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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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President Donald Trump has exempted some — but certainly not all — of the critical minerals necessary for the energy transition from the sweeping tariffs he announced Wednesday. Minerals such as lithium, nickel, cobalt, manganese, and copper are key components of clean energy infrastructure such as lithium-ion batteries, which are used in electric vehicles or stationary storage, and copper wires, which conduct electricity in solar panels and wind turbines.
The White House has published a complete list of hundreds of products that are exempt from tariffs. We combed through the list looking for key transition minerals. Here are the ones that caught our eye, plus some that were notably left off. If you see anything on the list you think we missed, my inbox is open.
Just about every other renewable energy company is taking a beating today.
American solar manufacturer First Solar may be the big winner from the slew of tariffs Donald Trump announced yesterday against the world’s trading partners. Sorry, make that basically the only winner among renewable energy companies.
In a note to clients this morning, Jefferies analyst Julien Dumoulin-Smith wrote that “in this inflationary environment, we expect FSLR's domestic manufacturing to be the clear winner” in the long term.
For everyone else in the renewable industry — for example, an equipment manufacturer like inverter company Enphase, which has been trying to move its activities away from China — “we perceive all costs to head higher, contributing to a wider inflation narrative.”
First Solar’s’s stock is up almost 4% in early trading as the broader market reels from the global tariffs. Throughout the rest of the solar ecosystem, there’s a sea of red. Enphase is down almost 8%. Chinese inverter manufacturer Sungrow is down 7%. Solar installer Sunrun’s shares are down over 10%. The whole S&P 500 is down 4%, while independent power producers such as Vistra and Constellation and turbine manufacturer GE Vernova are down around 10% as expected power demand has fallen.
First Solar “is currently the largest domestic manufacturer of solar panels and is in the midst of expanding its domestic manufacturing footprint, which should serve as a competitive advantage over its peers,” Morgan Stanley analyst Andrew Perocco wrote in a note to clients Thursday morning.
Nor has First Solar been afraid to fight for its position in the global economy. It ispart of a coalition of American solar manufacturers that have been demanding protections against Southeast Asian solar exporters, claiming that they are part of a scheme by Chinese companies to avoid preexisting solar tariffs. In 2023,80% of American solar imports came from Southeast Asia, according to Reuters.
Tariff rates specific to solar components manufactured in those countries will likely be finalized later this month. Those will come in addition to the new tariffs, which will go into effect on April 9.
But the biggest question about First Solar — and the American renewables industry as a whole — remains unanswered: the fate of the Inflation Reduction Act. The company benefits both from tax credits for advanced manufacturing and investment and production tax credits for solar power.
“Government incentive programs, such as the Inflation Reduction Act of 2022 (the “IRA”), have contributed to this momentum by providing solar module manufacturers, project developers, and project owners with various incentives to accelerate the deployment of solar power generation,” the company wrote in a recent securities filing.
If those tax credits are at risk, then First Solar may not be a winner so much as the fastest runner ahead of an advancing tide.
Tristan Abbey would come to Washington from a Texas think tank that argues peak oil is way off base.
Donald Trump’s pick to run the Energy Information Administration works for a think tank that denies the existence of an energy transition.
The Energy Information Administration is the nation’s primary energy fuel and power forecasting agency. Since its inception in 1977, EIA has become a go-to source of data for many U.S. businesses, analysts, and policymakers alike. The agency’s previous administrators have been relatively apolitical academics and industry experts, including under the first Trump administration, whose EIA administrator came to the role from a faculty position at Rice University. The office’s current acting administrator is Stephen Nalley, who was appointed deputy administrator by Trump in 2018 after serving in various other roles at the agency.
Last month, however, the president quietly nominated a new EIA administrator who may represent a new direction for the agency. Tristan Abbey is an energy consultant and a senior fellow with the National Center for Energy Analytics, a think tank founded last year by a conservative policy outfit, the Texas Public Policy Foundation. The group argues against the concept of “peak oil,” the notion that the world will one day hit a maximum level of oil demand as it transitions to other (presumably more climate-friendly) fuels.
“There has never been a more critical time for sober-minded, fact-based, emotion-free perspectives in energy domains,” the think tank proudly declares on its About webpage. “The U.S. and European governments, along with many U.S. states, are embarking on the biggest industrial spending program in history, all directed in the pursuit of an ‘energy transition’ with the goal to rapidly replace hydrocarbons that currently supply 80% of the world’s energy. Why are the stakes so high? ‘Transitions’ of such scale have never occurred. And energy is fundamental to everything in civilization.”
Abbey was previously director of energy and environment at the National Security Council from 2017 to 2019 under Trump 1.0, and was also chief economist for the GOP on the Senate Energy and Natural Resources Committee, boasting in a CV that his role included successfully repealing a federal oil export ban. Per that CV, he previously worked for Clarium Capital Management and Founders Fund, two hedge funds founded by GOP financier Peter Thiel. Abbey was also on the Trump 1.0 transition team, according to his LinkedIn.
Today, Abbey also works with the Energy Policy Research Foundation, a D.C. petroleum research organization, and recently stepped away from working at the Trump-affiliated America First Policy Institute, according to an ethics disclosure posted online.
Abbey’s work at the NCEA provides insight into the views he may bring to the top of EIA.
His biggest achievement at the think tank was authoring a report declaring that global gas demand will remain strong. “[T]he broad directional arrows are distinguishable: for the foreseeable future, the world will need far more electricity and more industrial energy, and a significant portion of that will require natural gas,” the report said. “The federal government never decided to become the world’s largest LNG exporter, but it did allow private companies to make that happen. The decision that it can make today is to preserve that achievement.”
On a webinar about the report, Abbey called on the U.S. to take steps to increase domestic natural gas consumption and find new ways to use LNG in various consumer products and industrial processes. “Is there something that is holding U.S. industry back from using more natural gas than it would otherwise?,” he asked.
The NCEA is a key player in a highly consequential but wonky debate in Washington about whether the U.S. should try and put thumb screws onto the International Energy Agency, a world power and fuel forecasting body overseen by the OECD, an international body to which the U.S. is the single largest contributor.
The IEA has previously predicted “peak oil” may occur before 2030 — one of many predictions that have led some Republicans in Washington to declare the IEA is no longer impartial and a “cheerleader” for renewable energy. These Republicans have been led by Senator John Barrasso, one of the lawmakers who will oversee Abbey’s nomination. Another fan of this view is Kathleen Sgamma, Trump’s pick to run the Bureau of Land Management, who cited the NCEA to call on U.S. policymakers to pressure the IEA into “meaningful reform” of its forecasting about the energy transition. The op-ed was first reported by E&E News’ Scott Waldman.
How does Abbey feel about the war on the IEA? We’ll find out at his confirmation hearing, which has yet to be scheduled. We’ve asked Republicans on the committee for an update on when that’ll happen and we will let you know once we find out. Given they’re still working through other more high-profile nominees, that’ll take a while.