Script

EPA RELEASES PUBLIC TOOL TO SEE EMISSIONS DATA OF INDUSTRIES

ATR Urges EPA to Rescind Obama’s Pebble Mine Veto
Tate Sanders, Americans for Tax Reform, September 6, 2018

This afternoon, Americans for Tax Reform, joined by 14 conservative organizations, sent a letter to the EPA urging Acting Administrator Wheeler to rescind the Obama administration’s unprecedented use of a preemptive veto to halt a mining project in Southwest Alaska. In 2013, Obama’s EPA colluded with liberal environmental activists to shut down the Pebble Mine project without allowing the mine’s developers to go through the normal permitting process. This decision blocked the creation of an estimated 2,000 jobs in Alaska. A coalition of conservative organizations opposing the EPA’s action warned the policy would have a “dramatic chilling effect on investment in America.”

Our Take: “Obama’s EPA colluded with liberal environmental activists”.   Kudos to Americans for Tax Reform and 14 other organizations for asking the EPA to dump this policy.

ConocoPhillips increases estimated production on the western North Slope
Tim Bradner, for the Frontiersman, September 6, 2018

ConocoPhillips has increased its estimated production from GMT-2, a new North Slope oil project scheduled to begin production in late 2021, according to plans filed by the company with the U.S. Bureau of Land Management. GMT-2 is in the National Petroleum Reserve-Alaska, a large 23-million-acre federal land enclave on the western North Slope and which is administered by the BLM.

Our Take: 8,000 barrels/day x 365 days = 2,920,000 more barrels of oil per year. Mic drop.

Santos warns of dangers to LNG sector due to interference
Russel Searanke, Upstream Oil & Gas, September 6, 2018

AUSTRALIAN domestic independent Santos has warned that future investment in liquefied natural gas development in the country is being threatened by political interference. Santos is the operator of the Gladstone LNG project in Queensland and has an 11.5% non-operated stake in the Darwin LNG project. The company is also a 25% owner of the Barossa gas resource, which is earmarked to supply backfill gas into the Darwin LNG facility. However, Australia’s status as a low-risk country in which to invest is under threat, according to Santos’ chief executive Kevin Gallagher. “Australia relies on foreign investment, but sovereign risk is rising fast,” Gallagher told delegates at the SEAAOC conference in Darwin this week. “The major political parties, strongly supported and urged on by minor parties of the right and left, are embracing policies of price controls, export controls and, recently in the government’s case, forced divestiture of assets legally created or acquired.”

Our Take:   If it ain’t broke…

From the Washington Examiner, Daily on Energy:

EPA RELEASES PUBLIC TOOL TO SEE EMISSIONS DATA OF INDUSTRIES: The EPA, as part of a new program to work closer with industry, launched an online tool on Thursday for the public to see a sector by sector breakdown of environmental performance.

The EPA unveiled its “Sector Snapshots” project, which is an online hub that assembles a range of environmental and economic data from publicly-available sources for various sectors over the last 20 years.

EPA officially launched the project Thursday, revealing data for three sectors: utilities, chemical manufacturing, and iron and steel. The agency will eventually provide data for 13 sectors.

How it works: The interactive visual tool includes graphs showing how environmental indicators such as air emissions, greenhouse gases, hazardous waste generation, water discharges, and criteria air pollution have changed for each industry over time. It compares how these environmental outcomes have changed in comparison to economic indicators, such as employment, gross output, and, for the utility industry, the amount of electricity generated.

EPA’s attempt at transparency: “By making this data easily accessible, you can look at the environmental and economic performance of each sector for many years,” Daisy Letendre, senior advisor for policy and strategic communications in the EPA’s Office of Policy, told reporters at agency headquarters Thursday morning. “It’s all in one spot. This is a way to portray public information in a different way that’s more accessible.”

Sighs(job loss), Spies(NGO’s and China) and Modernize(BP analytics)

‘America First’ or coal first? LNG groups want to know
Zack Colman, E & E News, September 4, 2018

As the Trump administration marches forward with its plan to aid economically distressed coal and nuclear power plants, the natural gas industry is looking for recognition from the White House. Frustration has been building between oil and gas companies and the administration. Battles over renewable fuel policy, tariffs on steel that goes into pipelines and a confusing rollout about plans to allow offshore drilling has heightened tensions. While those actions have stirred animosity, none has come close to eliciting the kind of angst stemming from the administration’s proposal to keep ailing electricity generators afloat on national security grounds. It’s a clear loser for the natural gas industry because the plan would extend support to competitors in the power sector. In turn, that could depress booming gas production.

Ex-Alaska AG leads Interior office with focus on Arctic, ‘adaptation’
Liz Ruskin, Alaska Public Media, September 5, 2018

Former Alaska Attorney General Gregg Renkes has a new job at the Interior Department in Washington, D.C. Renkes is listed on the Interior Department’s website as the director of the Office of Policy Analysis, signaling a new direction for him and for that office. Renkes was attorney general under then-Gov. Frank Murkowski. In his new position, Renkes leads an office at Interior that deals with Arctic issues, invasive species and what the Trump administration calls “adaptation.” In the previous administration, that program was called “climate change adaptation.”

Alyeska Pipeline to cut 10 percent of workforce
Alex DeMarban, September 5, 2018

The operator of Alaska’s main oil pipeline will reduce its workforce by 10 percent as it reorganizes operations starting this fall, a move that will affect all activities statewide, according to a letter from the company’s top executive to the governor and lawmakers. Alyeska Pipeline Service Co., which manages the 800-mile trans-Alaska pipeline and the oil-loading terminal in Valdez, will restructure itself to operate more efficiently, said the letter from company president Tom Barrett dated Tuesday.

EXXON INKS CHINA PETROCHEMICAL, LNG AGREEMENT
Natural Gas News, September 6, 2018

ExxonMobil has signed a cooperation agreement with the government of China’s Guangdong province to build a chemical complex and invest in an LNG terminal, it said September 5. The US supermajor said it will advance discussions concerning the proposed construction of a chemical complex in the Huizhou Dayawan Petrochemical Industrial Park. The project, which remains subject to a final investment decision (FID), would include a 1.2mn mt/yr ethylene flexible feed steam cracker, two performance polyethylene lines and two differentiated performance polypropylene lines. “ExxonMobil’s decision to proceed with the project will be based on a number of factors, including receipt of permits and project competitiveness. Startup is planned for 2023,” it said.

FERC announces steps to streamline LNG permitting
Hogan Lovells, Lexology, September 5, 2018

On Friday, the Federal Energy Regulatory Commission (FERC) announced significant measures to improve permitting for liquefied natural gas (LNG) terminals. These measures follow up on Chairman McIntyre’s statements earlier in July, proclaiming that the agency has taken “truly significant strides in reforming the permitting process.” They also respond to ongoing criticism by Congressional members and industry stakeholders about the agency’s review timelines for these important facilities. In addition to the MOU, FERC announced environmental review schedules for 12 LNG projects, providing the vast majority of them environmental document issuance dates in the first half of 2019 (federal authorizations by other agencies are typically expected to follow within 90 days thereafter). The earliest date is for the Freeport LNG expansion project, whose Environmental Assessment is slated to issue November 2, 2018. The latest date appears to be for the larger Alaska LNG project, whose Environmental Impact Statement is slated to issue November 8, 2019.

BP rolls out analytics system in US Gulf
Katherine Schmidt, Upstream Oil & Gas Online, September 5, 2018

UK supermajor BP has now deployed its Plant Operations Advisor, a predictive analytics system developed with Baker Hughes, across its four operated platforms in the deep-water US Gulf of Mexico. “Built on GE’s Predix platform, POA applies analytics to real-time data from the production system and provides system-level insights to engineers so operational issues on processes and equipment can be addressed before they become significant,” BP said in a statement. “POA helps engineers manage the performance of BP’s offshore assets by further ensuring that assets operate within safe operating limits to reduce unplanned downtime.”

FOREIGN AGENTS? CONGRESS INVESTIGATES A 2nd US ENVIRONMENTAL GROUP OVER CHINESE TIES
Michael Bastasch, The Daily Caller, September 5, 2018

Top Republicans on the House Natural Resources Committee asked the World Resources Institute (WRI), an environmental advocacy group, to turn over documents related to its work with Chinese officials and their advocacy in the U.S. Lawmakers want to know if WRI’s desire to maintain good relations with the Chinese is affecting the group’s U.S. operations and advocacy — effectively making it a foreign agent of the communist government. “WRI’s desire to maintain access to Chinese officials may influence its political activities in the United States,” Republican Reps. Rob Bishop of Utah and Bruce Westerman of Arkansas wrote in a letter to WRI President Andrew Steer sent Wednesday.

It’s really a 4-way race for Governor. More gold in AK. New veep at AGDC

Mineral exploration company begins assessment of a possible mine site north of Haines
Henry Leasia, KHNS, September 4, 2018

Constantine Metal Resources recently announced it is beginning a Preliminary Economic Assessment for a potential underground mine in the Chilkat Valley. The assessment will examine the viability of mineral resources at the Palmer Project, an exploratory site upstream from the Klehini River about 35 miles north of Haines. So far, Constantine has been drilling holes at the Palmer Project to determine the kinds of minerals available and where they are located. Mostly they have found copper, zinc, gold and silver. Liz Cornejo is the Vice President of Community and External Affairs for Constantine Metal Resources. She said the Preliminary Economic Assessment, or PEA, will be the first analysis of the economic viability of the project.

Under pressure to withdraw, Begich reaffirms plan to stay in Alaska governor’s race
Annie Zak, Tegan Hanlon, Anchorage Daily News, September 5, 2018

Former U.S. Sen. Mark Begich, under pressure from some in his party to withdraw from the Alaska governor’s race, said Tuesday that he isn’t dropping out. “Let me make it very clear to the reporters and others: If you want to talk about the process, talk to someone else,” he told press and a crowd of cheering supporters at his campaign headquarters in Anchorage. “We are done with that. I’m in the race to win. It’s a three-way race, so get used to it.”

Our Take: There are actually 4 candidates in the race. In the 2014 election, more people voted against the current governor than for him – the libertarian party and the constitution party garnered thousands of votes. Billy Toien is the Libertarian candidate who will appear on the ballot with Begich, Dunleavy and Walker.   On Monday, September 10th, the Anchorage Chamber of Commerce will host a gubernatorial debate with all 4 candidates.   Alaska voters will have many opportunities to see the slate interact with and debate each other. This election is critical to our economy – make sure you know how each candidate plans to lead us out of a recession.

Tim Fitzpatrick new veep at gasline agency
Suzanne Downing, Must Read Alaska, September 4, 2018

Tim Fitzpatrick is the new vice president of external affairs and government relations for the Alaska Gasline Development Corporation. Fitzpatrick replaces Rose Alcantra, who was released this summer by the agency, which is operating under close guidance from the Office of the Governor, with Deputy Chief of Staff Grace Jang keeping tabs on the agency’s every move. The construction of a gasline is Gov. Bill Walker’s primary focus and one of his main campaign promises when he ran in 2014. Fitzpatrick is a communications strategist with more than 20 years of experience assisting business and policy organizations achieve their public relations objectives, the news release from AGDC says. He has consulted to BP Alaska, the Alaska Oil & Gas Association, and the Alaska Support Industry Alliance.

Our Take: Congratulations to Tim! AKHEADLAMP and the Alliance are huge fans of Mr. Fitzpatrick. A great choice by AGDC – a knowledgeable, well-respected professional who can make a big impact!

FERC Announced New Date for EIS Schedule For AK LNG Project
Jennifer Williams, KSRM, September 4, 2018

The Alaska Gasline Development Corporation got some welcoming news on August 31, when the Federal Energy Regulatory Commission (FERC) announced they had moved up the schedule for the Alaska LNG project’s environmental impact statement (EIS) and commission decision. According to a release from Larry Persily, FERC now expects to issue the project’s draft impact statement in February 2019, instead of March, assuming the state-led project team provides “complete and timely responses to any future data requests” and cooperating regulatory agencies “provide input on their areas of responsibility on a timely basis.” Under the new timeline, FERC’s deadline to decide on the AGDC application would be no later than February 6, 2020, instead of the original timeline of March 8, 2020

NextDecade Starts Over in EPC Search
Dale Lunan, Natural Gas News, September 4, 2018

Texas-based NextDecade said September 4 it has been unable to negotiate a lump-sum turnkey engineering, procurement and construction (EPC) contract with McDermott International for its 27mn metric tons/year Rio Grande LNG project in South Texas. NextDecade and McDermott had originally planned to sign a lump-sum turnkey EPC contract by the end of 1H 2018 but have now agreed not to execute that contract in the belief that McDermott would have to secure a joint venture partner in order to successfully execute and financially guarantee a project of Rio Grande LNG’s size and scope. NextDecade will now launch a new competitive bid process to select a new EPC contractor, and has asked for bids from Bechtel, Fluor and McDermott. The selection process includes McDermott with the understanding that it will be required to find a joint venture partner before submitting a bid.

Our Take: Alaska LNG is hoping to sign a lump-sum turnkey EPC contract for some portions of their project.

Big Oil’s LNG Obsession
Vanand Meliksetian, OilPrice.Com, September 4, 2018

Big Oil is refocusing its business model to accommodate a world where the share of natural gas in the energy mix is growing by the day. LNG has been the main driver of growth in the natural gas sector as it has provided flexibility to customers and global price competition. While some companies, such as Royal Dutch Shell, have been increasing their activities in the LNG business for years, others like Exxon are only just starting to catch up. The change in focus comes at the cost of the raison d’être of these organizations: oil.

 

Eni strengthens Alaska position; Mack says “NO” to Chuitna Citizens Coalition

No favorite so far for competing Interior natural gas plans
Elwood Brehmer, Alaska Journal of Commerce, August 29, 2018
Interior Gas Utility leaders were largely measured in responding to a late pitch from Siemens Government Technologies on a new option for getting an additional natural gas supply to the Fairbanks area. Pamela Throop, chair of the startup utility’s board of directors and a longtime Fairbanks commercial real estate developer said the Siemens proposal is “neck and neck in some ways” with the Alaska Industrial Development and Export Authority’s $330 million comprehensive gas distribution and supply build out financing package. AIDEA’s plan also included IGU purchasing Fairbanks Natural Gas and its sister LNG supply chain companies for nearly $60 million — a purchase made predominantly with $42 million in state Interior Energy Project grant funds.

Our Take:  Good to see the private sector providing alternatives to a government run project.  Can someone get a gas contract?

Major oil company Eni buys ‘prime’ acreage in hunt for North Slope oil
Alex DeMarban, Anchorage Daily News, August 29, 2018

Italian oil major Eni announced on Wednesday it’s buying what it calls a promising chunk of North Slope acreage from Caelus Exploration Alaska, in a deal that moves exploration leases from a small oil company to a global producer. Eni will acquire 124 exploration leases in an area about 20 miles southeast of Deadhorse, the industrial support town serving giant Prudhoe Bay and other northern Alaska oil fields, Eni said in a statement. In Alaska, Caelus is perhaps best known for announcing a massive discovery in Smith Bay in 2016, an offshore site far from existing infrastructure. The Dallas-based company said in 2017 it was delaying additional drilling to confirm the discovery, citing difficulties linked to low oil prices  and some $75 million in tax credits the state owed the company.

Our Take: When the state doesn’t pay their bills – companies make tough decisions.   

Eni Builds up Alaskan Position
Natural Gas News, August 30, 2018

Italian explorer Eni has acquired 124 exploration leases for a total of 350,000 acres onshore in the eastern North Slope of Alaska from Caelus Alaska Exploration Company, it said late August 29. Eni will hold all the leases with a 100% working interest. The area is southeast of the giant Prudhoe Bay oil field, close to existing infrastructure, and is considered a “prime area with high potential and multiple proven plays, between two of the largest hydrocarbon discoveries in North America: Prudhoe Bay and Point Thompson.” These are among the sources of the gas that will be needed if Alaska LNG is ever developed.

Our Take:  This is the kind of activity that will strengthen our economy and create jobs.  “Eni will apply its business model and experience through a fast-track exploration with a short time to market of the potential new discoveries.”  Best wishes to Eni!!  

DNR commissioner reverses water reservation decision on Chuitna
Elizabeth Earl, Peninsula Clarion, August 29, 2018

A citizens’ group won’t receive a water reservation in a stream on the west side of Cook Inlet after all.  Alaska Department of Natural Resources Commissioner Andy Mack issued a decision Tuesday denying an application from the Chuitna Citizens Coalition for an instream flow reservation — essentially, the right to a minimum amount of water in a stream — on a tributary of the Chuitna River on the west side of Cook Inlet near Tyonek.

Our Take:  A good decision by Commissioner Mack. As Mack points out, with PacRIm no longer pursuing a project there “It is not in the public interest to grant a reservation that could completely preclude or significantly hinder a future potential use without full information on the potential use and options, especially where resources can be protected through DNR’ s other permitting and regulatory processes if an actual threat to such resources arises.”  

Hilcorp spuds Big Tex prospect
Josh Lewis, Upstream Online, August 30, 2018
US player Hilcorp Energy has spudded the first well as part of a multi-well drilling program in Texas and Louisiana. Australian company Otto Energy revealed Thursday drilling had started on the SL-192-PP-031 exploration well on the Big Tex prospect in Louisiana.  The well will be drilled to a total depth of 13,175 feet and target the Middle Miocene aged Tex W 16 and Tex W 18 sands which are productive at Hillcorp’s East Bay field to the east and the West Delta 30 field to the west. The Big Tex prospect has been estimated to hold 6.5 million barrels of oil equivalent in mean prospective resources, consisting of 5 million barrels of oil and 9.3 billion cubic feet of gas
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Insight: Is the US risking overuse of sanctions?
Meghan Gordon, S & P Global Platts, August 30, 2018
As the US government increasingly turns to energy-sector sanctions — or the threat of them — as a foreign policy tool, some have started to question whether the strategy carries long-term risks. Iran and Russia, the chief targets of US sanctions at the moment, would like the world to believe that the US is addicted to sanctions. Iranian Foreign Minister Javad Zarif tweeted this month that the US needs to “rehabilitate its addiction to sanctions.” A few days later, Russian Foreign Minister Sergey Lavrov said that US over-reliance on sanctions would eventually undermine the dollar as the global settlement currency. The statements are obviously self-serving, as both countries are staring down major new US sanctions. But as the US reaches over and over again for this foreign policy tool — and President Donald Trump flexes “maximum economic pressure” against countries he wants to behave differently — should policy makers pause to consider the long-term implications of overusing sanctions?

A tale of two reclamation policies – Donlin Gold gets it right, again.

State regulator raises bonds required for drilling
Rashah McChesney, Alaska’s Energy Desk, August 28, 2018
The regulator that oversees oil and gas drilling in Alaska wants to increase the bond amount it charges companies that drill in the state.  The bonds are meant to cover the cost of plugging wells and abandoning them. But, in some cases, it’s not enough. For example, the state currently has just one $200,000 bond to cover the cost of plugging and abandoning all of BP’s wells at Prudhoe Bay.  Alaska Oil and Gas Conservation Commissioner Hollis French says when a company goes bankrupt or stops operating and leaves without plugging its well properly the state is on the hook to pay for cleanu

Our Take: Making sure the state is protected is a good thing –  using BP as an example in a story about companies that could go bankrupt, stop operating or leave without plugging wells is ridiculous.  This is a money grab from big operators – $20 million from one company.  

Donlin Gold talks about reclamation and finances ahead of public hearin
Krysti Shallenberger, Alaska’s Energy Desk, Bethel, August 28, 2018

Cleaning up a mine is an expensive and time-consuming endeavor. Dan Graham is in charge of Donlin Gold’s reclamation plans and permitting process. “We’ve learned from the past and advanced through the environmental review process,” Graham said Reclamation is relatively new in the long history of mining in the United States. It came into existence in the late 20th century as more information came to light over the damage that mining does to the environment. What it means is that mining companies must restore the patch of land that they mined. And according to Alaska law, they have to pay for it. The Kuskoswkim Corporation (TKC) owns the surface rights to the proposed mine site, while the Calista Regional Native Corporation owns the subsurface rights. Both are major players in drafting the reclamation plan. “So the state, TKC, and Calista will not be on the hook to pay for the reclamation and closure,” TKC vice president Andrea Gusty said.

Our Take:  Kudos to Donlin for the being the first mine in Alaska’s history to propose monitoring water – forever.  

Platts JKM, the benchmark LNG spot price, has revealed three important surprises over the past three years.  In 2015, most analysts expected the LNG market to weaken considerably, increasingly de-correlate from oil and reduce seasonality. Three years of JKM analysis counters all three expectations — as well as re-emphasizing the importance of market-based LNG pricing, and derivatives — in helping market participants flexibly react to unforeseen developments.

Our Take: Great read on the reality of the LNG market.  

A plan calling for nearly $84 billion in Chinese investment in West Virginia petrochemical and natural gas projects will be honored despite the rumblings of a trade war between the US and China, the head of the Chinese conglomerate making the investment push said in Hong Kong on Monday.   “We and the West Virginia government, and other related companies, have always been extremely aggressive in pushing forward this project,” China Energy Investment General Manager Ling Wen told reporters at a media briefing on the earnings of its China Shenhua Energy subsidiary.

Our Take: Who thought West Virginia could make Alaska look small?   “For perspective, the state’s extraction industries, including coal mining and oil and gas production, accounted for just over $9.8 billion of West Virginia’s $76.8 billion 2017 gross domestic product.   China Energy’s commitment comes to just over $4 billion/year.”

If you want to know what the world’s biggest oil companies are saying to their shareholders about climate change, look to Europe.  BP Plc, the U.K. energy giant that suffered a catastrophic oil spill eight years ago, refers to “carbon,” “emissions” and the Paris climate agreement more than any other major, according to an analysis of investor presentations over five years. California-based Chevron Corp. barely addresses those topics at all.

Our Take:  Talk is cheap, actions speak louder than words.  We wrote about this earlier – the US leading the charge in reducing emissions.  Outside of the Paris Agreement.  

 

Dead people voting? Tourism, oil and mining can lead AK out of recession.

Alaska elections officials report voting ‘irregularities’ in East Anchorage House District primary
Devin Kelly, Alex DeMarban, Anchorage Daily News, August 27, 2018

The Alaska Division of Elections said Monday it is investigating absentee ballot irregularities in a primary race for an east Anchorage state House district — including absentee ballot applications sent in under the names of people who are dead, and votes cast in the name of at least two people who said they had never actually voted.  In the Republican primary in that district, Aaron Weaver is leading incumbent Rep. Gabrielle LeDoux by just three votes.

Our Take:  We are glad to hear that the Division of Elections has asked for criminal investigators to be involved.  This issue needs to be investigated no matter what the impact of the questioned ballots are on the outcome of the race.  We cannot have a legislator elected and seated who has engaged in voter fraud.

State economist: Alaska crawling out of recession
Steve Quinn, KTVA, August 27, 2018

Mired in its third year of recession, Alaska’s economy is inching closer toward emerging from its prolonged slide, said a Labor Department economist. But state economist Neal Fried says one major economic shift won’t instantly push the state out of the recession. “Remember it’s these little incremental increases or the ending of losses that brings us closer to the end of recession,” Fried told an attentive Anchorage Chamber luncheon crowd. “It’s not some big event.”

Our Take:  Fried noted that an increase in tourism, North Slope oil prices hovering around $70/bbl and stable mining employment could help push Alaska forward.  Elected officials should be cognizant of this and do what they can to create a stable business climate so that Alaska can move forward.  


LNG ship orders pour in
Andrew Buckland, Wood Mackenzie, August 21, 2018

33 new LNG ships have been ordered so far this year, compared to 19 in the whole of 2017 and just six in 2016. Owners have been tempted by higher spot/short-term charter rates, still-low newbuilding prices and rapidly growing LNG trade. New LNG supply is being absorbed far more easily than many expected by booming demand in Asia. A new wave of FIDs on new supply projects is expected to create even more demand for shipping. But owners need to be careful they don’t over order. There is still a huge number of ships ordered in the 2011-2014 LNG newbuilding boom to be delivered to the fleet and there is a long history of new ships arriving before new supply.

Our Take:  Something Old?  China leads the world in new demand.  Something New?  Wood Mac doesn’t see any new projects pending that will come on line before 2023.  Something Borrowed?  A ship – if current demand doesn’t use up all the inventory.  

Canada is likely to agree to a NAFTA deal with the US this week, business council says
David Reid, CNBC, August 28, 2018

Canada will restart official talks with the United States on Tuesday in the hope that an updated version of the North American Free Trade Agreement (NAFTA) will be signed off in the coming days. Canadian Foreign Minister Chrystia Freeland is in Washington to continue negotiations, following the news that Mexico and the U.S. have already reached an agreement that rewrites the trilateral trade pact, first ratified in 1994.

From the Washington Examiner Daily on Energy:

OIL INDUSTRY ENCOURAGED BY TRUMP INTERIM DEAL WITH MEXICO: Trump’s announcement with Mexico on Monday is being taken as an encouraging sign by the U.S. oil and natural gas industry.

“We are encouraged that negotiators have reached a preliminary agreement to modernize our trade relationships,” said Mike Sommers, the new president and CEO of the American Petroleum Institute, the oil industry’s top lobbyist in Washington.

Show me the energy: Energy has been a key aspect of the negotiations on a revamped version of NAFTA. However, no announcement on energy trade was made on Monday.

Mexico has become an important buyer of U.S. energy commodities, including both oil and natural gas. Energy Secretary Rick Perry was in Mexico last week to discuss the growing energy relationship.

Northern Sea Route sees more than 80 percent increase in goods shipped so far this year
Atle Staalesen, The Independent Barents Observer, August 28, 2018

A total of 9.95 million tons of goods have so far this year been shipped to and from ports on the Northern Sea Route. That’s an increase of 81 percent, the top official in Russia’s Federal Agency for Maritime and River Transport said in an interview with PortNews. By August 24, a total of 9.95 million of goods had been shipped on the route, compared with 5.5 million tons in the same period in 2017. The Novy Port project in the Yamal Peninsula accounted for the biggest part of the goods. A total of 4.35 million tons of oil were shipped from the oil terminal in the period. The port of Sabetta accounted for the second biggest share with its 3.95 million tons of LNG shipped out.

Baja building LNG import terminal. Oil rig count sees highest cuts in two years.

U.S. drillers cut most oil rigs in over two years: Baker Hughes
Reuters Staff, Reuters, August 24, 2018

U.S. energy companies cut nine oil drilling rigs this week, the biggest reduction since May 2016, following a recent decline in crude prices. The oil rig count fell to 860 in the week to Aug. 24, General Electric Co’s Baker Hughes energy services firm said in its closely followed report on Friday. U.S. crude futures, trading around $69 per barrel, were down about 7 percent so far this quarter, heading for the first quarterly decline since the second quarter last year.

Our Take: A disturbing headline. The Baker Hughes rig count is an important business barometer for the oil drilling industry. When drilling rigs are active they consume products and services produced by the oil service industry. The active rig count acts as a leading indicator of demand for oil products

Sinopec sees profits rise
Josh Lewis, Upstream, August 27, 2018

China’s Sinopec posted a rise in profits during the first six months of the year thanks in part to stronger performance from its upstream business segment. Sinopec posted a profit of 41.6 billion yuan ($6.1 billion) for the six months to 30 June, up from a profit of less than 27.1 billion yuan over the first half of 2017. Total revenue for the first half of 2018 totaled 1.3 trillion yuan, up 11.5% from a year earlier thanks largely to higher oil prices.

Our Take: Good new for Alaska’s potential business partner. Sinopec could be purchasing 75 percent of Alaska LNG’s product.

US and Mexico reach a trade deal, paving the way to replace NAFTA
Kayla Tausche, Fred Imbert, CNBC, August 27, 2018

The U.S. and Mexico struck a trade deal on Monday that paved the way to replace NAFTA, the current agreement between the two nations and Canada. President Donald Trump said the deal would be called The United States-Mexico Trade Agreement, getting rid of the NAFTA name. “The name NAFTA has a bad connotation because the United States was hurt very badly by NAFTA,” he said. Trump added that the deal will help farmers and manufacturers. “We’ve made it better” for both countries.

BOEM Publishes Final Environmental Impact Statement for Hilcorp Liberty Project
BOEM Press Release, August 23, 2018

The Bureau of Ocean Energy Management today announced the availability of a final Environmental Impact Statement (EIS) analyzing the possible environmental impacts of activities proposed in a development and production plan (DPP) submitted to BOEM by Hilcorp Alaska LLC on Sept. 18, 2015.

Our Take:   Exciting news for Alaska!   Hilcorp released the following statement in response: “We are currently reviewing BOEM’s final Environmental Impact Statement for the Liberty Project and we are encouraged that another step forward has been taken in the permitting process. The Liberty Project will incorporate proven technologies already utilized in the shallow waters of Alaska’s Beaufort Sea, and would help generate new jobs, revenue and domestic energy.”

LNG IMPORT TERMINAL SET FOR BAJA
Pietro Pitts, Natural Gas News, August 24, 2018

New Fortress Energy’s recent award to build a new LNG import terminal in Baja California Sur, Mexico will offer the isolated region a clean and low-cost energy solution, the company said August 24. “This development and our investment in Mexico will bring clean and affordable energy to help grow the economy and reduce harmful emissions,” New Fortress Energy founder Wes Edens said in a statement. The terminal, slated to be completed and online in 2020, will introduce natural gas into the state of Baja California Sur, and offer benefits to the local environment and competitiveness in the energy sector.

 

Alaska North Slope a ‘Super Basin’ Ready for Oil Resurgence

“According to the IHS Markit analysis, despite the geologic potential of the ANS, potential investment risks include needed service-sector expansion to support expected production growth, uncertainty over whether the state of Alaska will maintain its tax-incentive program, infrastructure access for new entrants, and the potential application of unconventional technology in a complex operating environment,” Mohamed said.

 


 

Alaska North Slope a ‘Super Basin’ Ready for Oil Resurgence as Oil Production Expected to Grow 40 Percent in Eight Years, IHS Markit Says

In a state of arrested development, late-emerging-phase Alaska North Slope Basin holds an estimated 38 billion barrels of oil equivalent in remaining recoverable resources.

 

HOUSTON–(BUSINESS WIRE)–The Alaska North Slope (ANS) Basin — a prolific source of U.S. oil production previously limited by a number of barriers to entry including cost and access — is poised to re-emerge as a major source of U.S. energy production, with crude oil output potentially increasing as much as 40 percent during the next eight years, according to new energy research from IHS Markit(Nasdaq: INFO), a world leader in critical information, analytics and solutions

“This is why we refer to this basin as being in the late-emerging-phase, because it still has such significant resources to offer.”

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Based on recent discoveries, the IHS Markit Plays and Basins: Alaska North Slope (ANS) Basin; Resurgence in an Arrested, Late-emerging Super Basin analysis estimates that the ANS Basin offers 38 billion barrels of oil equivalent (BOE) in remaining recoverable resources (50 trillion cubic feet (TCF) of gas, and 28 billion barrels of oil). IHS Markit said the estimated ultimate recovery (EUR) for the ANS Basin is 54.8 billion BOE, which includes the 38 billion BOE in remaining resources combined with the 16.8 billion barrels of oil produced to date in the ANS.

IHS Markit classifies the ANS Basin as an arrested, late-emerging-phase ‘super basin,’ rather than a mature basin, according to its research criteria.

“Previously thought of as a mature basin, recent large discoveries made in the shallow Nanushuk and Torok formations indicate this basin has a lot of room left to grow beyond the Endicott and Ivishak formations, which are the reservoirs from which the giant Prudhoe Bay and Endicott fields produce,” said Kareemah Mohamed, associate director, plays and basins research at IHS Markit, and lead author of the IHS Markit analysis“This is why we refer to this basin as being in the late-emerging-phase, because it still has such significant resources to offer.”

IHS Markit said the basin has previously produced 16.8 billion barrels of oil to date, but in 2017, recoverable reserves increased six-fold in previously ignored shallow Cretaceous formations—Nanushuk and Torok—which total an estimated 5 billion barrels.

“According to the IHS Markit analysis, despite the geologic potential of the ANS, potential investment risks include needed service-sector expansion to support expected production growth, uncertainty over whether the state of Alaska will maintain its tax-incentive program, infrastructure access for new entrants, and the potential application of unconventional technology in a complex operating environment,” Mohamed said.

Further, IHS Markit said there is an estimated 9.5 billion BOE of yet-to-find volumes in the National Petroleum Reserve in Alaska (NPR-A), Area 1002 of the Alaska National Wildlife Refuge (ANWR) and central Slope combined.

Aside from the new discoveries, the basin warrants attention from prospective operators because the Alaska North Slope now has fewer barriers to entry for operators, making it more competitive, Mohamed said. Advances in new drilling technologies that help reduce operating costs*, efficiencies from economies of scale, state-level incentive programs for accelerated permitting, and infrastructure investment make this largely onshore conventional basin worth considering anew.

“Cost efficiencies from advances in drilling and operational practices will require the right kind of operator expertise,” Mohamed said. “For example, ConocoPhillips has employed learnings from its Lower-48 unconventional assets to lateral drilling in their Alaska North Slope CD-5 development located in the NPR-A.”

In late 2017, the U.S. administration opened all areas of the NPR-A and Area 1002 of the Alaskan coastal plain (which is part of the ANWR) to possible E&P investment. The prospectivity of the Nanushuk and Torok formations adds more stratigraphic opportunities for operators, while the opening of the ANWR and all areas of the NPR-A, adds to the lateral extent potential as well, Mohamed said.

*ConocoPhillips has used new technologies such as extended-reach laterals to cut costs by 25 percent in the basin, the IHS Markit report noted. “We expect development in the basin to continue to be driven by commercial masters ConocoPhillips and ExxonMobil, but also by challengers Oil Search and Hilcorp,” Mohamed said. “We anticipate increased bidding activity and farm-ins as established operators expand their presence, and new entrants seek to gain early mover advantage by leveraging low acreage prices to enter newly opened areas.”

New production in the short-term will largely come from ConocoPhillips, ExxonMobil and Oil Search, the IHS Markit report said. Also operators such as Eni are chasing onshore reservoir trends into the shelf area, which is three miles off the Alaskan coast in the Beaufort Sea. This activity is a leading indicator of an approaching wave of near-field exploration on the ANS, Mohamed said.

“For onshore light-oil opportunities in a stable country with a positive investment outlook, the ANS provides a viable alternative to the competitive Lower-48 unconventional basins, where acreage prices are an order of magnitude greater, and have transportation and raw material constraints, even if they are temporary,” Mohamed said.

IHS Markit defines ‘super basins’ as basins that have multiple reservoirs and source rocks, diverse play types across numerous geologic horizons, infrastructure with access to markets, and established service sector and supply chains. Additionally, to achieve ‘super basin’ status, identified basins must hold at least 5 billion BOE in conventional remaining reserves and have already produced at least 5 billion BOE.

To speak with Kareemah Mohamed, please contact Melissa Manning at melissa.manning@ihsmarkit.com. For more information on the IHS Markit Plays and Basins: Alaska North Slope (ANS) Basin; Resurgence in an Arrested, Late-emerging Super Basin analysis, contact clare.fletcher@ihsmarkit.com.

About IHS Markit (www.ihsmarkit.com)

IHS Markit (Nasdaq: INFO) is a world leader in critical information, analytics and solutions for the major industries and markets that drive economies worldwide. The company delivers next-generation information, analytics and solutions to customers in business, finance and government, improving their operational efficiency and providing deep insights that lead to well-informed, confident decisions. IHS Markit has more than 50,000 business and government customers, including 80 percent of the Fortune Global 500 and the world’s leading financial institutions. Headquartered in London, IHS Markit is committed to sustainable, profitable growth.

IHS Markit is a registered trademark of IHS Markit Ltd. and/or its affiliates. All other company and product names may be trademarks of their respective owners. © 2018 IHS Markit Ltd. All rights reserved.

Contacts

IHS Markit
Melissa Manning, +1 832-458-3840
melissa.manning@ihsmarkit.com
or
Press Team, +1 303-305-8021
press@ihs.com
Follow @IHS_News

IHS MARKIT

Release Summary

Alaska North Slope a ‘Super Basin’ Ready for Oil Resurgence as Oil Production Expected to Grow 40 Percent in Eight Years, IHS Markit Says

Contacts

IHS Markit
Melissa Manning, +1 832-458-3840
melissa.manning@ihsmarkit.com
or
Press Team, +1 303-305-8021
press@ihs.com
Follow @IHS_News

Bipartisan love for Trump’s science guy who advocates for climate change research.

China imposes 25% tariffs on US oil products
Reuters, August 23, 2018

China on Thursday implemented tariffs on a second tranche of US goods, targeting oil products and coal for the first time, in retaliation to US tariffs effective the same day and paving the way for crude oil and LNG to be hit next. Energy commodities including propane, butane, naphtha, jet fuel and coal are on the second list of $16 billion worth of US products that attract 25% additional tariffs from August 23, 12:01 pm Beijing time (0401 GMT), according to China’s Ministry of Commerce announcement on August 8.

Oil slips as trade spat escalates; but crude stock decline supports U.S. crude
Reuters, August 23, 2018

Oil prices slipped on Thursday, weighed down by the escalating trade dispute between the United States and China, although a decline in U.S. commercial crude inventories offered some support. The United States and China escalated their acrimonious trade war on Thursday, implementing punitive 25 percent tariffs on $16 billion worth of the other’s goods. Washington is holding hearings this week on a proposed list of an additional $200 billion worth of Chinese imports to face duties.

US jobless claims fall as labor market holds firm despite trade tensions
Reuters, August 23, 2018

The number of Americans filing for unemployment benefits fell last week, a sign the labor market was holding firm despite tensions between the United States and its trading partners that have spawned restrictions on global commerce. Initial claims for state unemployment benefits slipped 2,000 to a seasonally adjusted 210,000 for the week ended Aug. 18, the Labor Department said on Thursday. It was the third straight week of declines for claims, which have dropped so low that economists have scrambled for explanations. In July, claims fell to their lowest level since 1969 even though the workforce is much larger than in prior decades.

From the Washington Examiner Daily on Energy:

SENATORS HAIL TRUMP’S SCIENCE ADVISER IN NOMINATION HEARING: Senators of both parties on Thursday morning hailed Trump’s nominee to be his first science director, Kelvin Droegemeier, an expert in extreme weather from the University of Oklahoma.

“There is no question to your qualifications,” Sen. Bill Nelson, D-Fla., said at Droegemeier’s confirmation hearing before the Commerce, Science, and Transportation Committee. “Your work on extreme weather is very important to the country. If confirmed, you have a tough task ahead of you, but a lot of us on the committee are going to be happy you are the White House science adviser.”

Science overcomes Trump’s politics: Trump had left the science and technology adviser position vacant for 19 months before nominating Droegemeier, providing fodder to critics who say his administration is downplaying science, especially as it relates to climate change.

But Droegemeier, a Republican, has bipartisan credentials to take the helm of the Office of Science and Technology Policy, a White House agency that helps set policy on issues involving innovations in medical research, self-driving cars, artificial intelligence — and climate change. Supporters say he accepts established climate science.

“Science has no politics. Science is just science,” Sen. James Lankford, R-Okla., said Thursday. “He knows his stuff he will be doing a great job,” Lankford added of Droegemeier. “There is no one in America better qualified for this position.”