Speaking Energy

2023 saw two megadeals in the oil & gas industry that have led to calls from environmental interest groups for the FTC to intervene despite a lack of obvious antitrust issues. Whether the FTC will sue to block the deals remains to be seen.

It seems likely the year ahead will see only a modest rebound in mergers & acquisitions (M&A) activity. Among the challenges that remain for 2024, one challenge to further deal activity is the potential shortage of attractive assets coming to market. Another hindrance to the depth of the M&A markets is the ongoing—and widening—valuation gap between the big energy giants and the smaller producers that is now reaching historic levels.

The past year has been broadly characterized as one of limited public market activity and rising interest rates putting a dampener on access to capital. For the oil & gas industry, the volume of debt & equity offerings remained at historically low levels. With bank lenders and some institutional investors also continuing to retreat from the market, it has been a year in which alternative sources of capital have come to the fore.

In Fore River Residents Against the Compressor Station v. FERC,¹ decided on July 21, 2023, the U.S. Court of Appeals for the District of Columbia Circuit ended long-running litigation over the Federal Energy Regulatory Commission’s (FERC or “Commission”) approval of the Weymouth Compressor Station in Norfolk, Massachusetts. The Weymouth Compressor Station is part of the Algonquin Gas Transmission, LLC and Maritimes & Northeast Pipeline, L.L.C. Atlantic Bridge Project, which received a certificate under section 7 of the Natural Gas Act (NGA) from FERC in 2017 (Docket No. CP16-9).² In Fore River, the court found that the petitioners, local residents, municipalities, and an environmental organization lacked Article III standing to challenge two orders issued by FERC after the certificate issued (1) a December 26, 2018, delegated order granting Algonquin a two-year extension of time to construct the facilities (the “Extension Order”)³ that was subsequently upheld by a full Commission order on February 21, 2020 (the “2020 Rehearing Order”);⁴ and (2) a January 20, 2022, denial of rehearing (the “2022 Rehearing Order”)⁵ of a September 24, 2020, order authorizing Algonquin to place the facilities in service (the “In-Service Extension Order”).⁶ It also dismissed the petitions as moot. 

Akin partners Matt Kapinos, Shariff Barakat and Sam Guthrie will be moderating panels and presenting at Infocast’s joint conferences CCS/Decarbonization Project Development, Finance & Investment and RNG & SAF Capital Markets that will explore current market perspectives, the latest developments, and what is on the horizon for carbon capture and renewable natural gas projects. The conference will take place July 24-26, 2023, in Houston, TX. Matt, Shariff and Sam would like to invite our Akin friends to receive a 15% discount to attend.

On March 2, 2023, a bi-partisan group of Senators introduced a package of legislation dubbed the Hydrogen Infrastructure Initiative aimed at facilitating the build out of the hydrogen infrastructure necessary to transport, store and deliver hydrogen. The Hydrogen Infrastructure Initiative includes four separate pieces of legislation: (i) the Hydrogen for Ports Act (S.647), (ii) the Hydrogen for Industry Act (S.646), (iii) the Hydrogen for Trucks Act (S.648) and (iv) the Hydrogen Infrastructure Finance and Innovation Act (HIFIA) (S.649). While all four bills could play an important role in assisting the development of hydrogen infrastructure in the U.S., HIFIA is likely to be of outsize importance given its focus on addressing one of the most significant barriers to the widespread deployment of clean hydrogen: the ability to cost-effectively transport it from where it is produced to where it will be consumed. Senators Chris Coons (D-DE) and John Cornyn (R-TX) are the initiative’s original co-sponsors.

At least 78 new US carbon capture and storage (CCS) projects were announced between 2021 and 2022, signifying a historic inflection point for CCS projects.

The following is a summary of some notable projects in development in the US:

The Federal Energy Regulatory Commission (FERC) recently issued Panhandle Eastern Pipe Line Company, LP, its first opinion and order on an initial decision in a Natural Gas Act (NGA) section 4 general rate case proceeding in nearly a decade. The last NGA section 4 general rate case to be fully litigated was El Paso Natural Gas Co. in 2013,  a decision that derived rates based on a test period from 2010 and 2011. The natural gas industry has changed significantly since that time.