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White House aims to enforce new sustainability standards in American aviation

President Biden’s administration pledges to reduce aviation emissions by 20% by 2030, focusing at the same time on creating new jobs in the industry. The key to success in this venture is sustainable aviation fuel (SAF).

This move comes to light as a means to achieve promised climate goals and bring forward carbon-free aviation before 2050 as part of President Biden’s Build Back Better Agenda. Since modern American aviation stands for 11% of all transportation-related emissions in the region, this share of emissions will only continue to grow without appropriate actions as the volume of commercial or not flights steadily increases. And prioritizing fuel produced from waste cooking oil, plants, and animal fats may be just the right answer, considering SAF could cut up to 80% of aviation emissions.

Such problems demand comprehensive measures, and for sustainable aviation to be achievable, the industry requires efficient innovations not only in aircraft technology but also in fuel extraction. And while hydrogen and electric-powered aviation may come to fruition in the future, bold decisions especially for long-distance travel need to be taken now.

The new SAF tax credit supports a significant reduction of greenhouse gas emissions up to 50% by cutting costs while rapidly scaling domestic production of sustainable fuels for aviation. This credit will work in concert with measures taken by the aviation-related industries to reduce their carbon footprints.

The White House's commitment to the transformation of aviation stems not only from the desire to address ecological challenges, but also to create union jobs, aid airport workers in improving environmental quality, and open rural economic opportunities to use sustainable fuels derived from a wide range of feedstocks and pathways. Aviation is changing toward a zero-carbon sector. To make this transformation, however, aircraft manufacturers, airlines, fuel producers, airports, and the Federal government will have to work together. And with the upcoming executive actions, new federal programs, and private sector commitments, the industry may very well soon be on its way to that cherished goal.

It is predicted that the domestic SAF market will increase rapidly in the coming years, with production reaching well over the current 4.5 million gallons per year. But SAFs production won't scale up domestically without the support of policy and producer commitments. Growing domestic production will require a wide range of feedstocks and paths, and the industry will explore a variety of possibilities. Ethanol conversion into jet fuel is one of these alternatives.

As evident, several airports already are in hot pursuit of the infrastructure needed to enable SAF deliveries in the future. While in Los Angeles, CA (LAX) and San Francisco, CA (SFO) it is readily in use on short domestic passenger flights. Additionally, many U.S. airports have individual road maps to achieve net-zero emissions and are actively participating in the Airport Carbon Accreditation certification program.

For our part, keeping ahead of sustainable fuel initiatives, Rextag will continue to add asset and infrastructure data to enhance business development, market surveillance, and competitive awareness in the industry.

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$5 Billion Returns for ConocoPhillips’ Shareholders as Prices Grow

Shareholder’s payout target was increased by 50% after the largest U.S. independent oil producer surpassed Wall Street’s earnings estimates on growing energy prices, said Houston-based Conoco Phillips Co. on Aug. 4. Due to Western sanctions on major producer Russia throttling energy supply amid a rebound in demand from pandemic lows, oil and gas #prices have soared. Crude has been trading more than 25% higher since the start of the year and results also benefited from high natural gas prices. Meanwhile, shares were down a fraction, to $91.03, in early trading but are up about 26% year to date. Conoco Phillips stated, that the average price obtained for a barrel of oil and gas accelerated 77% from a year earlier to $88.57. The company acknowledges that it has not hedged any of its oil and gas sales to make the most of higher market prices. The capacity of 1.69 million boe/d was in line with Wall Street estimates, however, the company expected the current quarter’s output would be between 1.71 million and 1.76 million boe/d.

Southland Royalty sold its San Juan Basin assets to MorningStar for $17.3 million. We go over the basics with an emphasis on the data needed to evaluate Southland Royalty's acreage in the San Juan Basin.

California oil joint venture, Aera Energy, of Exxon Mobil Corp. and ShellPlc is being sold to German asset manager IKAV, according to the agreement of Sept. 1. Shell noted that the sale of its 51.8% membership interest in Aera Energy is for a total consideration of about $2 billion in cash with additional contingent payments based on future oil prices, subject to regulatory approval. However, the total transaction value was not disclosed. Being one of California’s largest oil and gas producers, Aera Energy accounts for nearly 25% of the state’s production. The sale by Exxon Mobil and Shell ends a 25-year-long partnership in California, meanwhile, it persists a streak of divestments of mature oil and gas properties by the two supermajors. Aera Energy LLC operates about 13,000 wells in the San Joaquin Valley in California, producing oil and associated gas. In 2021, Aera took out about 95,000 boe/d. Exxon Mobil’s interests in the Aera oil-production operation in California contained a 48.2% share of Aera Energy LLC and a 50% share of Aera Energy Services Co. held by Mobil California Exploration & Producing Co. Moreover, Exxon Mobil affiliates have signed a separate agreement for the sale of an associated loading facility and pipeline system. The sale effectively ends Shell’s upstream position in California. The company reported that the divestiture is valued to result in a post-tax impairment of $300 million to $400 million, subject to adjustments.

The completion of the merger between Centennial Resource Development Inc. and Colgate Energy Partners II LLC happened on Sept. 1, sealing the debut of Permian Resources Corp., which is considered the largest pure-play E&P company in the Delaware Basin. Permian Resources’ idea was to combine two successful E&P companies, creating a better, stronger, and more strategically compelling company. Centennial and Colgate announced an agreement to merge in May, denying rumors that Colgate, a privately held independent Midland-based company, had been seeking an IPO. The merger estimated Colgate at about $3.9 billion and consists of 269.3 million shares of Centennial stock, $525 million of cash, and the assumption of approximately $1.4 billion of Colgate’s outstanding net debt. Permian Resources, being the combined company, has a deep inventory of “high-quality” drilling locations on around 180,000 net acres the companies anticipate will provide more than $1 billion of free cash flow in 2023 at current strip prices, in accordance with the company release on Sept. 1.

2022 blog posts