he's referring to the dozens of fossil fueled power plants being taken down
I still don't understand how power plants transitioning to cleaner fuel results in higher oil prices. Most power plant retirements are coal and nat gas plants coming online are growing. Is the growth in nat gas usage to blame for higher crude prices?
Though not as bullish as the BTU Analytics’ numbers, the U.S. Energy Information Administration (EIA) in its Monthly Electric Generator Inventory published in November said it expects 27.3 GW of new natural gas-fired generation capacity to enter operation from 2022 to 2025, a 6% increase above the current 489.1 GW of U.S. capacity as of August 2021. The agency said its data shows that most of the planned new gas-fired capacity will be built in the Appalachia region, which includes the Marcellus and Utica shale plays across West Virginia, Pennsylvania (Figure 1), and Ohio. Those plays accounted for more than one-third of all U.S. dry natural gas production in the first six months of this year.
Bradford said a favorable market for natural gas vs. coal means “gas-fired generation in 2022 should be up slightly at 31.0 Bcf/d vs. 2021 at 30.8 Bcf/d. BTU Analytics expects gas-fired power generation to climb to 31.7 Bcf/d by 2025 as increases in new gas capacity and further coal retirements are offset by competition from renewables and continued retirements of older-dated gas units.”
The EIA earlier this year said more than 60 GW of natural gas-fired generation capacity has been added across the U.S. since 2014.
He would also be referring to the cutback in fossil fuel land and infrastructure needed to continue fuel supply.
Oil and gas production from federal onshore lands makes up less than 10 per cent of total US output and oil companies are reluctant to drill on their current leases so how does that result in higher oil prices? Biden approved 3,557 permits for oil and gas drilling on public lands in its first year which is far more than Trump 's first-year total of 2,658....
WASHINGTON— New federal data shows the Biden administration approved 3,557 permits for oil and gas drilling on public lands in its first year, far outpacing the Trump administration’s first-year total of 2,658.
Nearly 2,000 of the drilling permits were approved on public lands administered by the Bureau of Land Management’s New Mexico office, followed by 843 in Wyoming, 285 in Montana and North Dakota, and 191 in Utah. In California, the Biden administration approved 187 permits — more than twice the 71 drilling permits Trump approved in that state in his first year.
The status of drilling permits during Biden’s administration The U.S. has more than 24 million acres under lease to oil and gas companies onshore — close to half are not producing.
Before drilling can occur, the leaseholder has to get a federal permit. At the end of 2021, there were 9,173 approved and available permits to drill on federal and Indian lands. Those permits include those issued under Biden and those still active from Trump’s administration and potentially before, said Josh Axelrod, of the National Resources Defense Council. Companies don’t have to immediately begin drilling as their leases last 10 years and can be extended beyond that.
From a federal regulatory standpoint, once a permit is approved, industry can proceed.
The president suggested the onus is on the industry to start drilling. But it’s not as simple as Biden made it seem, because there are some steps before companies begin production.
Companies have to contract rigs to drill the wells, and build a sufficient inventory of permits before rigs are contracted, said Jennifer Pett, a spokesperson for the Independent Petroleum Association of America, a trade group that represents oil and natural gas producers.
“Producers also have to put a drilling plan together, secure rights of way and work with state and private landowners,” Pett said.
Thousands of unused permits are not uncommon in any presidential administration.
Douglas Holtz-Eakin, an economist and president of the American Action Forum, a center-right think tank, said firms are trying to assess the durability of the global rebound. “They have to be sure that the costly investment (and time) that it takes to turn a lease into a producing well is worth it.”
Oil and gas companies can raise funds from investors by not drilling on leases with proven reserves, said Hugh Daigle, an associate professor at the University of Texas’ Hildebrand Department of Petroleum and Geosystems Engineering.
There is actually an incentive for the companies not to develop these resources because for publicly traded companies, these reserves get reported and influence market valuation, Daigle said.
“Sometimes there might not really even be producible oil and gas on a lease,” Daigle said. “Companies sometimes hold leases as a bit of a mind game with their competitors, or even just because they didn’t properly assess the production potential prior to leasing due to lack of data or that sort of thing.”
In 2020, the oil bust created worker and supply shortages and caused companies to cut their budgets. Investors remain reluctant to invest in fossil fuels. Pavel Molchanov, an analyst at Raymond James, told CNN Business that “oil and gas companies do not want to drill more.”
“They are under pressure from the financial community to pay more dividends, to do more share buybacks instead of the proverbial ‘drill, baby, drill,’ which is the way they would have done things 10 years ago. Corporate strategy has fundamentally changed.”
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