EGEB: Fed paves the way for oil industry bailout

In today’s Electrek Green Energy Brief (EGEB):

• The Federal Reserve is expanding coronavirus business loans, which opens things up for oil.
• Norway, which accounts for around 2% of the global oil production, cuts its output.
• Five of Ørsted’s US offshore wind projects may face delays due to coronavirus.

The Electrek Green Energy Brief (EGEB): A daily technical, financial, and political review/analysis of important green energy news.

Fed to boost oil

On April 30, the Federal Reserve announced that it is expanding the scope and eligibility for the $600 billion Main Street Lending Program. The purpose of the program was “to help credit flow to small and medium-sized businesses that were in sound financial condition before the pandemic.”

Businesses with up to $5 billion in annual revenue are now eligible for support through the Fed’s program, as are companies with up to 15,000 employees. Previously, companies with up to 10,000 workers but under $2.5 billion in revenue were eligible for help.

The changes were urged by oil state legislators like Senator Kevin Cramer (R-ND), Ted Cruz (R-TX), and Lisa Murkowski (R-AK).

Here’s Cruz’s April 24 letter asking for help, in which he cc’ed in Dan Brouillette, the energy secretary. Cruz writes:

Under the authority of Section 13(3) of the Federal Reserve Act, the Federal Reserve, with the approval of the Secretary of the Treasury, should immediately create a new lending facility that will provide emergency liquidity for small-and-medium sized businesses that work directly or indirectly with the oil and gas industry.

The changes will allow oil and gas to qualify for aid after industry lobbyists pushed the Trump administration for changes, reports Bloomberg.

Senate Democratic Leader Chuck Schumer said in a statement:

It’s outrageous that small businesses are fighting for limited funds, while the Trump administration is bending over backwards to shower these oil companies with billions of taxpayer dollars. For Republicans, there’s always enough money to bail out their corporate donors but not enough for helping working Americans and state and local governments.

Friends of the Earth’s Lukas Ross said:

These changes directly reflect demands from polluters and their favorite members of Congress. Long before the coronavirus, the drillers were in deep trouble. Now frackers want to pay back their debts with our money. Trump’s big oil bailout must be stopped.

Meanwhile, the Trump administration is sitting on about $43 billion in low-interest loans for clean energy projects, reports the New York Times.

Norway cuts oil production

Tina Bru, Norway’s minister of petroleum and energy, announced that Norwegian oil production will be reduced by 250,000 barrels per day (bpd) in June and 134,000 bpd in the second half of 2020 due to reduced demand as a result of the pandemic.

Bru said:

The cut will include oil fields on the Norwegian Continental Shelf and be fairly distributed between the fields and thereby between companies.

It will imply a limitation of production for those oil companies with ownership shares in the relevant oil fields. Gas fields are exempt. Thus, the cut will not affect Norwegian gas production or Norwegian gas exports.

Norway has previously said that it will cut production if several big oil-producing countries implement large cuts. Electrek reported on April 13 that oil-producing nations agreed to the largest cut in history in an attempt to stabilize oil prices. It didn’t work, as we also reported on April 20 that US oil futures crashed below $0 for first time in history.

Delayed US offshore wind

Denmark-headquartered Ørsted, the world’s top offshore wind developer, has five US offshore wind projects that are expected to be delayed due to COVID-19 and slowed permitting.

Ørsted confirmed that Maryland’s 120-MW Skipjack and New York’s 130-MW South Fork are expected to miss their 2022 completion dates. Skipjack will likely be pushed back to 2023, for example.

Ørsted’s three largest US offshore projects — the 704MW Revolution Wind for Rhode Island and Connecticut; New York’s 880MW Sunrise Wind; and New Jersey’s 1.1GW Ocean Wind — face “increased risk of delays,” Greentech Media reports. Yet the company hopes to finish its three largest projects on time in 2023-24.