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The tiny South American country has become a big deal in oil.
The much-predicted wave of oil consolidation is happening.
The oil giant Chevron announced on Monday it was acquiring rival Hess in a deal worth $53 billion. This comes weeks after ExxonMobil announced a merger with Pioneer Natural Resources in a similarly sized deal. While that tie-up was largely interpreted as ExxonMobil trying to consolidate its position in West Texas’s immensely productive Permian Basin, this latest deal is about Chevron getting in on another prize: the massive offshore oil resources of Guyana.
From 2014 to 2022, the South American nation has seen its gross domestic product grow from just over $4 billion to almost $14 billion. With a population of just over 800,000, the tiny country has been transformed by the 2015 discovery of oil by ExxonMobil off its coast, which turned into actual production by 2019. Today, the area known as the “Stabroek block” is controlled by a consortium of ExxonMobil, Hess, and the Chinese oil company CNOOC, of which Hess is a 30 percent owner. (Hess also has positions in North Dakota, the Gulf of Mexico, and Southeast Asia.)
“The Stabroek block in Guyana is an extraordinary asset with industry leading cash margins and low carbon intensity that is expected to deliver production growth into the next decade,” Hess and Chevron said in their statements today.
Hess in its most recent quarterly earnings said that its production in Guyana had almost doubled, going from 67,000 barrels per day in the second quarter of last year to 110,000 in the second quarter of this year.
Hess estimates that there are 11 billion recoverable barrels in the Stabroek Block. Last year, Rystad Energy wrote that more potentially drillable oil was probably discovered in Guyana than in any other country.
Guyana’s resources are a rare source of newly discovered growth for the oil industry. Western oil companies recently have had to abandon projects in Russia due to sanctions, while heavy investor and political pressure have made European oil companies less interested in, well, oil. Meanwhile in Latin America, Guyana’s neighbor, Venezeula, further nationalized its oil industry in the 2000s, and ExxonMobil was one of the first oil companies to leave the country entirely. But in turning its attention to Guyana, ExxonMobil quickly found huge stores of crude with lower sulfur content than Venezuela’s, which is notoriously expensive to refine and thus less profitable to drill.
So what does this deal mean for climate change and clean energy?
Like other large oil companies, Chevron has a bevy of projects that could fit into a lower-carbon-emissions world, like carbon capture and hydrogen production. Indeed, just last month it spent around half a billion dollars to acquire a stake in a planned hydrogen storage plant in Utah. But while Chevron has said it wants to spend $10 billion on low carbon investments by 2028, that figure is dwarfed by today’s announced deal with Hess alone.
The massive move is an indication that Chevron expects there to be steady oil demand in the years and decades to come, as Hess’s operations are still growing. “Hess brings growth to Chevron — growth in resource, growth in production, growth in cash flow,” chief executive John Hess said on CNBC on Monday morning. “We have the best growth portfolio in the business.”
And yes, toy trucks. "The Hess toy truck will continue," Hess said.
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The Trump administration just did something surprising: It paved the way for a transmission line to a solar energy project.
On Friday, the Bureau of Land Management approved the Gen-Tie transmission line and associated facilities for the Sapphire Solar project, a solar farm sited on private lands in Riverside County, California, that will provide an estimated 117 megawatts to the Southern California Public Power Authority.
It is the first sign so far that some renewable energy requiring federal lands may be allowed to develop during the next four years, and is an about-face from the first weeks of Trump’s presidency.
BLM notably said the solar project’s transmission line will help “Unleash American Energy” (the bureau’s capitalization, not mine). And it said the move “aligns with” Trump’s executive order declaring a national energy emergency — which discussed only fossil fuels, nuclear, and hydropower — because it was “supporting the integrity of the electric grid while creating jobs and economic prosperity for Americans.”
“The Bureau of Land Management supports American Energy Dominance that prioritizes needs of American families and businesses,” BLM California State Director Joe Stout said in a statement provided via press release.
Another executive order Trump issued on his first day back in office paused solar and wind project permitting for at least 60 days, leading to a halt on government activities required to construct and operate renewable energy projects. It’s unclear whether these actions to move Sapphire’s transmission line through agency review means the federal permitting pipes are finally unstuck for the solar industry, or if this is an exception to the rule — especially because the pause Trump ordered has yet to hit the expiration date he set on the calendar.
For those keeping score, that’s three more than wanted to preserve them last year.
Those who drew hope from the letter 18 House Republicans sent to Speaker Mike Johnson last August calling for the preservation of energy tax credits under the Inflation Reduction Act must be jubilant this morning. On Sunday, 21 House Republicans sent a similar letter to House Ways and Means Chairman Jason Smith. Those with sharp eyes will have noticed: That’s three more people than signed the letter last time, indicating that this is a coalition with teeth.
As Heatmap reported in the aftermath of November’s election, four of the original signatories were out of a job as of January, meaning that the new letter features a total of seven new recruits. So who are they?
The new letter is different from the old one in a few key ways. First, it mentions neither the Inflation Reduction Act nor its slightly older cousin, the Infrastructure Investment and Jobs Act, by name. Instead, it emphasizes “the importance of prioritizing energy affordability for American families and keeping on our current path to energy dominance amid efforts to repeal or reform current energy tax credits.” The letter also advocates for an “all-of-the-above” approach to energy development that has long been popular among conservatives but has seemed to fall out of vogue under Trump 2.0.
Lastly, while the new letter repeats the previous version’s emphasis on policy stability for businesses, it adds a new plea on behalf of ratepayers. “As our conference works to make energy prices more affordable, tax reforms that would raise energy costs for hard working Americans would be contrary to this goal,” it reads. “Further, affordable and abundant energy will be critical as the President works to onshore domestic manufacturing, supply chains, and good paying jobs, particularly in Republican run states due to their business-friendly environments. Pro-energy growth policies will directly support these objectives.”
As my colleagues Robinson Meyer and Emily Pontecorvo have written, tariffs on Canadian fuel would raise energy prices in markets across the U.S. That includes some particularly swingy states, e.g. Michigan, which perhaps explains Rep. James’ seeming about-face.
Republicans’ House majority currently stands at all of four votes, so although 21 members might not be huge on the scale of the full House, they still represent a significant problem for Speaker Johnson.
Editor’s note: This story has been updated to reflect the fact that Rep. James did not unseat Democrat Carl Marlinga in 2022 as the district had been newly created following the 2020 census.
Three companies are joining forces to add at least a gigawatt of new generation by 2029. The question is whether they can actually do it.
Two of the biggest electricity markets in the country — the 13-state PJM Interconnection, which spans the Mid-Atlantic and the Midwest, and ERCOT, which covers nearly all of Texas — want more natural gas. Both are projecting immense increases in electricity demand thanks to data centers and electrification. And both have had bouts of market weirdness and dysfunction, with ERCOT experiencing spiky prices and even blackouts during extreme weather and PJM making enormous payouts largely to gas and coal operators to lock in their “capacity,” i.e. their ability to provide power when most needed.
Now a trio of companies, including the independent power producer NRG, the turbine manufacturer GE Vernova, and a subsidiary of the construction firm Kiewit Corporation, are teaming up with a plan to bring gas-powered plants to PJM and ERCOT, the companies announced today.
The three companies said that the new joint venture “will work to advance four projects totaling over 5 gigawatts” of natural gas combined cycle plants to the two power markets, with over a gigawatt coming by 2029. The companies said that they could eventually build 10 to 15 gigawatts “and expand to other areas across the U.S.”
So far, PJM and Texas’ call for new gas has been more widely heard than answered. The power producer Calpine said last year that it would look into developing more gas in PJM, but actual investment announcements have been scarce, although at least one gas plant scheduled to close has said it would stay open.
So far, across the country, planned new additions to the grid are still overwhelmingly solar and battery storage, according to the Energy Information Administration, whose data shows some 63 gigawatts of planned capacity scheduled to be added this year, with more than half being solar and over 80% being storage.
Texas established a fund in 2023 to provide low-cost loans to new gas plants, but has had trouble finding viable projects. Engie pulled an 885 megawatt project from the program earlier this week, citing “equipment procurement constraints” and delays.
But PJM is working actively with a friendly administration in Washington to bring more natural gas to its grid. The Federal Energy Regulatory Commission recently blessed a PJM plan to accelerate interconnection approvals for large generators — largely natural gas — so that it can bring them online more quickly.
But many developers and large power consumers are less than optimistic about the ability to bring new natural gas onto the grid at a pace that will keep up with demand growth, and are instead looking at “behind-the-meter” approaches to meet rising energy needs, especially from data centers. The asset manager Fortress said earlier this year that it had acquired 850 megawatts of generation capacity from APR Energy and formed a new company, fittingly named New APR Energy, which said this week that it was “deploying four mobile gas turbines providing 100MW+ of dedicated behind-the-meter power to a major U.S.-based AI hyperscaler.”
And all gas developers, whether they’re building on the grid or behind-the-meter, have to get their hands on turbines, which are in short supply. The NRG consortium called this out specifically, noting that it had secured the rights to two 7HA gas turbines by 2029. These kinds of announcements of agreements for specific turbines have become standard for companies showing their seriousness about gas development. When Chevron announced a joint venture with GE Vernova for co-located gas plants for data centers, it also noted that it had a reservation agreement for seven 7HA turbines. But until these turbines are made and installed, these announcements may all just be spin.