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With Industry In Turmoil, Energy Players Meet In Houston

IHS Energy/CERAWeek


The energy industry is in turmoil. Coal and oil prices are way down, there are big changes to environmental regulations in the works, and more and more renewables are coming online. Some of the biggest players in the industry met at a conference in Houston this week to weigh in on what it all means. Inside Energy reporter Jordan Wirfs-Brock was at IHS CERAWeek. She spoke to Wyoming Public Radio’s Stephanie Joyce from the conference about the biggest issues on the table for the energy industry.  


JOYCE: So, Jordan, last year, CERAWeek was in April. Oil prices at the time had been going down for 6 months or so at the time and the focus then was on innovation, survival, winners and losers.  How was the conference different this year?   

WIRFS-BROCK: Well, since last year, oil prices have only continued to fall and they've gone far lower than people expected, and they've stayed lower for far longer. So everyone here wants to know what's going to happen in the future. Are prices going to stay this way or are they going to start ticking back up sometime soon? And so one of the sort of most anticipated speakers this week was the Saudi oil minister Ali Al-Naimi, and people really wanted to know whether he was going to give some kind of a clue as to whether they were going to cut production, which would help drive prices back up. And bottom line is he said they're not going to cut production, don't expect that to happen from any of the other major oil producing countries. So essentially companies are going to have to just survive.

No one really wanted to go out on a limb and say when prices are going to come back up, but the general sort of discussion was that they will kind of creep up but not to where they were. We're not going to be seeing $100 a barrel for oil anytime soon.

JOYCE: So, I guess, in addition to the oil and gas industry players, I know the conference always features some major policy makers. Gina McCarthy was there, the head of the Environment Protection Agency, what did she talk about?

WIRFS-BROCK: Well, everyone was expecting her to talk about the Clean Power Plan, which is the Obama administration's new rules for cutting carbon emissions in the near future, and she did not disappoint. A few weeks ago, the Supreme Court issued a stay on the ruling and McCarthy had a nice little description of her reaction to that moment.

MCCARTHY: I think my head hit the table. Only because it was unexpected. But within 10 minutes I was back in action.

WIRFS-BROCK: Her bottom line and basic message was that the Clean Power Plan is here to stay. The EPA is not going to back down on this. People may fight it, many states are suing over this, but essentially all of this is not going to slow down our transition to a lower carbon economy.

JOYCE: And did McCarthy address any other regulations that are coming down the line?

WIRFS-BROCK: Yeah, a big topic of discussion this week was actually methane leaks. The recently Aliso Canyon leak in Southern California kind of brought this issue to the forefront, and so a lot of people have been paying attention to methane that can leak from all parts of the natural gas system—from the well pad, from pipelines, all the way to people's homes and the sort of the end of the line of the infrastructure.

And McCarthy did address this. She mentioned how recently the EPA updated the way it actually calculates methane emissions and how we come up with our inventory for the US, and essentially she says for years we've been underestimating this issue. Here is another bite from McCarthy.

MCCARTHY: The new information shows that methane emissions from existing sources in the oil and gas sector are substantially higher than we previously understood.

WIRFS-BROCK: Last year, they announced some proposed regulations those are going to be finalized later this year and the Bureau of Land Management is that also tackling this issue, so stay tuned for more on methane.

JOYCE: And so there was another key administration player there, the energy secretary Ernest Moniz. What was his agenda, what did he talk about?

WIRFS-BROCK: Well, he talked about a wide range of issues and and he's always a pretty entertaining guy, so he actually provided one of the funniest moments of the conference, when IHS chair Daniel Yergin was interviewing him, he asked him about the recent idea President Obama put forward for a $10 a barrel fee on oil.

YERGIN: Can you explain to us where the thinking is on this $10/barrel fee of oil?

[Silence, growing laughter]

YERGIN: A very articulate answer.

MONIZ: You mean $10.25?

YERGIN: Right.

MONIZ: Well, look, I’m just gonna say that this is going to be the classic answering a different question.


WIRFS-BROCK: So, where we went from there is that Moniz actually brought up that we have a huge, hairy problem which is how do we pay for our aging, crumbling transportation infrastructure? It's going to be expensive, we don't have the money to do it and he said, you know, “you try to come up with a better solution,” so that's what he talked about in terms of that $10 a barrel fee on oil.

JOYCE: Definitely something that I imagine was not greeted with enthusiasm in that room. You know, the Energy Department has come out with a number of reports and studies recently about the future of energy in this country and the policy to guide that future. Did Moniz have anything to say about that?

WIRFS-BROCK: Well, one of the most exciting and disruptive technologies that he talked about was actually electric vehicles and self-driving cars. During the press conference it actually came out that it seems like he's pretty bullish on the idea of self-driving cars—that they're coming and they're coming sooner than we think and that they will fundamentally change the way that we use energy for transportation. And also, in addition to Moniz, the CTO of Tesla Motors was there, JB Straubel, and he was very optimistic. Basically he said that in the next 5 to 10 years we're going to see millions of electric vehicles on the road.

JOYCE: One of the last big speakers of the conference, I understand, was from the Federal Energy Regulatory Commission, the agency that oversees the grid. What did FERC Chairman Norman Bay focus on in his presentation?

WIRFS-BROCK: He talked a lot about energy storage—and this was something that all of the people presenting on utilities in the power sector really emphasized as the future. We've known for a while that energy storage at the utility-scale is going to be necessary to bring on renewables on a very large scale across the electric grid. But the issue has always been cost and these technologies have not been commercially viable yet. But what Norman Bay said is that costs are dropping, and they're dropping faster than people had expected them to. And so here’s a bite from Norman Bay, talking about what that means.

BAY: Some analysts have predicted that costs will decline 50 percent over the next five years, to the point where, in some markets, energy storage systems can be cost competitive.

WIRFS-BROCK: Essentially, his point is that in the next few years instead of building new power plants, things like natural gas fired power plants, to meet demand, it will actually be economically viable to instead put in storage systems that can accommodate renewables. So that is that is huge. Essentially the combination of storage systems with renewables will make that cost competitive with more traditional power plants.

JOYCE: Lots to keep an eye on in 2016, it sounds like. Thank you so much, Jordan.

WIRFS-BROCK: Thanks, Stephanie. 

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