Texas’ energy industry in the news: Top 10 stories of 2022
This year’s top energy headlines would have been radically different if Russia did not invade Ukraine. Nonetheless, Moscow’s aggression thrust Texas’ energy industry to a level of geopolitical importance not seen since World War II. As Russian natural gas exports to Europe dwindled — or were cut off with the explosion of the Nord Stream pipelines — world markets turned to U.S. liquefied natural gas much of it coming from Texas ports, as an energy alternative.
While the war in Ukraine raged and U.S. liquefied natural gas tankers departed for European ports, Texas continued its own energy expansion. Here, major strides were made towards the development of carbon capture and underground storage projects and hydrogen energy facilities. In the meantime, our state’s electric grid worked overtime in the face of a severe winter storm and an extremely hot summer. And to the grid’s credit in a trying year, it worked.
Here are the top 10 Texas energy headlines of 2022 in chronological order:
1. Russia invades Ukraine February 2022
Russia’s invasion of Ukraine and the subsequent international realignment of energy exports transformed a regional war into a global energy emergency. European leaders scrambling for alternatives to Russian natural gas imports found a resource in Texas-produced liquefied natural gas. In the meantime, “Midland not Moscow,” became the state’s new battle cry.
2. Winter Storm Landon February 2022
Almost one year after Winter Storm Uri in February 2021, Landon brought extremely cold temperatures, ice and snow deep into the heart of Texas. While Landon was not as severe as Uri, the storm was Texas’ first test of the planning and preparedness policies implemented by the Legislature in 2021. While a few areas lost power, the state as a whole retained function. The state’s response underscored the need to plan and prepare for extreme weather events.
3. Hackers target U.S. liquefied natural gas producers March 2022
In the weeks leading up to Russia’s invasion of Ukraine, hackers were discovered attempting to access the computer systems of several major liquefied natural gas companies, including some headquartered in Texas. This cyberattack was believed to be a Russian effort to destabilize the U.S. energy industry. One year earlier, hackers shut down the Colonial Pipeline in May 2021.
4. Major Carbon Capture Projects Announced for Texas April–May 2022
Throughout the spring, several major energy companies announced plans for carbon capture and underground storage projects in Texas. In April, Enterprise Products and Occidental Petroleum announced plans to develop a CCUS and conveyance system along the Texas Gulf Coast. One month later, Chevron and Talos Energy announced plans for building the Bayou Bend CCUS joint venture near Beaumont. The project would take carbon produced from industrial facilities near Beaumont and Port Arthur and sequester them in rock formations beneath the Gulf of Mexico. In addition, British Petroleum and Lynde announced a CCUS project along with clean hydrogen production along the Texas gulf coast.
5. Freeport LNG Terminal explodes June 2022
An explosion at the Freeport LNG terminal temporarily shut down the facility, halting the production and export of liquefied natural gas from a major U.S. port. According to the U.S. Energy Information Administration, the shutdown caused a 17% drop in U.S. export capacity. This was a blow to European countries seeking U.S. liquefied natural gas as an alternative to Russian natural gas.
6. Hot grid summer June–August 2022
This summer was marked with record high, or near record high, temperatures across the state. As outdoor temperatures went up, indoor thermostats went down, accelerating demands on the state’s electrical grid. By summer’s end, even though actual electrical demands exceeded earlier forecasts, and 11 new demand records were set, Texas’ power grid delivered electricity to homes and businesses albeit at a higher cost to consumers.
7. Railroad Commission moves forward on Carbon Capture and Underground Storage Jurisdiction August 2022
In 2021, the Texas Legislature consolidated CCUS regulatory jurisdiction with the Railroad Commission. In August, the Commission voted to approve rules for the RRC’s jurisdiction over CCUS, paving the way for the agency’s application to the EPA for primacy under federal law for permitting injection wells. The Commission’s action was a critical step for the development of CCUS in Texas, a major component to our state’s energy expansion.
8. Record energy prices yield record state revenues September 2022
Russia’s invasion of Ukraine sparked an increase in domestic oil and gas prices. By mid-summer natural gas prices reach levels not seen since the shale boom of the 2000’s, as oil prices also neared record highs. While these higher prices pinched consumers at the gas pump, they also contributed to increased state severance tax collections, fueling a budget surplus in advance of the 2023 legislative session.
9. EPA rejects Bluewater Texas Terminal permit September 2022
The EPA rejected the permit application for the Bluewater Texas offshore oil terminal citing pollution concerns. Located in the Gulf of Mexico southwest of Corpus Christi, the Bluewater terminal was slated to be the largest offshore oil terminal on the Texas coast. The EPA’s rejection of the Bluewater permit reversed a previous decision under the Trump Administration.
10. Texas and Gulf Coast hydrogen hub partnership announced November 2022
The U.S. Infrastructure Investment and Jobs Act approved by Congress in late 2021 provides $8 billion for the creation of several regional hydrogen hubs to expand industrial use of clean hydrogen. In an effort to pursue this critical funding opportunity, a coalition of private and public entities announced the creation of the HyVelocity Hub for the development of clean hydrogen projects along the Gulf Coast. According to a report by the Center for Houston’s Future, the establishment of a clean hydrogen industry could generate 180,000 jobs and $100 billion in GDP growth for Texas.
While these were the top 10 Texas energy stories of the year, there was one other story that caught our eye:
Texas produced water consortium releases report September 2022
Texas’ oil and gas producers generate billions of barrels of produced water each year as part of the extraction process. In 2021, the Legislature established the Texas Produced Water Consortium at Texas Tech University to study and make recommendations regarding the beneficial use and reuse of produced water. The report’s findings and recommendations provide the starting foundation for the development of key policy strategies for recycling produced water in Texas.