Friends,

With Conventions finally over, it is finally time to relax a little in August.  Both conventions were interesting though…  Rather than comment on each politically or logistically, let me just say kudos to both the people, police and leadership of both Cleveland and Philadelphia who were kind, likable, polite and very helpful to visitors of all stripes.  Both cities were very gracious and did a great job given the challenging environment.

The final golf major of the year, the PGA Championship, saw Jimmy Walker become the fourth new major winner this year by holding off world #1 and defending PGA Champ Jason Day at Baltusrol in New Jersey.  Walker’s win completed a sweep of first-time major winners: Henrik Stenson at the British Open, Dustin Johnson at the U.S. Open, and Danny Willett at the Masters. The last time newcomers won all four majors in a year, it was 2003.

While I didn’t join Malia Obama at the 25th Lollapalooza in Chicago, I’m sad I didn’t as my tickets to the Counting Crows Saturday night were spoiled by the bad weather.  Seems like Billy Joel still went on at Nationals Park after a 90-minute delay, but show in Chicago’s Grant Park got rave reviews.  It’s hard to believe that Lollapalooza is 25 years old. For fans of a certain age (like yours truly), the festival was synonymous with alternative rock, and it helped introduce the mainstream to a broad spectrum of artists like Pearl Jam, Rage Against the Machine, Tool, Soundgarden, Green Day, and Nine Inch Nails.  Here are some facts about 25 Years of Lollapalooza.

Keeping it low key this week with an eye on the usual August regulations roll out.  With less than six months to go in the Administration, the flurry of regs has been a steady conversation.  Finally, starting to look for the schedule for the September DC Circuit arguments on the Clean Power Plan.  Also, we are keeping an eye on the latest twists and turns in the RFS debate as a number of refiners report serious concerns over the program and RINs costs in last week’s earnings calls.

Finally, on Thursday and Friday of this week, Austin hosts the 28th annual Texas Environmental Superconference.  Speakers will include Gary Jonesi of EPA’s Enforcement office and Bryan Shaw of TCEQ, as well as Bracewell enviro experts Tim Wilkins and Kevin Collins.  See more on the event here.  Bracewell will be hosting an event on Thursday with cocktails, small bites and a live performance by Quiet Company.

The PRG Energy Update will be subject to the call of the chair until after Labor Day.  We’ll keep you updated with Special Updates when they occur and we’ll also be around off and on, so check in with your questions or let’s take the free time to grab lunch.

 

Best,

Frank Maisano

(202) 828-5864

(202) 997-5932

 

FRANKLY SPOKEN

“RINs have become a black pool allowing exempt parties, and even speculators, to drive prices to confiscatory levels. We believe the market may be cornered, the effect of which will be to bring small merchant refiners to the brink of bankruptcy while unjustly enriching speculators and exempt blenders.”

Jack Lipinski, chief executive officer of CVR Refining in 2Q Earnings call last week.

 

IN THE NEWS

Refiners Hit Hard by RINs – In Earnings Calls this week, several small refiners unable to blend their own gasoline are facing higher RIN costs which are eating into refinery operating costs, as the renewable fuels volumes breech the E10 blendwall. CVR CEO Jack Lipinski on his 2Q earnings Call last week unloaded on RINs, saying the market is being cornered, bringing small merchant refiners to the brink of bankruptcy while unjustly enriching speculators and exempt blenders. CVR has two refineries, a 115,000 b/d refinery in Coffeyville, Kansas, and a 70,000 b/d plant in Wynnewood, Oklahoma. HollyFrontier also raised concerns about lower refining margins and costs associated with blending ethanol and purchasing RINs to comply with the RFS mandate. Valero estimated that its cost of compliance with the renewable-fuel standards this year will be $750 million to $850 million, well above the $440 million it spent on RIN credits in 2015.  Finally, PBF Energy, which also does not have a retail or wholesale segment, was downgraded by Goldman Sachs on expectations the company to be “disproportionately negatively impacted” by expectations of higher RINs prices, increasing from $172 million in 2015 to $300 million in 2017.

Small Retailers Join Together on RFS – A number of small retailers have finally weighed in on the RFS as group.  A newly-formed coalition of small fuel retailers is adding to the calls for EPA to shift responsibility for RFS compliance.  The Small Retailers Coalition urges EPA to move the so-called point of obligation to the “rack,” terminals that hold bulk fuels before they move to retail outlets. The current set-up, needlessly tilts the playing field towards large retailers by giving large retailers the ability to use RINs to discount their prices says former Natl Assn of Convenience Stores (NACS) President Bill Douglass, saying moving the obligation would reflect the needs of all market participants.  DOUGLASS: “There are thousands of smaller retailers feeling the adverse impact of the large retailers advantaged by RIN revenue that will share their observation on this market failure.  The end result is that small independent retailers will be driven from the market.”

Coal Plays Pivotal Role in 2016 Battleground States – With the presidential primaries and national conventions in the rearview mirror, ACCCE released a new paper examining the importance of coal-fired electricity and coal in battleground states.  According to the paper, as of mid-July, there were as many as 17 states that are considered tossups or are leaning either Trump or Clinton.  Of the 17 states, coal-fired electricity is important to at least 13.  These states are Arizona (11 electoral votes), Colorado (9), Georgia (16), Indiana (11), Iowa (6), Michigan (16), Missouri (10), Nebraska (1), North Carolina (15), Ohio (18), Pennsylvania (20), Utah (6), and Wisconsin (10). Collectively, they represent 149 electoral votes, more than half the 270 votes necessary to be elected president.  Two hundred coal-fired electric generating units in the 13 battleground states have already shuttered operations with another 46 units expected to close their doors in the near future because of current EPA policies.  Said Duncan, “If the next President adopts the wrong policies, the 370,000 jobs and $90 billion in economic activity coal-fired electricity supports in these states will be threatened.”  Right now, coal is responsible for 48% of the electricity produced in these 13 states.  The percentage of electricity from coal ranges from 30% in Pennsylvania to 78% in Missouri.

The Hill Highlight Faison EffortsThe Hill has a nice profile on the efforts of NC Republican Jay Faison to change the Republican Party focus on Clean Energy.   The Article points out that Faison is a champion of options that he says don’t get respect they deserve, including nuclear power, hydropower, coal with carbon capture and natural gas.  It also highlights his ire is the League of Conservation Voters (LCV), which is aligned with Democrats and has spent the most of any environmental group this election cycle. The group “is very harmful to responsible energy solutions, and I would say it’s harmful for our democracy. I just can’t be more negative on them,” Faison said.

Holmstead Q&A Hits Houston Chronicle – Bracewell expert and former EPA Air chief was featured in a Q&A in the Houston Chronicle late last week.   Holmstead focuses on the upcoming Legal battles in the DC Circuit over the Clean Power Plan.

Chron Endorses Clinton – Speaking of the Houston Chronicle, the energy industry city’s paper of record which previously endorsed Republican presidential nominee Mitt Romney, has now officially endorsed Democratic presidential nominee Hillary Clinton. On Friday, the Houston Chronicle made its official endorsement known saying “these are unsettling times that require a steady hand: That’s not Donald Trump.”  The paper also added reasoning as to why they are endorsing now: “The Chronicle editorial page does not typically endorse early in an election cycle; we prefer waiting for the campaign to play out and for issues to emerge and be addressed. We make an exception in the 2016 presidential race, because the choice between Hillary Clinton and Donald Trump is not merely political. It is something much more basic than party preference.”

Capitol Crude Looks at Arctic Production – On Platts Capitol Crude podcast today, Brian tackles the future of US Arctic production with Oceana’s Mike LeVine and David Holt of the Consumer Energy Alliance. In a matter of weeks, an Obama administration decision could kill oil and gas development in the Arctic for years and may hinder drilling offshore Alaska for a decade or more.

 

ON THE SCHEDULE THIS WEEK

Report, Forum to Look at Middle East Oil, Gas – Today at 12:30 p.m., the Washington Institute for Near East Policy holds a discussion on a new report on U.S.-Middle East policy amid the oil and gas boom. To explore how the region and global investors see the changing oil and gas scene affecting U.S. policy, and to understand how Washington can maximize opportunities and minimize disadvantages from these developments, the Institute will host a Policy Forum discussion with Patrick Clawson and Simon Henderson WINEP, as well as RBC’s Helima Croft. Clawson and Henderson will also release their report, Energizing Policy: America and the Middle East in an Era of Plentiful Oil.

Nuclear Expert to Look at Technology – The Global America Business Institute (GABI) will hold a roundtable tomorrow at Noon on the emerging innovation landscape in nuclear energy, embodied by a growing number of pioneers from the technical, financial, and business fields that are seeking to successfully commercialize a number of advanced nuclear reactor concepts.  According to Third Way, there “are nearly 50 companies, backed by more than $1.3 billion in private capital, developing plans for new nuclear plants in the U.S. and Canada. The mix includes startups and big-name investors like Bill Gates, all placing bets on a nuclear comeback, hoping to get the technology in position to win in an increasingly carbon-constrained world.”  Third Way’s Senior Visiting Fellow, Dr. Todd Allen, leads an intimate discussion about the status, prospects, and ramifications of North America’s burgeoning advanced nuclear industry.

Forum to Look at DoD Renewables – New America and the Pew Charitable Trusts will hold a forum Thursday at 10:00 a.m. featuring a conversation with the Secretary of the Air Force Deborah Lee James, as we look at energy and the future of the Air Force. Following Secretary James, an expert panel will discuss how all of the military services work with clean energy companies at military bases in the United States.

Annual Enviro Superconference Set for Austin – The 28th annual Texas Environmental Superconference is set for August 4th and 5th at the Four Seasons in Austin, TX.  This year’s theme is Yogi Berra quotes and the conference is fittingly entitled “It’s like déjà vu all over again”; each topic has an appropriate quote assigned to it.   The event is co-sponsored by the State Bar of Texas Environmental and Natural Resources Law Section, the Air & Waste Management Association – Southwest Section, the Water Environment Association of Texas, the Texas Association of Environmental Professionals, The Auditing Roundtable, and the American Bar Association Section of Environment, Energy, and Resources. Bracewell will be hosting an event on Thursday, August 4th during the superconference with cocktails, small bites and a live performance by Quiet Company.  Speakers will include Gary Jonesi of EPA’s Enforcement office and Bryan Shaw of TCEQ, as well as Bracewell enviro experts Tim Wilkins and Kevin Collins.  See more on the event here.

 

FUTURE EVENTS

Power-Gen Forum Set for Columbus – Regardless of the Democratic Platform challenge of natgas, Pennwell will host Mark McCullough, Executive Vice President, American Electric Power to discuss the growing role in natural gas in power generation at the upcoming GenForum scheduled August 22nd in Columbus, Ohio. The half-day event is connected with PennWell’s POWER-GEN/Natural Gas.

Storage Forum Set – The EnergyStorage Global Innovation Forum will be held September 12-13 in Chicago bringing together top experts from ComEd, Oncor, PowerStream, PJM, Midwest ISO, ARPA-E, Argonne National Lab and many others to examine grid-level and behind-the-meter storage business models, technology innovations and opportunities. The Forum offers the latest updates on advanced storage technologies and systems for grid-level applications, as well as next-gen EV / smart transportation. These updates will be viewed through the lens of real-world deployments, business cases, and impacts on existing systems and operations.

Forum to Look at Environment Policies, Investments in Electricity – The Bipartisan Policy Center, the Great Plains Institute and the Nicholas Institute for Environmental Policy Solutions are hosting a workshop in Atlanta at the Hyatt Regency on Tuesday September 13th.  The event will feature experts, state officials and stakeholders from across the Eastern Interconnect for a one-day workshop exploring recent modeling analyses that provide new insights into trends in the electricity sector. The event will explore what these trends mean for state energy and environmental policy choices. Experts will present their findings and stakeholders will have an opportunity to reflect on those findings.

Renewable Conference Set for Mexico City – The Mexican Energy Leaders conference is set for Mexico City on September 7 and 8th. The event has become the major meeting for both Mexican and international renewable energy experts to discuss the new opportunities opened after major reforms on energy in Mexico.

SEJ Conference Set For Sacramento – The annual Society of Environmental Journalists (SEJ) Conference will be September 21-25 in Sacramento.  Of course, Bracewell’s PRG will be hosting our annual big reception on Thursday Night to welcome everyone.  More on this as we get closer.

SHALE INSIGHT Set for Pittsburgh – The Marcellus Shale Coalition will hold its 6th annual SHALE INSIGHT Conference at the Lawrence Convention Center in Pittsburgh, PA.  The focus of this year’s conference is the next phase of the shale revolution and will emphasize end use and connecting the market place through infrastructure. The conference will feature keynote presentations, an interactive and robust exhibit floor, tailored panel discussions, the Technology Showcase and a Natural Gas Use Marketplace, which all present networking opportunities for attendees.

NY Ratification Event to Include World Leaders – Well if you thought the Paris Accord was not a treaty, you might not want to attend the event on September 21st in New York where UN head Ban ki-Moon is asking countries to celebrate the ratification of the Accord.  In a recent letter, Ban asked countries to accelerate your country’s domestic process for ratification of the Agreement this year.