Daily on Energy: Pence visits Texas to lock down oil driller support for trade deal

Pence will climb aboard the Diamondback Oil Rig in Midland in the afternoon, where he will tour the operations at the fracking well and meet with employees, according to the White House.

His main message to employees will be that the U.S.-Mexico-Canada Agreement will benefit oil workers and the energy industry.

Diamondback Energy, which owns the rig Pence will tour, is a member of the Independent Petroleum Association of America, the national industry group that represents smaller independent firms.

Fred Lawrence, the group’s vice president for international markets, tells John the deal is key to allowing more oil and natural gas exports to flow, which is important to Trump’s energy dominance agenda. The trade deal also provides legal protections for U.S. firms investing in Mexico’s energy system.

However, the one thing the trade deal does not do is address the current steel tariffs that are making it harder to invest in new rigs and pipeline infrastructure, says Lawrence.

He says Trump’s steel tariffs and import quotas are contributing to increased project costs for oil producers. “Any future steel import issues with Mexico and Canada need to consider potential consequences to American oil and natural gas production,” he adds.

Trump was just in Texas last week, touting the U.S.’ recently achieved status as the largest producer of oil in the world. But continued production is dependent on building more pipelines to move that oil to market, which is dependent on imported steel.

Meanwhile, Trump’s trade deal, which would allow more oil sales across the North American market, is lingering without a firm timeline for when Congress would vote on it going into an election year.

Wells Fargo analysts said earlier this week that if Congress fails to ratify the deal, it could force the administration to withdraw entirely from the previous NAFTA free trade accord, with potentially disastrous effects for all industries.

A total withdrawal would mean trade would no longer be duty-free, as it has been over the past 25 years, according to Wells Fargo analysts. That would slow trade and grind daily transactions like oil sales to a stand still.

The American Petroleum Institute, the largest oil lobbying group, tells John it wants the USMCA to succeed for the benefits it would create by providing an integrated, seamless energy market that will make the continent energy independent.

Not having the deal ratified by Congress could make it harder for oil, natural gas, electricity, and other commodities to flow easily between the three countries.

Creating one seamless market between the three nations will help preserve the over 10 million jobs in the oil and gas sector by creating a stable market for exports, says the group.

A giant rises in the Permian: Pence’s visit to the Permian follows one of API’s top members, Chevron, striking a $58 billion deal in the Permian region to make itself a fracking “powerhouse,” according to a new analysis from IHS Markit.

Chevron’s proposed acquisition of the independent oil company Anadarko, announced last week, would raise its status as a global oil producer, becoming second only to Exxon in terms of barrels of oil produced per day, according to IHS Markit projections.

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SAUDI ARABIA FORMS CLOSER NUCLEAR TIES WITH RUSSIA: As Saudi Arabia readies the final details for Russian President Vladimir Putin’s visit to the kingdom this year, the Saudis and 13 other Arab nations agreed with Moscow on Tuesday to work more closely on a variety of areas including nuclear energy and nonproliferation.

The agreement was made in a statement from Moscow following the 5th Session of the Arab-Russian Ministerial Forum, marking the biggest turnout of Arab nations since the start of the annual forum, according to the Russian foreign ministry.

The statement comes as tensions remain high between the oil-rich kingdom and the U.S. after the murder of Saudi journalist Jamal Khashoggi last year, making it harder for Trump to fulfill his commitment of sharing U.S. nuclear know-how with the Saudis.

The Energy Department’s recent authorizations of seven U.S. nuclear export licenses to Saudi Arabia have drawn both criticism and increased scrutiny from both Republicans and Democrats on Capitol Hill, given Saudi Crown Prince Mohammed bin Salman’s desire to obtain a nuclear weapon.

The general thinking among analysts in Washington is that Saudi Arabia is moving closer to Moscow in terms of energy cooperation because of the high hurdles it faces with the U.S., especially on nuclear energy. Russian and Saudi Arabia have also proven to work effectively in managing the global price of crude oil.

Putin pushes for stronger energy cooperation: Putin said earlier this month that energy is a top area of cooperation with the Middle East that has already resulted in billions of dollars of investment in the region.

At two earlier conferences held in Moscow this month on Russian-Arab cooperation, Russian Foreign Minister Sergei Lavrov said his country is financing about $25 billion in loans to support projects in the Middle East.

Two projects are already underway, including Russia’s construction of a nuclear power plant in Egypt. Russian oil and natural gas companies LUKOIL and Gazprom Neft, respectively, are developing oil and gas fields in Iraq. Russia’s second largest natural gas production firm, NOVATEK, is developing Lebanon’s resources, Lavrov said.

Meanwhile, the new Saudi ambassador to the U.S. gets sworn in: Saudi King Salman on Tuesday held a swearing-in ceremony for the kingdom’s new ambassador to the United States, Princess Reema bint Bandar bin Sultan — the first female ambassador from the conservative Gulf kingdom.

Her father, Prince Bandar bin Sultan, was well-known for his access to the White House when he was ambassador. He was also known for a number of arms deals with the U.S. that became an object of contention with regard to Israel.

Oil, nuclear energy, and military cooperation are expected to be on the agenda once she arrives in Washington.

LAWMAKERS PUSH CLEAN ENERGY MANDATES TO PICK OFF REPUBLICANS SKEPTICAL OF CARBON TAXES: Republicans and Democrats in both chambers of Congress are planning to introduce bills requiring utilities to obtain an increasing amount of electricity from renewable and other zero-carbon energy sources.

Supporters view so-called “clean energy standards” as more likely to attract Republican support than addressing climate change through carbon taxes, because the resulting higher energy costs would not be as obvious to people.

“Politically the costs are much more transparent with a carbon tax then they are with a clean energy standard,” George David Banks, Trump’s former international energy adviser, told Josh.

An increasing number of states — more than half the country — have adopted some form of clean energy mandate or a more restrictive renewable portfolio standard.

Republicans mull it over: While Democrats are mostly leading on circulating clean energy standard proposals in Congress, at least one Republican is working on a bill.

Rep. David McKinley, R-W.Va., plans to introduce a bill merging a clean energy standard with government investments in innovation, meaning it would spend on new technologies that qualify for the mandate to bring down their cost, according to multiple people with knowledge of his plans.

A House Republican congressional aide confirmed to Josh ongoing discussions among GOP members related to a federal clean energy standard but expressed caution about its prospects.

“There are always concerns with one-size-fits-all approaches, especially ones that are mandatory,” the source said. “So, the specific details matter.”

Read more of Josh’s report here.

BETO DECLINES TO SIGN NO FOSSIL FUEL MONEY PLEDGE: 2020 Democratic presidential candidate Beto O’Rourke declined Tuesday to sign a pledge from climate activists to not accept money from fossil fuel interests during the campaign.

O’Rourke, the former Texas congressman, said he won’t take donations from oil and gas company executives, lobbyists, or political action committees. But he will accept campaign donations from oil and gas workers.

“If you work in the oil fields, you answer the phones in the office, if you’re one of my fellow Texans in one of our state’s largest employers, we’re not going to single you out from being unable to participate in our democracy,” O’Rourke said during at address at the College of William and Mary in Williamsburg, Va., in comments reported by Bloomberg.

Several other Democratic presidential candidates have signed the pledge, including Sens. Elizabeth Warren, Bernie Sanders, and Kirsten Gillibrand; Pete Buttigieg, mayor of South Bend, Ind.; and Washington Gov. Jay Inslee.

INSLEE CALLS ON DNC TO HOST CLIMATE-ONLY DEBATE: Inslee called the Democratic National Committee on Tuesday to host a debate during the presidential primaries solely focused on climate change, saying that “climate change is at the heart of every issue that matters to voters.” Inslee said the 2016 debates included only about five minutes dedicated to discussing climate change. The DNC plans to host 12 debates during the primaries this go-around.

The DNC did not commit to Inslee’s proposal. “Democrats are eager to put forward their solutions to combat climate change, and we will absolutely have these discussions during the 2020 primary process,” said DNC communications director Xochitl Hinojosa.

The Rundown

Associated Press Former Interior boss Ryan Zinke parlays post into private career

Bloomberg OPEC risks gambling away success again as $80 oil looms

New York Times Trudeau faces a new foe against his carbon tax as conservatives retake power in Alberta

Denver Post Colorado Gov. Jared Polis ushers in new era of drilling regulation, but are ‘oil and gas wars’ over?

Calendar

WEDNESDAY | April 17

1 p.m., Teleconference. Environmental Protection Agency holds a meeting by teleconference of the Environmental Laboratory Advisory Board. Email Thomas O’Farrell at [email protected] to obtain teleconference information.