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Super hurricanes Harvey, Irma, and Maria have put a spotlight on US President Donald J. Trump’s policy position on climate change, which seems to deny the scientific reality. Although its “energy dominance” policy seeks to expand coal, oil, and gas, the Trump administration in June announced a “complete review of US nuclear energy policy” with the goal of revitalizing this energy resource the future of which is in serious doubt.
A recent series of militant attacks that forced the closure of three of Libya’s key oil fields represents the latest blow to the North African nation’s efforts to revive its energy sector while reigning in the chronic instability that has plagued the country since its 2011 revolution.

Over the course of two weeks in late August, the Rayayina Patrols Brigade (RPG) targeted oil fields and other facilities along a key pipeline corridor in western Libya, disrupting production at  the Hamada el Hamra, El-Feel, and El Sharara oil fields by an estimated 360,000 bpd.

Though all three fields are scheduled to resume production this week following a negotiated settlement, the attacks underscore the challenges the Tripoli-based and internationally recognized Government of National Accord continues to face as it attempts to revamp production and stabilize the country amidst a fraught security environment.
As Hurricane Irma, one of the most powerful ever recorded, leaves Florida battered in its wake, US energy infrastructure continues to bear the strain of long-term planning neglect. The damage wrought by the storms and the impact on the energy sector demonstrates that the time is right to prioritize infrastructure, particularly pipeline infrastructure planning.
Hurricane Harvey, which has devastated the city of Houston and the surrounding areas, has struck at the heart of the US energy sector. The consequences will outlive the rainfall, and raise questions about the utility and design of strategic product storage in a rapidly changing domestic energy landscape.

Since making landfall on August 25, Harvey has knocked out nearly one quarter of national refining capacity at the time of writing, including the nation’s largest refinery at Port Arthur. A number of refineries could be out for as long as a month if their storm drainage pumps remain submerged. 

While Harvey’s rainfall may be unprecedented and the situation quite serious, this is not entirely new territory for a Gulf Coast refining sector with experience of major storms. Hurricane Katrina left refinery complexes inoperative for months in 2005 due to flooding and power outages. While many existing facilities were successfully reinforced before the arrival of Hurricane Ike three years later, new facilities built to accommodate the US shale oil boom are only now being tested. The aftermath of Harvey will surely call for an assessment of the resilience of installations, but also of the tools at hand to mitigate the effects of disruption.
On August 4, the administration of US President Donald J. Trump formally notified the United Nations (UN) of its intent to withdraw from the Paris Climate Accord, while a forthcoming report points to the increasing effects of climate change.

In providing formal notification, Trump confirmed his June announcement that he would pull the United States out of the Paris Climate Accord. However, in line with Trump’s desire for a better deal, Washington stipulated that the United States would be willing to re-engage with the terms of the Accord on “terms more favorable to it.”

This move by the Trump administration raises more questions than it answers. Will the United States play a constructive role at COP23, the UN climate change conference in Bonn this fall, or will it be relegated to the sidelines? How will the rest of the world respond to US participation at COP23 and the 2018 Facilitative Dialogue to follow? More broadly, how will Washington engage in a process that is now driven by a framework (and a responsibility) for emissions reductions that it has rejected?

Adding to these questions, the administration’s official notification was followed by a reminder of just how real, and how serious, the implications of a changing climate are.
On July 14, an unofficial draft of the much-anticipated US Department of Energy (DOE) grid study, formally referred to as the Study Examining Electricity Markets and Reliability, was leaked, notably absent any recommendations.

The report was requested in an April 14 memo by US Energy Secretary Rick Perry. A number of senators and representatives, based upon the language of Perry’s memo, publicly denounced Perry’s request for a report, putting him on notice that the final document will be scrutinized carefully. Other groups, mostly renewable energy supports, protested the request for the report as well. However, the leaked DOE staff draft report, sans recommendations, has met with some approval from the same quarters.

In light of the backlash against the original memorandum requesting the grid report, the topics submitted by Perry indeed deserve a close examination, particularly given the absence to date of the release of a final DOE report.
The Russia sanctions bill passed overwhelmingly by the US House of Representatives on July 25 is a “strong” piece of legislation that makes it clear that the United States must work jointly with its European allies to impose those sanctions, according to Daniel Fried, a distinguished fellow at the Atlantic Council.

“[The House bill] locks in the sanctions against Russia because of Ukraine; locks them in because of congressional concerns that the Trump administration is going to unilaterally lift them,” said Fried, who served as the State Department’s coordinator for sanctions policy in the Obama administration.

Fried spoke in a Facebook Live discussion with Ellen Scholl, an associate director in the Atlantic Council’s Global Energy Center, on July 24. The following day, the House approved the sanctions legislation, which targets Russia, Iran, and North Korea, by a 419-3 vote.

Nicosia, Cyprus and Chania, Crete

Over the past decade, major offshore natural gas finds in Egyptian, Israeli, and Cypriot waters have fueled an ongoing debate over how to get that gas to market. Fixed midstream assets and pipes will be key to getting the gas out of the region, and various export routes present their own challenges. Recent political developments in Cyprus and subsequent Turkish military deployments in the region following the collapse of the country’s unification talks are narrowing options.

Competing export routes to move offshore natural gas north via Cyprus to Turkey, south to Egypt, and inland to Israel, have been considered. More expensive options such as capital-intensive floating liquefied natural gas (FLNG) facilities and longer subsea pipelines offer their own prospects. In April 2017, European and Israeli ministers expressed their support for the Eastern Mediterranean (EastMed) Gas Pipeline via Crete to bring gas directly to the European continent while bypassing Turkey and avoiding liquefaction. The arguments for each of these options are to some extent political, and the reach of those politics extends to Russia, the Levant, North Africa, and beyond.

Business cases are rooted firmly in project economics, and lofty political ambition is certainly insufficient to start breaking ground. Even in the boardroom though, economic risk evaluations over the project life cycle impact the final analysis, and political uncertainty can sour the case for otherwise viable projects.    
A consensus is emerging among Washington experts that the current draft legislation in the US Congress to expand sanctions against Russia should—and could—be refined to avoid a number of potential unintended consequences.

In a panel discussion at the Atlantic Council on July 19, Daniel Fried, who as the State Department’s coordinator for sanctions policy in the Obama administration led the US sanctions effort against Russia, argued: “I think the legislation is more or less a good thing. If I could, I would make modifications based in part on some of the observations I’ve heard from Americans and observations from the European Union. And I think there is more than enough room in this bill to do what the drafters and what the sponsors intended without weakening it, but also taking care of what I consider some legitimate, if rhetorically exaggerated, European concerns.”

The sanctions as written would have negative implications for US companies operating overseas, and for energy sector jobs at home, according to the panel’s participants, including Richard L. Morningstar, a former US ambassador to the European Union (EU) and special envoy for Eurasian energy, and Daniel Yergin, an energy expert and vice chairman of IHS Markit.
The Shanghai Cooperation Organization (SCO) summit and Expo 2017 hosted in the Kazakh capital Astana in June served to highlight important regional trends to which US policy makers should play close attention.


    

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