The Inflation Reduction Act

Is There a Silver Lining for The Natural Gas Industry?

President Joe Biden signed the Inflation Reduction Act (IRA) on August 16, 2022, in company of Senator Joe Manchin (D-WV), noted as gaining concessions in relation to energy. What are the key takeaways from the IRA for the natural gas industry:

  • Increased royalty rate on offshore oil and gas leases, as well as an increased minimum bid.
  • Royalties will now be paid for gas flared, vented or released on federal lands.
  • Methane penalties would start at $900 MTPA and rise to $1500 after 2 years.
  • The IRA does include appropriations of $1.5 billion to help industry address methane emissions.
  • Tax credits include biogas in addition to hydrogen, and renewable energies.

Senator Manchin has gotten agreement of Democratic leadership on Legislation for streamlining federal permitting for:

  1. oil and gas drilling coming as early as September and,
  2. pipelines and other infrastructure to be seen in the coming months.

What can this mean for the Natural Gas industry. Robert Kachmar in his most recent article looks at one aspect: permitting.

Robert writes, “daily prices increased 182% in June 2022 when compared to June 2021. That is nearly 3 times as much for the commodity portion of local utility bills. … Using RBAC’s GPCM® Market Simulator for North American Gas & LNG™ software, we ran scenario forecasts on future Transco Z5 North pricing with and without the Mountain Valley Pipeline (MVP). … consumers in southern Virginia are paying a premium of 33% because a 4-mile section of pipeline has been held up in court.”

What effect on prices can MVP have if it is finally completed? And what might that mean for other projects?

Read his full article, “Can Mountain Valley Pipeline Reduce Inflation?” here.

RBAC, Inc. has been the leading provider of market fundamental analysis tools used by the energy industry and related government agencies for the past two decades. The GPCM® Market Simulator for North American Gas and LNG™ is the most widely used natural gas market modeling system in North America. RBAC’s G2M2® Market Simulator for Global Gas and LNG™ has been instrumental in understanding evolving global gas and LNG dynamics and is vital in fully understanding the interrelationship between the North American and global gas markets.

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E-mail:

contact@rbac.com

Contact Numbers:

Administration:
(281) 506-0588
Sales:
(281) 506-0588 ext. 126
Support:
(281) 506-0588 ext. 125

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