union officials’ energy companies and governments have filled underground caverns and other facilities to more than 90 percent of capacity, compared with less than 80 percent a year ago. If the weather on the continent continues to be mild, these aggressive actions may be enough to avoid an energy crisis this winter. While Europe is certainly not out of the woods yet, it is looking more likely that the doomsayers may have been off the mark.
Natural gas prices are also experiencing volatility here in the United States. Natural gas prices in West Texas dipped below zero for the first time since 2020 as increasing production is becoming trapped in the Permian as there is nowhere to store or move the gas out of the region. Gas for next-day delivery at the Waha hub in the Permian fell to around negative $2 per million British thermal units on Tuesday of this week. That is a stark contrast with about $5 a week ago. Analysts have said that seasonal pipeline maintenance is worsening existing constraints on the region’s network of gas distribution as well as mild weather so far this Fall.
Administration Finally Moves Forward on Leasing
After nearly 2 years of delays and bureaucratic hold ups, the Department of Interior has announced that it will hold lease sales on the remaining offshore lease parcels, as required. These lease parcels are mandated to be held per the Inflation Reduction Act.
Moving forward in this process, BOEM has prepared a Draft Supplemental Environmental Impact Statement (EIS) for two Gulf of Mexico oil and gas lease sales – Lease Sales 259 and 261. Congress directed that Lease Sale 259 be held by March 31, 2023, and Lease Sale 261 by September 30, 2023.
While this represents an important step forward that Energy Workforce has long been pushing the administration to take, it likely does not yet represent a change in course regarding the administration’s support for domestic energy production as this action was required by law.
Tim Tarpley, SVP Government Affairs & Counsel, analyzes federal policy for the Energy Workforce & Technology Council. Click here to subscribe to the Energy Workforce newsletter, which highlights sector-specific issues, best practices, activities and more.