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The Oil Industry Is Facing A

The Oil Industry Is Facing A "Capex Conundrum"

Oil companies reported much better…

Congress To Pass Budget Deal Benefitting Biofuels And Nuclear Sectors

Trump

President Trump has, last night, signed a budget deal to raise spending and reopen the government. In its current form, the biofuels and nuclear power industries are set to benefit from the compromise deal.

A two-year agreement would provide tax incentives for the two energy sectors as well as credits for energy efficient car purchases of models manufactured in 2017. Another $1-a-gallon tax credit applies to refiners who mix biofuel in their products. Cellulosic ethanol, produced from garbage, algae, and corn stover, will also get an extension on its $1.01 per gallon credit.

An energy production tax credit for Southern Co.’s nuclear plants in Georgia will help the facilities there get off the ground.

In the last 20 years, the U.S. has seen only one new nuclear reactor that is functional, constructed by a government entity – the Tennessee Valley Authority. Further, the Nuclear Regulatory Commission shows that there are only four reactors currently under construction in the entire country. Two would be at the Alvin W. Vogtle station in Georgia, and two at the Virgil C. Summer plant in South Carolina.

These projects are implementing reactors manufactured by Westinghouse. Construction on all four are currently delayed over three years and are billions over-budget. Westinghouse itself was one of the last private companies to be commissioned for the manufacture of nuclear reactors—before over-budget, inefficient projects such as these pushed them into ruin. So far, Westinghouse remains committed to completing the projects.

Related: LNG: Glut Today, Shortage Tomorrow

Southern Co. also recently abandoned a coal-gasification plant project in Mississippi, which countered President Donald Trump’s plans to increase clean coal’s grip on the American energy mix.

“They’ve got the conundrum of having spent billions of dollars [on nuclear projects],” Glenrock Associates analyst Pail Patterson told Bloomberg over the phone. “That’s why abandonment in the middle of a project usually looks unattractive.”

By Zainab Calcuttawala for Oilprice.com

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