Daily Energy Standup Episode #135 – From Fossil to Future: Dominion Shuts Down Chesterfield’s Last Coal Units as Clean Energy Rises

Dealing a blow to Gov. Gavin Newsom, Democratic legislators today shot down his ambitious attempt to reform state environmental law and make it easier to build big infrastructure projects in California. In a 3-0 vote, […]

 

Highlights of the Podcast00:00 – Intro

02:44 – Dominion to deactivate last two coal units in Chesterfield
04:57 – Democrats sidelined Newsome’s plan to perform CEQA
07:38 – Clean tanker demand drop ways on U.S. Gulf rates
11:11 – Market Updates
13:23 – Outro

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Michael Tanner: [00:00:16] What is going on Everybody, Welcome into another edition of the Daily Energy News Beat Stand up here on this gorgeous June 1st, 2023. As always, I’m your humble correspondent, Michael Tanner, coming to you from an undisclosed location here in Dallas, Texas. Stu is stuck still out on assignment so you’re stuck with me for another day. Don’t worry we had a absolutely packed show, though Stu still did a great job of giving me everything we’ve got really three stories I’m going to cover I will kick the oil and gas. [00:00:46][29.3]

Michael Tanner: [00:00:46] First up, Dominion to deactivate last two coal units in Chesterfield Next, we’ve got Democrats sidelined Newsome’s plan to perform CEQA this is a really interesting story coming out of California, specifically targeting what’s happening around there, clean energy Gavin Newsom trying to slip some stuff in there so love a good chance to take a swing at California. [00:01:09][23.3]

Michael Tanner: [00:01:11] And then Next up, Clean tanker demand drop weighs on us Golf rates we’ve seen a huge drop in U.S. tanker shipping rates and this article really does, I think, a good job of breaking down what that means for the overall markets or what it does it unfortunately tells us why oil prices are currently at 6768. I’ll cover what happened a lot of softness in that market. [00:01:39][27.9]

Michael Tanner: [00:01:40] We did see the Nasdaq and S&P are finished in the red. We did see an interesting API, crude oil, about 5 million barrel estimated build as remember with the holiday, everything’s pushed out back a day. So as you listen to this, on Thursday, June 1st, you will be actually hearing and knowing what the EIA has pronounced they’ll do that about 930 10 for now we’ve got the API numbers I’ll cover that 5 million barrel bill at the end and let you guys get out of here. [00:02:07][27.6]

Michael Tanner: [00:02:07] But as always remember to check us out online world’s greatest website www.EnergyNewsBeat.com It’s where all of these stories come from it’s the best place to kind of stay up to speed on all of your oil and gas news check out Dashboard.EnergyNewsBeat.com it’s the best place for all your data and news combo. [00:02:26][18.9]

Michael Tanner: [00:02:27] I mean we’ve we had a nice little dev subscription call this morning folks I’m telling you watch out it’s going behind a paywall. We appreciate everybody checking us out you can email the show [email protected] but let’s go ahead and dive in. [00:02:42][14.7]

Michael Tanner: [00:02:42] I think first up, quickly, Dominion to deactivate last two coal units in Chesterfield. Dominion came out on Wednesday and announced that they’re going to go ahead and finally deactivated their two remaining coal units out in Chesterfield the Chesterfield power station. They’ve been in operation for more than 50 years, sit on the banks of the James River near the Dutch cap conservation area. It’s about one mile east of Interstate 95 and Route 288 for all you locals out there. Quickly, we’ll do a quick moment of silence for the two coal plants all right, that’s enough. [00:03:17][35.2]

Michael Tanner: [00:03:19] You know these were built in the sixties or they had other ones that were built in the sixties. This will be the latest retirement was in late 2018 so this will be the first retirement since then. Again, they’re switching over to gas so I think that’s the one thing to say, you know, in favor of what Dominion’s doing this, this decommissioning is is is moving to two new natural gas facilities that are currently being spun up right now, which I think is critical. [00:03:47][27.3]

Michael Tanner: [00:03:48] You know, as much as we don’t like coal, and don’t get me wrong, coal’s bad for the environment. I’ll admit that when she told subscribers on that, it ain’t good. But what I will say is this Now, the baseload energy that coal provides is critical to be able to replace and do that with renewables. Is it going to work? So I’m glad they’re being smart and I’m glad they’re going to natural gas because you can make that very clean. Exactly. You make that extremely clean so I appreciate the move there. [00:04:17][28.4]

Michael Tanner: [00:04:18] You know, they could have gone they could have done something weird. They could have done some weird. Over there. They could have done some weird offshore, you know, energy pipe it in you know, I wouldn’t necessarily want to be in charge, but, you know, they could have done something crazy and they went the smart route. So, you know, good for Minnesota, good for them. You know. [00:04:42][24.0]

Michael Tanner: [00:04:43] I mean it you never know with Minnesota, you know, my brother lives there. Exactly. Tell some stories, man. You never know with Minnesota. So. Props to them for going the smart route, deactivating their coal, and switching to natural gas. Speaking of regulatory reform we got to talk about what’s going on in California. So this is something that I think got slipped through by Gavin Newsom a couple of weeks ago and finally today, things kind of came to a head. [00:05:14][30.9]

Michael Tanner: [00:05:15] So about two weeks ago Gavin Newsom at the last minute as the budget is due by June 1st, aka Friday, he attempted to slip in ten bills conveniently known as Q, E, or CEQA, which is a play on a pretty horrendous bill that has to do that that’s already made is basically just the name that this this climate bill that he’s trying to pass is said. [00:05:45][30.1]

Michael Tanner: [00:05:46] He basically tried to stuff ten bills under this name, CEQA in at the last minute and he tried to slip it in through the Budget Committee. Okay. So today in a 3-0 vote, the Senate, the California Senate Budget Committee decided, okay, no, no, no, we like the idea of course, they say they have to say they like the idea. But even that even because we like it, we can’t pass this because we don’t have enough time to read it. [00:06:13][27.3]

Michael Tanner: [00:06:13] Here’s the quote from the committee chair, Senate committee chair Josh Becker, He’s a Democrat from San Mateo. Quote, The overwhelming agreement is that we need to build clean faster and cut the green tape that’s been a legislative priority for me and will continue to be a legislative party. [00:06:29][15.9]

Michael Tanner: [00:06:30] Although today we are rejecting the governor’s trailer bill proposals based on process as seven days is insufficient to vet the hundreds of pages of policy nuance in these proposals. We look forward to working with the administration on all of these critical issues. So they have to, of course, say they like it. [00:06:46][16.6]

Michael Tanner: [00:06:47] Now, what’s funny is they’re giving us the impression that they’re actually going to read this bill, which I’d be shocked if anyone actually read this bill. You know, again, most of this stuff is being, you know, written by lobbyists. So, I mean, this is probably got Sierra’s club name all over and I hope they got rid of the watermark on it. [00:07:05][18.4]

Michael Tanner: [00:07:07] So, I mean, let’s just be very clear they obviously want this to pass but I thought it was funny and worth it to bring up that even in California, they’re not even going to let they’re not going to let him slip it this is even too much for California. They’re checking Gavin Newsom have to like it, you know, because if we keep this up, that dude might be our president that’s a scary thought. I wish I could have Stu to opine on what that would be like but thank goodness he’s on assignment because he might fall out of his chair dying. [00:07:33][26.8]

Michael Tanner: [00:07:35] The other interesting thing I saw, is a nice August article, Clean tanker demand drop ways on U.S. Gulf rates. Basically, what we’ve seen really since the beginning of 2023 was a drop in U.S. crude oil tanker shipping rates, which is really a sign of profitability as these tanker rates are heavily tied to not only the price of the commodity, but the short-term future supply and demand, and is arguably one of the best indicators of where prices will go. [00:08:03][28.4]

Michael Tanner: [00:08:04] We’ve seen tanker rates drop substantially currently in 2022 that we averaged about basically 950,000 per month. But to give you an idea, it’s now about 713,000 per month. So you can break that down on a daily basis pretty insane what you pay for these takers. [00:08:23][18.8]

Michael Tanner: [00:08:23] The point is the Gulf of New Mexico tanker has not been as profitable as it used to be. And part of the reason why export demand has faced headwinds has been basically Brazil turning away from U.S. diesel in favor of cheaper Russian supplies. I mean, that is, unfortunately, when you create when you put sanctions on and you’re the only one abiding by the sanctions. Other countries are going to take advantage and Brazil is doing what Brazil should do is saying, hey, we’re going to be able to buy Russian refined diesel on the cheap. [00:08:56][32.8]

Michael Tanner: [00:08:57] They’re important. 95,500 barrels per day of Russian diesel up from, you know, up an average of basically 1800 barrels a day. Remember our diesel imports or excuse me, they were averaging 1800 barrels of Russian diesel import in 2022 and in 2023, they’re doing 95,000 a day. So, I mean, that’s basically what a million increase involved. [00:09:19][22.5]

Michael Tanner: [00:09:20] Give you an idea Brazil Diesel’s imports from the U.S. have fallen 75000 to 75000 barrels per day from 163,000 barrels per day. To give you know, they originally tried to blame, you know, the Gulf’s slow, sluggish performance on poor refinery maintenance. You know, we did see some pretty low refinery utilization in last December, about 86.6%, but we’ve averaged about 95.4 in 2023 so we really can’t use that. [00:09:52][31.4]

Michael Tanner: [00:09:52] So it’s really just, again, Brazil going on the rag and being like, yo we’re buying Russian diesel it’s cheap sorry is what it is. I mean, it’s pretty crazy. And this is the lowest level, you know, the lowest level since last February, which is kind of crazy to think about it again. It’s countries doing what countries are doing, looking out for themselves you know, it’d be nice if we all played well but, you know, BRICS, you know, this podcast is part of BRICS. [00:10:21][28.8]

Michael Tanner: [00:10:22] So we got offered to buy Russian diesel we said no, because we don’t need any. But now I’m just kidding we’re in BRICS Plus. So we didn’t quite get the offer unfortunately, we’re we’re waiting to get into BRICS. [00:10:34][12.3]

Michael Tanner: [00:10:35] Stu is actually out on assignment, by the way. He just got hired as Putin’s campaign manager. So Stu will be running Vladimir Putin’s 2024 presidential campaign it’ll come out probably next week but you heard it here first. So Stu’s just wrapping up a couple of things in Moscow before he makes it back. So I think we end up shooting the show tomorrow, so I’m going to make sure to I will get him tapped in, see what’s going on, and look forward to another successful run for Vladimir Putin. [00:11:06][30.5]

Michael Tanner: [00:11:08] What have we got next here? Let’s let’s cover oil prices, 6771. I mean, not good guys were down. You know, we were it were it wasn’t good. Yesterday. We saw a second straight day of declines, you know, to end a month. Did did not look well. Really settling lower on weak Chinese data. We had a lot of you know, to give you guys an idea manufacturing data pop or came out today and China contracted a lot more than we thought. You know what they call their purchasing managers index their PMI was down to 48.8 from 49.2 in April that forecast was supposed to be 49.4. [00:11:46][37.6]

Michael Tanner: [00:11:48] Again, as we continue to debate this debt ceiling, the dollar continues to krump or to hold a little bit of its value, you know, especially with this debt ceiling looking like it’s going to pass dollar not doing as well. Just a choppy road for prices. I don’t know what this means going forward. I mean, if you want some, you know, crazy analysis of where project, I don’t know you know we’re on the path of whatever news comes out so will the markets trade you know, I think there’s choppiness ahead. [00:12:23][34.8]

Michael Tanner: [00:12:23] If you had to ask me my opinion, it’s dropping. I don’t I don’t think I’m bullish per se I think I lean choppy and neutral to choppy bearish. You know, do I think I’m completely bearish? No, I think I’m somewhere in that in that 5 to 7 range. [00:12:36][13.0]

Michael Tanner: [00:12:37] You know, we did see the API came out today as we record this I’m here Tuesday. It’s about 7:00 Central Time to do about a seven or a 5.2 million barrel bill that will be confirmed or denied tomorrow by the EIA so we will let you know. [00:12:51][13.6]

Michael Tanner: [00:12:53] But other than that, guys, you know, just headwinds, natural gas down to 2 hours and 22. I mean, this doesn’t look good, folks. It just it just doesn’t look good. The only thing we can do is keep listening to the show. [00:13:07][13.8]

Michael Tanner: [00:13:07] Appreciate you guys checking us out Stu will be back from his his soiree we’ll check in, see what’s going on in his world tomorrow and then get you guys out of here for the week. But again appreciate everybody checking it out www.EnergyNewsBeat.com, See you tomorrow! [00:13:07][0.0]