Daily on Energy: Pompeo’s top energy official says sanctions on Venezuela, Iran are working

  • Mar 14, 2019
  • Washington Examiner

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HOUSTON – The State Department’s top energy official is confident the Trump administration’s hardline approach to Iran and Venezuela is working, thanks to America’s booming oil production helping offset losses from those two mainstay OPEC producing countries.

Francis Fannon, the U.S. assistant secretary of state for energy resources, gave a rare interview Wednesday to Josh on the sidelines of the CERAWeek by IHS Markit conference in Houston, providing a window into the Trump administration’s use of energy power as a diplomatic tool to accomplish foreign policy goals.

“The market is in a pretty strong place,” Fannon said. “What continues to surprise all of us is the resilience and innovation of the U.S. producer. Every indication I am getting is that’s going to continue.”

Fannon said the administration has made “incredible strides” in its effort to eliminate Iran’s oil exports, a strategy he said is meant to prevent the Iranian regime from using oil revenue proceeds to “fund terrorism and proxy wars.”

“Our target is to drive the exports to zero,” Fannon said. “The target is unwavering.”

Brian Hook, the State Department’s special representative on Iran, backed up Fannon’s claim in public remarks at CERAWeek Wednesday, saying Iran has lost $10 billion in revenue since U.S. sanctions began in November, removing about 1.5 million barrels per day from Tehran.

The U.S. aims to cut Iran’s oil exports to below 1 million barrels per day by May, Reuters reported Thursday, accelerating its goal to eventually shutdown all of Tehran’s oil. That means the administration in May will likely grant an extension of waivers it granted to eight countries that had begun reducing purchases of Iranian oil, but not eliminating them, including to its biggest buyers, China and India.

Venezuela on the brink: Fannon also justified the Trump administration’s sanctioning of Venezuela’s state-oil company PDVSA as a way to choke off the main revenue source of the socialist regime of Nicolas Maduro, and “preserve the wealth” of the Venezuelan people.

“The Maduro regime has sacked and looted PDVSA for years, which had been the shining star in Latin America in terms of oil companies,” Fannon said.

PDVSA once produced about 2.7 million barrels of oil per day, but that number is “cratering.”

“It's amazing how mismanagement and socialist communist policies can drive other competencies and success into the ground,” he said.

Fannon would not say if the administration is planning to impose secondary sanctions, punishing other countries that buy oil from Venezuela as it did with Iran — as the Maduro regime as held on.

“We see that increasing the voice of freedom is getting louder every day,” Fannon said. “We continue to encourage companies and countries not to support the illegitimate maduro regime.”

Nord Stream 2 sanctions possible: Fannon offered similar warnings to European countries supporting Russia’s Nord Stream 2 natural gas pipeline to Germany. He confirmed the administration is considering sanctioning the pipeline, which Germany continues to support despite opposition from the U.S. and other European allies who worry a dependency on Russian gas would embolden President Vladimir Putin.

“We have been clear that any party that is involved in the Russian natural gas pipeline export business faces a high degree of sanctions risk,” Fannon said. “That hasn't changed. The plurality of Europe opposes this project, and is disparately concerned about Russia’s use of energy as a coercive tool.”

Spreading love to renewables: Fannon also defended the administration’s advocacy for renewable energy overseas, rebutting criticism that the Trump administration’s focus on “energy dominance” is overly focused on fossil fuels.

“We talk about the oil and gas story because it appropriately gets a lot of headlines,” he said. “But the U.S. is also the second biggest producer of renewables in the world. Our innovation that happens here is a global export as well.”

The State Department’s energy chief said the agency has a “variety” of programs to help other countries, such as India, integrate wind and solar onto their power grids.

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BUT…..FEDS SAY HIGH OIL PRICES HERE TO STAY DUE TO TRUMP’S SANCTIONS, OPEC CUTS: President Trump's sanctions on Venezuela have managed to reduce the country's oil production by 100,000 barrels a day from January to February, enough to keep oil prices high through the remainder of 2019, the federal government forecast Wednesday.

The Energy Information Administration raised its 2019 crude oil price forecast $63 per barrel, an increase of nearly $2 per barrel from its previous forecast in February..

Tracking OPEC supply cuts: Since Venezuela is an OPEC member, the EIA is tracking how the Venezuela losses from sanctions will factor into the international oil cartel's decision to pull back overall production to balance the global oil market.

OPEC began implementing production cuts last month in order to counter a supply glut that depressed prices. The production cuts are meant to raise prices by depleting excess supply, which is working. The Brent oil price rose $5 to $64 per barrel from January to February.

Read more on how sanctions are affecting oil and fuel prices from John’s coverage.

REPUBLICANS UP PRESSURE ON PELOSI TO OPEN HEARINGS ON AOC’S GREEN NEW DEAL: Top House Republicans began pressuring House Speaker Nancy Pelosi, D-Calif., on Thursday to launch hearings on the Green New Deal, arguing that the progressive plan raises serious questions for the nation's economy and must be debated and properly vetted.

“Taken together, we fear the Green New Deal would hurt Americans struggling to make ends meet — the very people it purports to help," reads a letter sent to Pelosi by 11 Republicans representing key committees. "Worst of all, it could permanently put the American Dream out of reach for millions of Americans."

The lack of detail about the Green New Deal is one of the key reasons the Republicans want Pelosi to begin hearings on the plan, in order to flesh it out and debate its implications for the country.

"As the committees to which it has been referred, we have a responsibility to fully understand how the Green New Deal will affect the cost of living and economic mobility of hardworking Americans. We need to get to the facts, the American people deserve answers,” the letter added.

Republicans on the letter include Reps. Rob Bishop of Utah, the top Republican on the Natural Resources Committee, Greg Walden of Oregon, the top Republican on the Energy and Commerce Committee, Oversight and Reform Committee ranking member Jim Jordan of Ohio, and several others.

RICK PERRY WILLING TO MEET WITH AOC TO DISCUSS GREEN NEW DEAL: Energy Secretary Rick Perry said Wednesday that Alexandria Ocasio-Cortez, D-N.Y., should not rebuked for pushing the Green New Deal.

Perry told reporters at CERAWeek that he’d be open to meeting with Ocasio-Cortez to discuss ways to reduce emissions.

“I don't think the representative should be castigated or pushed aside just on the face of her comments relative that she wants to live in place with clean air and water,” Perry said. “So do I.”

He later suggested a blanket rejection of the Green New Deal would be counterproductive to the goal of addressing climate change, which he shares.

"I would rather be agreeable," Perry said. "Life is too short to be pissed off all the time.”

Perry supports state lifelines to nuclear: In the press conference with reporters, Perry also expressed support for a push in Pennsylvania to compensate the state’s economically struggling nuclear plants for the zero-carbon electricity they produce, and he encouraged other states to enact similar programs.

"I'd be inclined, if I were the governor of Pennsylvania, to try to keep a job creator in business and to help them be innovative on how you put the program together,” Perry said. “Those are wise conversations to have about are there industries in our state that are worth subsidizing, supporting."

Federal subsidies appear to be on ice: In later comments, Perry seemed to confirm reporting that the White House and Energy Department are struggling to come up with a legally viable federal government plan to subsidize coal and nuclear plants, after prior attempts to do so generated massive pushback.

“I support those types of thoughtful competitive programs where states don't have to rely upon the federal government to support a particular industry sector,” he said. “I’ve thrown a lot of jello over at the wall on this one trying to find some solutions that we can all, or at least a majority of us can get behind.”

But Perry didn’t rule out federal government action: “We are looking for answers to a question that vexes us at the moment,” he said.

FERC CHAIRMAN FEELS ‘URGENCY’ ON RESILIENCE DEBATE, BUT NOT READY TO ACT: With the White House effort on ice, the coal and nuclear industries are urging the Federal Energy Regulatory Commission to move quicker on evaluating whether to change wholesale power market rules to better value the resilience and reliability that different energy sources provide.

FERC Chairman Neil Chatterjee, in an interview with Josh on Wednesday at CERAWeek, said the commission “appreciates the urgency” of the issue, but is still deciding on the best course.

The independent panel of energy regulators previously rejected a proposal from Perry to directly subsidize coal and nuclear plants that can store fuel on-site for help during a grid emergency, but FERC is now considering a broader question of whether the grid is resilient as it evolves away from coal and nuclear to gas and renewables.

“We are working as diligently as we can, but this is something so significant and complex,” said Chatterjee, a Republican. “We have got to be careful to make sure whatever actions we take our thoroughly legally defensible, are not influenced by politics whatsoever. There is no putting our thumb on the scale to favor one fuel source over the other.”

Confident about more LNG approvals: Chatterjee, who is giving a public address at CERAWeek later Thursday, also told Josh he is optimistic FERC can address concerns of the energy industry that the commission is not moving fast enough to clear a backlog of permit applications for liquefied natural gas export terminals, which the industry says are needed to transport the benefits of the shale boom abroad.

Chatterjee has cheered FERC’s “breakthrough” approval of the Calcasieu Pass LNG export project last month, the commission’s first approval of an LNG facility in two years.

A dozen other facilities are awaiting permit approval from FERC. Chatterjee said the breakthrough came because the commissioners who approved the Louisiana facility agreed on a smoother process to review the direct greenhouse gas emission impacts of the facilities.

“Getting that delicately negotiated compromise on greenhouse gas emissions in place addressed the single most contentious issue they had been holding up these projects," Chatterjee said. “With that framework in place, as we individually assess projects in the pipeline, I am cautiously optimistic we can continue to move forward and meet this moment.”

Democratic Commissioner Cheryl LaFleur, who was the decisive vote in approving the Louisiana project, has pushed back on Chatterjee’s “breakthrough” characterization, and vowed that her vote is not guaranteed for future projects if greenhouse gas emissions are too high.

“We don't predjudge any of the applications before us,” Chatterjee assured.

Cybersecurity standards: Chatterjee also said FERC does not necessarily need to enforce mandatory cybersecurity standards on natural gas pipelines to keep them secure from attacks.

“Mandatory standards are one way to address the issue, but they are not the only way,” he said.

The pipeline industry prefers FERC stick to a process being run by the Transportation Security Administration on a voluntary cyber program. Chatterjee said he’s seen “real movement” from TSA and industry “to address the seriousness of the issue.”

BETO O’ROURKE SAYS CLIMATE CHANGE A ‘MOST’ IMPORTANT ISSUE IN 2020 LAUNCH: Former Democratic Rep. Beto O’Rourke of Texas declared combating climate change to be among the highest priorities of his 2020 presidential campaign launch, which he announced Thursday.

“Perhaps most importantly of all, because our very existence depends on it, we can unleash the ingenuity and creativity of millions of Americans who want to ensure that we squarely confront the challenge of climate change before it’s too late,” O’Rourke said in his campaign launch video.

O’Rourke joins a crowded crop of Democrats vowing to make climate change central to their campaigns, led by Washington Gov. Jay Inslee, who is singularly running on the issue.

COALITION URGES RECORD FUNDING OF ARPA-E, WHICH TRUMP WANTS TO KILL: More than 80 businesses, clean energy groups, environmentalists, and universities urged congressional leaders to provide record funding for the Energy Department’s advanced energy research program, which Trump seeks to kill in his latest budget request.

Groups on the letter called on Congress to provide at least $400 million for the Advanced Research Projects Agency–Energy (APRA-E) in Fiscal Year 2020, roughly $35 million higher than the prior fiscal year. Among those signing the letter are General Electric, The Nature Conservancy, ClearPath Action, and the U.S. Chamber of Commerce.

“Since its inception, ARPA-E has successfully sponsored a dynamic range of research, including technologies with potentially profound benefits for the nation’s future energy security,” the groups said. “Stable and sustained funding growth is necessary to ensure this successful program continues to enhance America’s ability to pioneer the energy technologies of tomorrow.”

CARPER URGES EPA CHIEF WHEELER TO RESIST PRESSURE ON PFAS: Sen. Tom Carper, D-Del., top Democrat on the Environment and Public Works Committee, is urging Environmental Protection Agency Administrator Andrew Wheeler to resist pressure from other agencies not to enact strict limits on the chemical pollutant known as PFAS in drinking water.

In a letter sent Thursday to Wheeler, Carper responded to reports that the reason for the delay in enacting new rules “is that the Department of Defense (DOD), National Aeronautics and Space Administration (NASA) and the Small Business Administration (SBA) are urging for the adoption of a much less stringent clean-up standard.”

EPA has recently faced strong criticism for not setting strict limits on PFAS given the prevalence of the chemical in drinking water across all states, and the health concerns that come with its prevalence. The Defense Department uses a large amount of the chemical, which is commonly found in packaging material.

Reuters How Russia’s oil company sank billions of dollars into Venezuelan quicksand

New York Times Trump’s World Bank nominee tries to distance himself from Trump on climate

Wall Street Journal Shipping companies banking on gas carriers as LNG demand grows

1 p.m., Teleconference. Public health leaders and a leading researcher will hold a teleconference to highlight the success of the Mercury and Air Toxic Standards (MATS) since they were adopted in 2011. Dial-in: 1(888) 466-9863; Passcode: 9429 318#.

All day, Houston. IHS Markit’s CERAWeek energy conference continues through March 15.

All day, 5701 Marinelli Road, North Bethesda, Md. The Nuclear Regulatory Commission’s 31st annual Regulatory Information Conference wraps up today.