Oil & Gas E&P Accounting Methods: Full Cost vs. Successful Efforts: Effects on Earnings, Asset Value, Depreciation, and Depletion: RBN Energy Analysis

     This post is a summary of a post on the RBN Energy Blog by Nicholas Cacchione. I don’t have much familiarity with or knowledge of this subject. He first notes that when comparing different oil & gas exploration and production (E&P) companies, one might compare their annual reports. However, this is complicated by the fact that there are two differing accounting methods generally used to value the companies. He compares the two methods: Full Cost (FC) and Successful Efforts (SE), to different tax accounting methods approved by the IRS. The goal for those comparing companies is to get an accurate idea of the real value of the company. Such valuations can inform possible merger and acquisition decisions.

     He notes that while both methods are permitted under U.S. Generally Accepted Accounting Principles (GAAP), they offer different opinions, particularly of exploration successes and failures. He also explains how methods used changed after the shale revolution, where shale is a “resource play” tapping a continuously present, repeatable resource, while mainly vertical pre-shale wells had significant dry hole risks not encountered in shale drilling.

“These differences influence reported earnings, asset values, depreciation and depletion rates, impairment behavior and, ultimately, how companies are perceived by the market. For decades, FC and SE accounting methodologies were viewed largely through the lens of conventional exploration. In that Pre-Shale Era, dry holes were common, exploration risk was high, and accounting methodology played a major role in determining financial results. FC tended to smooth results by spreading failures across large cost pools, while SE forced companies to recognize losses immediately.”

“Today, the most important differences between FC and SE appear in impairment timing, depreciation profiles, reserve revisions, and the way capital costs are embedded in balance sheets over time. However, it is important to recognize that despite whichever accounting methodology a company subscribes to, cash flow and cash flow-related metrics will still tell the economic truth about a company’s financial fortunes.”    

     Pre-shale oil & gas was high risk and high cost. Shale drilling is low risk and high cost. The Successful Efforts (SE) method ensures “project-level accountability and rapid recognition of failure.” This method is transparent and conservative. The Full Cost (FC) method does not operate at the project level, but pools capitalized exploration and development costs into larger portfolios, typically by country.

“Proponents of FC argue that this approach better reflects the long-term economics of resource development. Individual failures are expected to be offset by future discoveries, and capitalizing costs smooths earnings over time. In their view, expensing dry holes immediately creates excessive volatility that does not reflect underlying business value.”

     He gives some history of these methods. In the 1960s and 70s they were hotly debated. Large integrated oil companies, the “majors,” generally favored SE, while smaller independent producers often preferred FC. FC serves to reduce short-term earnings volatility and enable better access to financing.

     As noted, shale drilling brought repeatability and is largely seen as developmental drilling rather than exploratory drilling. The geologic risks are much lower with shale. Shale also benefits, he notes by the density of drilling, which provides much more geological data and information, which further lowers risks.

     The graph below depicts different companies and the accounting method used alongside capitalized costs. Those in red use FC and those in black use SE.

     He notes that in the Shale Era, what has changed mainly is how impairments, or cost write-downs, are accounted. He explains that the Securities and Exchange Commission (SEC) requires the “full cost ceiling test” to limit excessive asset capitalization under FC accounting.

“A ceiling test write-down occurs when a FC company’s net capitalized oil and gas costs exceed the present value of its proved reserves (PV-10), requiring the excess to be written off immediately. These write-downs are often triggered by lower commodity prices or reserve revisions rather than changes in underlying operations.”

     He suggests that SE accounting is more accurate in the sense that it flushes out failures more quickly with the resultant asset valuations being more accurate. The implication is that delaying impairments can be deceiving. He explains that SE accounting is especially more accurate in that asset valuations will better match inventory quality. This is especially important for maturing shale plays.

“In mature shale plays — where core inventory is gradually depleted and development moves outward — this distinction becomes increasingly important. Companies with significant net capitalized costs may appear well-capitalized while facing deteriorating drilling economics.”

     On the other hand, companies involved in exploratory drilling projects, such as those in the Gulf and in offshore plays around the world, must invest large amounts of money in projects that take years to develop. For those companies, FC accounting is most apt.  

     Below, he reiterates that accounting method differences mainly affect the timing of expense recognition and that cash flow is the best indicator of financial performance.

“Because accounting policy primarily affects the timing of expense recognition rather than underlying economics, cash flow remains the most reliable indicator of performance. Investors and analysts evaluating upstream companies should emphasize operating and free cash flow, reinvestment rates, finding-and-development (F&D) costs, reserve replacement efficiency, payout ratios and capital returns. These measures are less distorted by accounting treatment and more closely reflect economic reality.”

     The table below compares the differences between FC and SE accounting in a hypothetical scenario. The result is mainly a difference in profit declared due to the difference in impairment timings. Note that cash flow is the same in both scenarios.

“Shale development narrowed the most visible historical differences between FC and SE by reducing traditional dry-hole risk, but it did not eliminate the importance of accounting methodology. Instead, it shifted the battleground toward impairment timing, DD&A profiles, reserve revisions, and the accumulation of embedded capital on balance sheets.”

“Accounting determines when results are recognized, but cash flow determines whether value is created. In the end, cash flow — not accounting methodology — is the only true measure of success or failure in the upstream oil and gas business.”

     Thus, cash flow is king. I am glad to have learned a little about this topic. The author notes plans for RBN Energy to augment its reporting of year-end reserve reconciliations in future blogs based on accounting methods.

   

 

References:

 

You Go Your Way, I’ll Go Mine – Why Accounting Methods Matter. (No, Seriously, You Gotta Read This). Nicholas Cacchione. RBN Energy. Blog. February 26, 2026.  You Go Your Way, I’ll Go Mine – Why Accounting Methods Matter. (No, Seriously, You Gotta Read This) | RBN Energy

AEP Ohio Plans to Deploy a Fixed-Wing Drone With a 12-Foot Wingspan and LIDAR to Inspect for Potential Power Line Tree Damage

    This post comes from my local power provider, AEP Ohio, via its monthly newsletter, The Wire. Below, AEP Ohio Project Manager Principal Jake Reed explains the new fixed-wing drone deployment plan, which is equipped with LIDAR and a twelve-foot wingspan and intends to inspect power lines, particularly in rough terrain. We have some of that here in the Appalachian foothills of Southeastern Ohio.

“This year, we’re deploying an innovative fixed-wing drone with a 12-foot wingspan —the largest in our fleet — to inspect vegetation along the power lines that bring electricity to homes and businesses. What sets this drone apart is its high-resolution camera and lidar sensors.”

     The National Oceanic and Atmospheric Administration (NOAA) describes LIDAR as follows:

“Lidar, which stands for Light Detection and Ranging, is a remote sensing method that uses light in the form of a pulsed laser to measure ranges (variable distances) to the Earth. These light pulses—combined with other data recorded by the airborne system — generate precise, three-dimensional information about the shape of the Earth and its surface characteristics.”

“Lidar systems allow scientists and mapping professionals to examine both natural and manmade environments with accuracy, precision, and flexibility.”

     AEP Ohio’s Center for Customer Reliability plans to use the data generated from the LIDAR measurements to “identify vegetation — down to a single tree branch — that may be too close to equipment and needs trimming to prevent future outages.” The goal is to prevent outages before they happen.

     AEP employs certified drone pilots who have completed advanced training and are familiar with all FAA regulations.

     According to the newsletter:

“The fixed-wing drone enhances our capabilities, flying up to 400 feet, reaching speeds of 45 miles per hour and staying airborne for up to two hours while collecting critical data. That information helps crews make proactive repairs before outages occur. This year, the fixed-wing drone will travel roughly 8,000 miles of our distribution power lines, capturing images and data on vegetation within our rights of way.”

“The fixed-wing drone is supported by a mobile command center, where crews operate the aircraft autonomously while a certified pilot monitors each inspection remotely.”

     AEP Ohio also employs traditional, or multi-copter, drones for powerline inspection. Drone inspections improve safety by reducing the need for field personnel to work at heights, “minimizing the risk of accidents and injuries, and allow large areas — especially challenging terrain — to be covered more quickly than with traditional methods.” 

     The newsletter also notes that AEP Ohio is utilizing AI image processing along with LIDAR to map out power lines.

 

 

 

References:

 

Faster, Farther, Stronger: Fixed-Wing Drones Increase Reliability. AEP Ohio. The Wire. February 2026. Faster, Farther, Stronger: Fixed-Wing Drones Increase Reliability - AEP Ohio Wire

What is lidar? Lidar — Light Detection and Ranging — is a remote sensing method used to examine the surface of the Earth. National Oceanic and Atmospheric Administration. What is lidar?

 

U.S. DOE Gives Out Its Largest Ever Loan, $26.5 Billion to Southern Company for Natural Gas, Nuclear, Hydro, Batteries, and Power Transmission in Georgia and Alabama

   The U.S. Department of Energy just issued its largest-ever loan to subsidiaries of Southern Company for electricity projects in Georgia and Alabama. The loan is for new gas power plants, improvements to existing nuclear and hydroelectric plants, battery storage, and transmission lines. Energy Sec Chris Wright noted that the loan will enable data center buildout and the reshoring of American manufacturing. Southern Company also announced that it will freeze power prices for customers for two years. The loan totals $26.5 billion. Subsidiary Georgia Power would get $22.5 billion, and Alabama Power would get $4.1 billion. Greg Beard, director of the department’s loans office, noted:

“This is the largest investment by the U.S. government ever in a non-crisis time.”

     The loan involves the development and improvement of up to 16 GW of power generation. According to the DOE, the loan aims to lower consumer electricity costs and increase grid reliability. Over the 30-year term of the loan, getting the loan from DOE instead of private sources offers the company about $7 billion in savings. The DOE stipulated that the $7 billion in savings would be delivered to millions of customers in Georgia and Alabama.

     Wright noted:

"These loans will not only lower energy costs but also create thousands of jobs and increase grid reliability for the people of Georgia and Alabama.”

     The Southern Company is planning for about 5 GW of new gas-fired generation, along with 6 GW of nuclear power through upgrades and license renewals for eight existing reactors. The loan will also modernize hydroelectric facilities, develop battery storage systems, and pay for transmission and associated upgrades.

     The state of Georgia has pending legislation to protect ratepayers from power cost increases associated with data centers. The state is also moving to end incentives to attract more data centers. Apparently, they think they are full enough with ongoing projects.

     DOE also noted that the loan will cover over 1,300 miles of transmission and grid enhancement projects.

“Once all funds are received through the program, the loans are estimated to reduce Southern Company’s interest expenses by over $300 million per year, helping expedite lower electricity costs for customers.”

   

References:

 

Energy Department doles out its largest-ever loan: $26.5B for power in Georgia, Alabama. Rachel Frazin. The Hill. February 25, 2026. Energy Department doles out its largest-ever loan: $26.5B for power in Georgia, Alabama

Southern Company awarded $26.5B loan by Energy Department. Alton Wallace. The Center Square. February 26, 2026. Southern Company awarded $26.5B loan by Energy Department

Energy Department Announces Largest Loan in Department History, Delivering Over $7 Billion in Electricity Cost Savings for Georgia and Alabama Customers. U.S. Department of Energy. February 25, 2026. Energy Department Announces Largest Loan in Department History, Delivering Over $7 Billion in Electricity Cost Savings for Georgia and Alabama Customers | Department of Energy

Energy Corps: EQT CEO Toby Rice, Wife Aileen Rice, and Geologist Scott Tinker Launch Non-Profit to Address Global Energy Poverty, Promote Clean Cooking Fuels, and Support Human Flourishing

     EQT CEO Toby Rice and his wife Aileen Rice, along with legendary geologist Scott Tinker, founded Energy Corps to address global energy poverty. The non-profit has goals to advance human flourishing, inspired by the UN’s Sustainable Development Goals (SDGs). The group seems to be focused mainly on energy poverty and energy access. One might see the name Energy Corps as a possible reference to the Peace Corps, as the work is similar in some ways.

     According to a February 18 press release:

“The organization identifies and tests pathways that enable modern energy to scale, and addresses the policy, financing, and demand-side barriers to energy development.”

“Billions of people are still being left behind without access to clean cooking and reliable electricity—and that is one of the greatest sustainability challenges of our time,” said Toby Rice. “America’s energy industry has a proven track record of delivering affordable, reliable, and lower-emission solutions in the developed world. Now it’s time to focus that same innovation and commitment on the billions who stand to benefit most.”

     The non-profit is also involved in bringing clean cooking fuels to developing countries, where dependence on wood, charcoal, and even dung as cooking fuels has resulted in respiratory issues and premature death for millions of mostly women and children. This issue has existed for a long time and has not been alleviated nearly enough. When Hillary Clinton was Secretary of State in 2009, during Obama’s first term, she led a global clean cooking fuels initiative that was ended by the first Trump administration.

     As shown below, the projects so far are mainly in Africa. The Switch Energy Alliance was founded by Tinker as an energy education project that has resulted in two great movies, an excellent and very informative TV show, Energy Switch, on PBS, and other great projects.

     According to another February 18 press release:

“Energy Corps today announced its role as a founding contributor to the Clean Cooking Accelerator Initiative, a new collaboration with the Clean Cooking Alliance, The Rockefeller Foundation, and the Global Energy Alliance for People and Planet designed to rapidly scale access to modern cooking solutions across Africa.”

     The initiative was announced during the High-Level Dialogue on Advancing Energy Access and Cooking Solutions, hosted by the International Energy Agency. Energy Corps is focused on “mobilizing private sector resources toward clean cooking supply chains.” Access to affordable propane is a main issue. They explain past issues that they hope to resolve:

“Progress has often been constrained by fragmented delivery models, limited investment pipelines, and weak project design. The clean cooking solutions offered through this Initiative will replace polluting fuels like biomass, improve public health, and create economically durable pathways to affordable clean cooking access.”

     Energy Corps is providing $500,000 for the initiative. They go into more detail about how they hope to streamline processes, develop fuel access infrastructures, train people, and coordinate with governments and other NGOs. They also have support from the U.S. Department of Energy, the Global Energy Alliance, and African governments. 

     Another focus is to facilitate private investment in the Clean Cooking Accelerator Initiative and other energy access initiatives. Global Energy Alliance noted that Energy Corps’ private sector expertise can really help fund and manage these kinds of energy access projects. Private sector project management could perhaps make the program more efficient as well. 

     Energy Corps emphasizes its 50-50-50 moonshot: 50 MWh per person per year, 50K GDP per capita, and 50 years of commitment.

     

 

References:

 

A World Where Everyone Has the Energy Needed to Flourish. Energy Corps. Energy Corps - A World Where Everyone Has the Energy Needed to Flourish

Energy Corps Works to Accelerate the Global Shift from Energy Poverty to Energy Prosperity. Energy Corps. February 18, 2026. FRxPLDZRWjSNImlBJwX5OH5oSF0.pdf

Energy Corps Joins Global Effort for Energy Access Through Clean Cooking Accelerator Initiative. Energy Corps. February 18, 2026. 3uxhtXR8jQF6iVPROnSjh4qcWA.pdf

 

 

Druzhba Pipeline in Ukraine Struck by Russian Bombs, but Hungary and Slovakia Blame and Punish Ukraine for not Restoring Service Fast Enough

      It has only been three weeks or so since Russia bombed a pumping station on the Druzhba Pipeline near Lviv, Ukraine. Apparently, Hungary and Slovakia expect Ukraine to prioritize restoring the service of the product that funds the invasion of their country over other concerns. Both countries’ leaders, Viktor Orban and Robert Fico, have also kept up friendly relations with Russia and have blocked sanctions against Russia and funding for Ukraine. I will be glad if both of those leaders are elected out. Orban is facing an election in April and trails in the polls to Peter Magyar. If Orban is re-elected, clearly the EU will have to do something about his ability to stop EU plans, including changing its rules if necessary. These leaders have had four years to diversify their energy supplies and have clearly not done enough to do so.

     Secretary of State Marco Rubio recently visited Orban and Fico, basically to show MAGA's approval of them. In 2019, then Senator Rubio co-wrote an open letter to President Donald Trump, warning him about “the steady erosion of freedom, the rule of law and quality of governance” in Viktor Orban's Hungary and pointed to Budapest’s strategic alignment with Moscow. An article in the Washington Examiner points this out and says the U.S. should stop indulging these leaders. Another important thing said in the article is that while Germany, once also strongly dependent on Russian hydrocarbons, has made significant efforts to find other sources. By comparison, Orban and Fico have dragged their feet as well as getting a reprieve due to their dependence. Hungary still imports 90% of its natural gas from Russia and 92 % of its oil, up from 61% in 2021. That is, frankly, shameful, and a slap in the face to Ukraine and efforts to pressure Russia. Hungary also has other deals and investments with Russia, including a new nuclear plant.  

     Both Orban and Fico have become star performers at CPAC. Orban is credited with stopping immigration into his country, but also has one of the worst economies in the EU and a shortage of labor that immigrants could help alleviate. Others in Fico’s own party do not share his views, apparently. The article describes Fico as a:

“Soviet nostalgist with little genuine affection for the United States.”

“The idea that Hungary and Slovakia, especially under their current governments, should be privileged interlocutors or models for others to follow is laughable. Their size and relative influence aside, the leaders of both countries see the world through lenses that rarely prioritize the trans-Atlantic partnership over other, more transactional ties.”

     Hungary and Slovakia have just announced plans to cut diesel export supplies to Kyiv if Ukraine does not reopen the Druzhba pipeline, which brings Russian oil to Slovakia and Hungary.

     Ukraine sent a letter to the EU Coordination Group on February 25, noting:

"Full responsibility for the suspension of oil transit through the Druzhba pipeline lies solely with the Russian Federation as a consequence of its terrorist attack against Ukraine's critical infrastructure," the letter says.

Ukraine pointed out in the letter that as a result of targeted Russian attacks on 27 January, key facilities of the main oil pumping station near the town of Brody in Lviv Oblast were significantly damaged, including technological and auxiliary equipment of the Druzhba pipeline.

Quote: "We draw attention to the unacceptability of ultimatums and political pressure by certain member states, including threats to suspend diesel fuel and electricity supplies or to block EU assistance and sanctions against the Russian Federation."

     The letter also explained that they are working to restore service, although one should hardly see that as a priority for a country under attack every day for the past four years:

"the Ukrainian side is interested in restoring transit as soon as possible within the available legal framework".

     As noted below from an article in Ukrainska Pravda, the EU Oil Coordination Group determined that there was no immediate threat to the EU’s energy security as a result of the pipeline being offline. It also notes some of the shameful threats and punishments of Ukraine by these leaders.

 

 

References:

 

Ukraine sends its position on Druzhba pipeline to EU: Ultimatums are unacceptable. Tetyana Vysotska, VALENTYNA ROMANENKO. Ukrainska Pravda. February 25, 2026. Ukraine sends its position on Druzhba pipeline to EU: Ultimatums are unacceptable

The US should stop indulging Hungary and Slovakia. Dalibor Rohac and Ivana Stradner, Washington Examiner. February 25, 2026. The US should stop indulging Hungary and Slovakia

 

Pressure on Cuba is Needed, but a Siege and Oil Embargo is Not the Best Way

      I certainly agree with the Trump camp that we need to put pressure on Cuba to reform and cooperate with international norms, although that has not happened since the 1959 revolution that put Fidel Castro in power. In one sense, Cuba is a satellite state of the former USSR and now a satellite state of the USSR’s heir, Russia. However, it is close enough to the U.S., and we can exert enough leverage to keep it from being a problem. Sure, regime change would be the best outcome for the country and particularly for its people, but that is probably too complicated at the moment. Cuba has also meddled in Venezuela. The U.S has successfully recued that meddling as the interim government announced that the Cuban security apparatus favored by Maduro is leaving the country.

     It is unclear what the current U.S. oil embargo will achieve. It may spur the Cuban government to cooperate and make changes, but many are doubtful. It has already affected trade and tourism as fuel shortages affect the country. I was a bit annoyed to hear that the oil supplied freely to Cuba from Venezuela, or rather, in exchange for that security apparatus, was more than the country needed, and so they sold it to other buyers. They should have built more storage and stored more of it. Mexico has been supplying oil to Cuba for years as a humanitarian gesture, but stopped recently at the request of the U.S. Secretary of State Marco Rubio is reportedly negotiating with the Cuban government, but not much is known about those negotiations.

     Cuba is also a sore spot in any notion of controlling the hemisphere via the Monroe Doctrine, or as the newly termed 'Donroe Doctrine.' Cuba is basically a bad actor aligned with our adversaries and the world’s other bad actors, particularly Russia, but also Iran and Venezuela. The U.S. has strongly disrupted ghost fleet oil trade in the Caribbean, where sanctioned Russian, Venezuelan, and Iranian crude and diluent were flowing freely. I praise that effort. We should not tolerate it at all.

     The latest potential confrontation in the region involves a ghost fleet tanker currently off the East Coast of the U.S., which is thought to be bound for Cuba with Russian oil. I expect the U.S. will intercept and interdict it. It is exhibiting the usual tricks to disguise its position, country of origin, destination, and the oil was loaded in a ship-to-ship transfer.

     The UN recently condemned the U.S. executive order imposing a fuel blockade on Cuba.

“The U.S. executive order imposing a fuel blockade on Cuba is a serious violation of international law and a grave threat to a democratic and equitable international order,” the experts said.

“It is an extreme form of unilateral economic coercion with extraterritorial effects, through which the United States seeks to exert coercion on the sovereign state of Cuba and compel other sovereign third States to alter their lawful commercial relations, under threat of punitive trade measures,” they said.

     I think that statement goes a little too far, as does the following one.

“There is no right under international law to impose economic penalties on third States for engaging in lawful trade with another sovereign country,” the experts said.

     I would argue that deliveries of internationally sanctioned oil cargoes do not constitute “lawful trade.”

“A democratic international order cannot be reconciled with practices whereby one State claims the authority to dictate the internal policies and economic relations of others through threats and coercion,” the experts said.

     Here, I would argue by asking, “Are not sanctions a method of 'dictating economic relations of others through threats and coercion'?

     Although I disagree with the UN’s wording above, I agree with them about it being a humanitarian issue that needs to be addressed. We should not punish a population for the actions of its government. The UN goes on to say that energy is a basic requirement for many things: electricity, sanitation, transportation, communications, etc. The Trump doctrine of seemingly using every bit of real, imagined, legal, and illegal leverage is probably going too far in this case. The country is in economic despair and has been beset with power outages for years. People need to refrigerate their food and make money to survive. I really think we should allow Mexico to resume its oil shipments to Cuba. We certainly don’t want Russian oil delivered. Well. It looks like the U.S. will allow Venezuelan oil to be delivered to Cuba, so that is good. That also suggests that the U.S. will definitely stop the Russian oil from being delivered, and I hope that does happen.

     AFP reports:

The Treasury Department said it would allow "transactions that support the Cuban people" that include Venezuelan oil for "commercial and humanitarian use."

“To qualify, the exports would need to go through private businesses and not the vast government or military apparatus in the communist state.”

     Caribbean leaders were concerned that a continued blockade would trigger migration from the country and contribute to destabilizing the region.

     Cuba is a communist dictatorship that is allied to U.S. adversaries. It is also very close to the U.S. Thus, it does need to be watched closely. It really is a shame that they can’t evolve enough to have a democratically elected government and join the international community.  

  

 

References:

 

Russian ‘dark fleet’ tanker believed to be delivering oil to Cuba, detected off US coast amid Trump ban. Emma Bussey. Fox News. February 24, 2026. Russian ‘dark fleet’ tanker believed to be delivering oil to Cuba, detected off US coast amid Trump ban

UN experts condemn US executive order imposing fuel blockade on Cuba. United Nations. Press Release. 12 February 2026. UN experts condemn US executive order imposing fuel blockade on Cuba | OHCHR

US eases Venezuela oil ban to Cuba as crisis alarms Caribbean. AFP. February 25, 2026. US eases Venezuela oil ban to Cuba as crisis alarms Caribbean

The Gas Turbine Crunch May Be Easing, but There Are Still Significant Supply Chain Constraints on Gas Power Projects

      Right now, there is still a wait, up to four or even five years, to get a gas turbine. In 2021, the wait was just two years. However, that wait is about to begin easing as manufacturing output increases. According to investment bank Jefferies, gas turbines are “increasingly not the primary bottleneck” for large loads seeking power. The three big gas turbine manufacturers in the U.S. are GE Vernova, Siemens. and Mitsubishi Heavy Industries, each announced increasing manufacturing capacity since the beginning of 2025.

     According to Utility Dive:

“We expect at least 19 GW of total available equipment capacity by 2028, increasing to 49 [GW] and 76 GW by 2029 and 2030,” Jefferies said. The company still expects “the key large-frame turbine OEMs to be over 90% booked for 2028 and over 70% booked for 2029, while [behind-the-meter] OEMs are likely 65% and ~33% booked for the same timeframe.”

      The higher available capacity for behind-the-meter (BTM) applications bodes well for AI data centers. While many are utilizing internal combustion engines burning natural gas, turbines are more efficient. Jeffries expects BTM deployments to grow by 25 GW by 2030. They expect BTM to be a “bridge solution” that could last up to a decade, but cheaper and lower-maintenance grid power would be preferred.

“While we continue to argue that in the long-term, large loads will prioritize cheaper, reliable grid power (now 5-7 years away), we also acknowledge that it is possible to remain off-grid for longer,” the Jefferies analysis said. “A gas reciprocating engine, which can last 40-80k+ hours before first major maintenance, can support a data center for +11 years running at 80% capacity factor, longer with batteries.”

     The bottleneck in gas turbines has been well explained. Manufacturers were hesitant to increase capacity over the past few decades due to no real demand growth for power generation. That has changed over the past few years as AI data center buildout has expanded significantly.

     Siemens announced plans to spend $1 billion and add 1500 jobs in gas turbine manufacturing. Mitsubishi announced plans to double its gas turbine production over the next two years. GE Vernova announced plans to spend $600 million, add 1500 jobs, and deliver up to 80 heavy-duty turbines per year, up from an average of about 51 per year in the five years from 2021 to 2025. According to Wood Mackenzie’s Ed Crooks, the consultancy forecast is that the US will add about 63 GW of gas-fired generation capacity, including combined-cycle plants, peaking plants, and coal plant conversions, by 2030. That is more than double the capacity added over the previous five years. They also point out that coal plant retirement delays will keep more baseload power available to the grid, helping to meet power demand growth. However, it is unclear how much of that coal power will actually be used. He notes that coal plants will benefit from higher power prices, making them more economical. Meanwhile, many data centers are being powered by reciprocating ICE engines burning natural gas and, in some cases, diesel. Diesel is a dirty form of energy for mass use since it puts out large amounts of fine particulate matter.

“The latest Wood Mackenzie data show that US utilities already have at least 178 GW of new large loads either committed or already under construction, with more than 450 GW more known but currently uncommitted.”

     That is a lot of gigawatts.

  

 

References:

 

Natural gas equipment bottleneck is easing, analysts say: Manufacturers GE Vernova, Siemens and Mitsubishi “have all announced significant capacity expansions since the start of last year,” said Wood Mackenzie’s Ed Crooks. Diana DiGangi. Utility Dive. February 24, 2026. Natural gas equipment bottleneck is easing, analysts say | Utility Dive

Supply chain constraints limit the growth of gas-fired generation in the US: Renewables and storage, and slower retirements of coal plants, are needed to meet rising demand. Ed Crooks. Wood Mackenzie. February 20, 2025. Supply chain constraints limit the growth of gas-fired generation in the US | Wood Mackenzie

 

Study Links Alzheimer’s Disease Risk to Long-Term Exposure to Particulate Air Pollution

   

      A study published in PLOS Medicine links Alzheimer's disease with long-term exposure to particulate pollution. The study is large, involving 27.8 million Americans. Alzheimer’s affects 57 million people globally, including 7.2 million in the U.S. over age 65. There is no known cure for it. Thus, prevention is emphasized. The study suggests that improving air quality, especially fine particulate pollution, can aid in that prevention. Environmental health researcher Yanling Deng of Emory University, Georgia, and her colleagues, examined data on more than 27.8 million U.S. Medicare recipients aged 65 years and older from 2000 to 2018.

“The data is clear enough to suggest that we need to treat air quality as a brain‑health issue, not just a lung‑health issue,” said professor Bryce Vissel of the University of New South Wales (UNSW), who was not involved in the present study, in a statement.

     The study suggests that direct effects on the brain are the main mechanism rather than common chronic conditions such as hypertension, stroke, or depression, which have also been linked to Alzheimer’s and are thought to be indirect causes compared to fine particulate pollution (PM 2.5), which is now thought to be a direct cause.    

“Dementia risk is not just about personal choices. It is also about the air we breathe and the environments we live in over decades,” added epidemiologist professor Susanne Röhr, also of UNSW, who was also not involved in the present study.

     According to Masashi Kitazawa, professor of Environmental & Occupational Health at UC Irvine:

"Remarkably, results from this study predict a possibly direct toxic mechanism of (particulate matter) to (Alzheimer's disease)," said Kitazawa, who was not involved in the study.

     Other scientists and medical professionals cautioned that correlation does not imply causation.

      The study suggested that those who have had a stroke are more likely to be affected.

"Our findings suggest that individuals with a history of stroke may be particularly vulnerable to the harmful effects of air pollution on brain health, highlighting an important intersection between environmental and vascular risk factors," the authors added.

     It is not yet clear why this is the case.

"It could be related to a previously damaged brain − from stroke − being weaker in fighting off toxins," suggested Ahmad, who is also an assistant professor at the University of Maryland School of Medicine.

     The bottom line is that fine particulate pollution contributes to Alzheimer’s both indirectly and directly, although there are certainly other factors as well.

     The researchers suggest that the direct link between Alzheimer’s disease and particulate matter likely involves the mechanisms of neuroinflammation, oxidative stress, and vascular injury.

 

 

References:

 

Study of 27.8M Americans may have revealed direct Alzheimer's cause. Maria Azzurra Volpe. Newsweek. February 17, 2026. Study of 27.8M Americans may have revealed direct Alzheimer's cause

The role of comorbidities in the associations between air pollution and Alzheimer’s disease: A national cohort study in the American Medicare population. Yanling Deng , Yang Liu, Hua Hao, Ke Xu, Qiao Zhu, Haomin Li, Tszshan Ma, and Kyle Steenland. PLOS Medicine. February 17, 2026. The role of comorbidities in the associations between air pollution and Alzheimer’s disease: A national cohort study in the American Medicare population | PLOS Medicine

Air pollution may directly increase Alzheimer's risk, study finds. Sara Moniuszko, USA TODAY. February 18, 2026. Air pollution may directly increase Alzheimer's risk, study finds

Air pollution may directly contribute to Alzheimer’s disease: Cohort study finds people with stroke may be extra susceptible to air pollution’s impact on the brain. Eureka Alert. Press Release. February 17, 2026. Air pollution may directly contribute to Alzheimer’s disease | EurekAlert!

 

EIA: Some Planned Coal and Gas Plant Retirements May Be Delayed in 2026 as They Were in 2025

     The Energy Information Administration (EIA) notes that in 2025, there were planned retirements of 12.3 GW of coal and gas power-generating capacity, but only 4.6 GW was actually retired. This was a result of the DOE ordering plants to remain operational, presumably to preserve baseload power in case it is needed. The moves have been controversial, with some utilities saying it is costing them and their ratepayers money to keep those plants available. The 4.6 GW retired in 2025 was the lowest annual level of such retirements since 2008.

     In 2026, there are plans to retire 10.9 GW of power: 6.3 GW of coal (58%) and 4.6 GW of natural gas (42%). 3.5 GW of the 10.9 GW of planned retirements, or about one-third, includes plants that delayed retirement in 2025. The planned coal retirements in 2026 represent about 4% of total current coal capacity.

     The 4.6 GW of planned natural gas plant retirements in 2026 represent about 1% of the total gas operating capacity. EIA notes:

“Most of the retiring natural gas capacity (76%) is at older steam turbine units, which are less efficient than the newer combined-cycle units.”

     As the graph shows, nearly half, just under 5 GW, of the planned 2026 retirements are slated for December.

     It should also be noted that 7.7 GW of the planned 10.9 GW of planned 2026 retirements, or 71%, are delayed from the 2025 planned retirements. That means only 3.2 GW of new retirements are in the works for 2026.

     It should be pointed out that much of the coal and gas capacity slated for retirement is old, inefficient, costly to run, and currently has low or very low utilization rates.

     They note that two aging California gas plants with a combined capacity of nearly 1.4 GW are scheduled to retire after being delayed in 2020 and then in 2023 to support increasing power demand. More efficient combined-cycle units are being added at those sites. Gas plants scheduled for 2025 retirement in Illinois and Texas were delayed by the DOE.

     

 

 

References:

 

Retirement delays of U.S. electric generating capacity may continue in 2026. Energy Information Administration. Today in Energy. February 23, 2026. Retirement delays of U.S. electric generating capacity may continue in 2026 - U.S. Energy Information Administration (EIA)