Good morning; here's what the Oilman has for you today:

• Here Come the Blackouts

• Canadian Oil Balks at Trans Mountain Costs

• Upcoming Oil & Gas Events

• Tweet of the Day

Here Come the Blackouts

The Department of Energy has warned that two-thirds of the United States is at risk of blackouts this summer.

Because of the weather, of course, what else?

When embarrassed, always blame it on the weather

Here’s the DoE’s explanation of the situation:

"In summer, electricity demand increases as temperatures rise and homes and businesses turn up the air conditioning to cope."

Shocking, I know.

"Above-normal summer temperatures further push up demand and can reduce electricity supply if power plant outages or reduced output stem from heat-related issues."

What the DoE seems to be shy about is what those issues might be, so let me do the honors.

Summer heat reduces wind speeds, compromising wind power output.

The heat also reduces output from solar panels.

There, fixed it for you, DoE.

The elephant-sized problem in the room

Normal summer weather is not the big problem; the big problem is what NERC warned about earlier this year and what the DoE somehow forgot to mention.

Coal and gas power plants are being retired faster than replacements are coming online, NERC said.

And when the replacements are wind and solar, vulnerable to the effects of normal summer weather, we get blackouts.

Of course, the DoE won’t mention this. Not when it’s been pushing so hard for more wind and solar and less gas and coal.

Sadly, that won’t help the rest of us.

Let’s hope we get lucky this summer.

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Canadian Oil Balks at Trans Mountain Costs

Canadian oil companies have complained about the costs of the expanded Trans Mountain pipeline.

Four times over budget, the expansion project is prompting some tough questions.

Regulatory delays don’t come cheap

The TMX will carry three times as much crude as before once finished.

Yet it will charge shippers a base toll of C$11-12 per barrel, with additional costs to be slapped on if the project costs continue to rise.

For now, total TMX costs are seen at C$30.9 billion.

Originally, the project was supposed to cost a fourth of that.

What happened?

Well, maybe…

• years of regulatory delays,

• protests,

• and opposition from British Columbia…

had something to do with it.

They had a lot to do with it: Kinder Morgan got fed up and sold the project to the federal government.

Ironic since that same government wants to squeeze the life of Canadian oil and gas.

Now, it has to make that expansion happen. At four times the original cost.

Talk about sound financial planning.

What if shippers don’t ship?

"Cenovus is concerned about the escalation in costs and expenses to construct the expanded system."

Sure, it would be concerned.

These tolls that the TMX owner is proposing, the price of oil will rise.

And that will make it harder to sell.

It was a foretold disaster.

Canada’s government has been openly hostile to the oil industry.

It has built an equally hostile regulatory environment.

And now it wants oil companies just to lie down and take it?

Someone’s going to lose money on that expansion project.

Upcoming Oil & Gas Events

• June 28-29: Kentucky Oil and Gas Association 86th Annual Meeting

• July 19-20: 2023 Independent Petroleum Association of New Mexico Annual Meeting

Around the Global Patch

🇮🇶 Iraq's oil bonanza, licensing round unleashed.
🇨🇳 Chinese major explores floating LNG opportunities.
🇷🇺 Russian gas giant fast-tracks startup of FSU.

Tweet of the Day

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