BREAKING NEWS: Former Alliance board member Doug Smith elected new chair of Alaska Gasline Development Corporation
China’s Gas Pivot Is Starting To Pay Off
Tim Daiss, OilPrice.Com, January 9, 2019
Environmental authorities in China said on Friday that Beijing and its surrounding industrial province of Hebei cut smog emissions by at least 12 percent in 2018 after a long crackdown on polluters as well as campaigns to reduce household coal use. Beijing’s local government said that the city’s emissions of small, hazardous breathable particles known as PM2.5 fell 12 percent to 51 micrograms per cubic meter (mcg) over the whole of 2018. The government said that average emissions are still significantly higher than China’s official air quality standard of 35 micrograms. It added that 656 polluting enterprises were forced to relocate last year, with firms and individuals fined a total of 230 million yuan ($33.50 million) for violations, up 22.5 percent from last year.
From the Washington Examiner Daily on Energy:
INDUSTRY GROUPS TOUT LNG EXPORTS TO LOWER EMISSIONS IN 2019: Oil industry trade groups announced Thursday that the U.S. becoming the third largest liquefied natural gas (LNG) exporter in 2019 will lead to significant emissions reductions.
The new joint assessment, led by the American Petroleum Institute, Center for LNG, and the group LNG Allies, is meant to underscore the job creation, emissions reductions and reliable energy supplies that U.S. LNG will provide in the new year.
“With LNG export capacity set to nearly double in 2019, the United States is poised to become a leading global supplier,” said Todd Snitchler, API’s vice president for market development.
He said LNG cargoes have been delivered to nearly 30 countries around the globe, stating that as LNG demand continues to grow, the industry expects even more countries to reap the benefits of reduced emissions from U.S. LNG.
The statement follows a report by the Rhodium Group earlier this week that showed U.S. greenhouse gas emissions rose last year due to the rapid uptick in natural gas and despite the continued retirement of coal-fired power plants.
U.S. Sen. Lisa Murkowski yesterday reintroduced a bipartisan package of more than 100 public lands, natural resources, and water bills. Murkowski, as chairman of the Senate Committee on Energy and Natural Resources and one of the four primary negotiators for the package, ensured it reflects a wide range of Alaska priorities.
“While we weren’t able to pass this bipartisan package at the end of the last Congress, its provisions remain important, and we will have an opportunity to take it up early this year,” Murkowski said. “From authorizing land allotments for Alaska Native Vietnam veterans and greater access to federal land for sportsmen, to helping with the right-of-way for the gasline project and the needs of individuals who live in communities like Kake and Utqiaġvik, this is a good package for Alaska.”
The lands package – S. 47, the Natural Resources Management Act – includes the following provisions of interest to Alaskans:
- S. 217, the Denali Improvement Act – Provides routing flexibility for the Alaska gasline project in Denali National Park and Preserve.
- S. 346, the National Volcano Early Warning and Monitoring Act – Improves the nation’s volcano-related capabilities to help keep communities and travelers safe.
- S. 733, the Sportsmen’s Act – Promotes access and opportunities for hunting, fishing, and other outdoor recreational activities on federal land.
- S. 785, the Alaska Native Veterans Land Allotment Equity Act – Introduced by Sen. Dan Sullivan, R-Alaska, to ensure the federal government fulfills its decades-old promise to provide allotments to Alaska Natives who served in the Vietnam War.
- S. 884, the Small Miner Relief Act – Clarifies that four Alaska miners are to be exempt from the claim maintenance fee assessed by the Bureau of Land Management.
- S. 1149, the Kake Timber Parity Act – Repeals a statutory ban preventing the export of unprocessed logs harvested from lands conveyed to the Kake Tribal Corporation.
- S. 1486, Ukpeaġvik Land Conveyance – Requires the Department of the Interior to convey all right, title, and interest in the sand and gravel resources within and contiguous to the Barrow Gas Field to the Ukpeaġvik Iñupiat Corporation.
- S. 1493, the Chugach Land Study Act – Requires the Department of the Interior and the U.S. Forest Service to conduct a study to identify the effects that federal land acquisitions have had on Chugach Alaska Corporation’s ability to develop its lands, and to identify options for a possible land exchange with the corporation.
- S. 1787, the National Geologic Mapping Act Reauthorization Act – Renews this program, which is run by the U.S. Geological Survey, for five years.
Gas line corporation president awarded $296,000 bonus as new board members chosen
Alex DeMarban, Anchorage Daily News, January 7, 2019
Gov. Mike Dunleavy announced changes to the board of the state gas line agency on Monday, the same day officials confirmed the head of the agency was awarded $296,000 in bonuses in late December. The performance-based bonuses for Keith Meyer, president of the Alaska Gasline Development Corp., come atop his $550,000 annual salary, the highest at the state.
Our Take: This bonus is completely on par and very common for executives at this level. The challenge is the optics: budget deficit, reduced PFD, performance bonus while missing a major deadline on December 31st.
Breaking: Dunleavy changes gasline board members
Suzanne Downing, Must Read Alaska, January 7, 2019
JOEY MERRICK, HUGH SHORT DISMISSED; DAN COFFEY, DOUG SMITH REPLACE
Gov. Michael Dunleavy today announced key changes and appointments to the seven-member board of directors governing the Alaska Gasline Development Corporation. But not before the previous board gave AGDC President Keith Meyer a $300,000 performance bonus for his work over the past two years, adding to his $550,000 base annual salary. Meyer’s contract is up this year. The board had given him $138,750 for June 2017, and $157,256 for 2018. Dunleavy has now changed out four of the seven members of the board, so Alaskans might expect more changes ahead in coming days.
Our Take: Congratulations to former Alliance board President Doug Smith! What a great private sector addition to the board. Thanks to Alliance member Joey Merrick for his service on the board.
A power shift in the House and a new crop of lawmakers have mining critics reviving their attempt to fundamentally change the law that governs the practice, and companies are readying their counterattack. Step one for reformers is a major education campaign on the 1872 General Mining Act; step two is navigating the new political landscape on Capitol Hill. Debates surrounding mining will see a fundamental shift. Beyond the 95 new members, 58 percent of House Democrats have never worked in the majority and 70 percent of House Republicans have never been in the minority. The most recent iteration, H.R. 5753, would have replaced mining claims with a federal leasing system similar to other commodities.
Our Take: Reality check: “Energy and Natural Resources Committee Chairwoman Lisa Murkowski (R-Alaska) is likely to keep working on making permitting faster and reducing American dependence on so-called critical minerals.”
From the Washington Examiner Daily on Energy:
OIL AND GAS INDUSTRY GROUPS URGES END TO GOVERNMENT SHUTDOWN: The oil and gas industry is urging the Trump administration and Congress Tuesday to resolve the government shutdown before the energy industry is harmed.
“A longer shutdown is certainly not good for this industry,” said Mike Sommers, the president and CEO of API, the main trade group representing the oil and natural gas industry, in comments to reporters ahead of its 2018 State of American Energy event in Washington on Tuesday afternoon.
Sommers said the industry has not experienced any setbacks so far. Bloomberg reported Tuesday that the Trump administration is still processing oil and gas permits for drilling on federal land and water during the government shutdown.
But the industry fears a prolonged shutdown could slow progress at the EPA and Interior Department to roll back environmental regulations
TRUMP’S TRADE WAR IS ‘NOT GOOD FOR BUSINESS’ OIL AND GAS INDUSTRY SAYS: Sommers also encouraged the Trump administration on Tuesday to resolve its trade dispute with China, and to soften its broader approach to imposing barriers on markets for goods.
The oil and gas group’s CEO said he is “encouraged” by reports that U.S-China trade talks are making progress.
But he said: “We want this dispute to end quickly.”
“We need to do it in way that doesn’t affect American economic leadership that is really driven by American energy leadership,” Sommers added.
LNG and infrastructure are affected: Sommers specifically expressed concern about China’s 10 percent tariff on American liquified natural gas, which it imposed in October in retaliation to Trump’s tariffs.
Industry officials have warned that Trump’s trade war with Beijing is threatening to discourage China, the world’s fastest growing LNG market, from signing long-term contracts with American developers.
“We need to make sure retaliatory tariffs on LNG don’t continue and certainly don’t expand,” Sommers said.
Sommers added that Trump’s 25 percent steel tariffs are raising costs for energy infrastructure that API says is needed to transport record U.S. production of oil and natural gas.
A gassy New Year
Natural Gas News, January 7, 2019
The expected flurry of final investment decisions that will be taken this year to build LNG terminals in North America, Russia, Africa and elsewhere cannot of course disguise the fact that oil is still of paramount importance. And the same producers are involved in some of the biggest projects in both oil and gas, so there cannot be cut-throat competition, exactly. Nevertheless, the rate of change is heartening and reflects the rapid absorption of LNG on the global market in the last year, when many were digging themselves in for a glut and knock-down prices. Competitive pricing is one thing, value-destruction another. After a relatively quiet few years, it means that there is confidence in a market for gas in its own right – power, heating, marine and road transport, petrochemicals and manufacturing – but also it will be less rigid than before.
Despite shutdown, Trump administration continues work to begin oil drilling in ANWR
Elizabeth Harball, Alaska’s Energy Desk, January 4, 2019
As the partial government shutdown drags on, the Trump administration is making sure some Interior Department employees continue work on one of its biggest, most controversial priorities: opening the Arctic National Wildlife Refuge to oil drilling. Drilling opponents were quick to criticize the move, contrasting it with the overflowing trash cans and unattended public toilets in national parks managed by Interior, which have become a symbol of the continuing stalemate in Washington, D.C.
Oil rises 3 percent; lifted by OPEC cuts, steadying stock market
Stephanie Kelly, Reuters, January 7, 2019
Oil prices climbed about 3 percent on Monday, rebounding further from 1-1/2-year lows reached in December on support from OPEC production cuts and steadying equities markets. Brent crude LCOc1 futures rose $1.47 to $58.53 a barrel, a 2.6 percent gain, as of 11:12 a.m. EST (1612 GMT). U.S. West Texas Intermediate (WTI) crude CLc1 futures rose $1.56 to $49.52 a barrel, a 3.3 percent gain. Oil futures have gained about 10 percent since last Monday.
From the Washington Examiner Daily on Energy:
PELOSI PLANS TO RESURRECT FAILED CAP-AND-TRADE BILL FROM A DECADE AGO: House Speaker Nancy Pelosi said Friday that she plans to resurrect something similar to the failed cap-and-trade bill that the House passed nearly a decade ago but that the Senate couldn’t muster the votes to pass.
“We couldn’t pass in the Senate our climate bill, and we’ll be returning to that,” Pelosi said on Friday at as part of MSNBC’s “The Speaker” town hall broadcast.
Old ideas reborn: Pelosi is referring to the bill named after former Reps. Henry Waxman and Ed Markey, who is now a senator. The bill put in place a cap on carbon dioxide emissions, while offering emission credits to the power plant operators, which they would have to purchase in order to meet the cap. The price of the credit would adjust as an incentive to reduce emissions.
Our Take: What was that definition of insanity? The Senate wouldn’t pass it before and Headlamp would put money on the same thing happening again.
Judge tosses lawsuit questioning constitutionality of tax credit bonds
Elwood Brehmer, Alaska Journal of Commerce, January 3, 2019
The small oil companies and banks holding more than $800 million in refundable tax credits scored a victory Wednesday when an Alaska Superior Court judge threw out a lawsuit challenging the state’s plan to sell bonds to pay off those credits. Judge Jude Pate granted the State of Alaska’s motion to dismiss the suit filed by former University of Alaska regent Eric Forrer arguing against the constitutionality of the bond scheme contained in House Bill 331 that the Legislature approved last spring.
Our Take: Though AKHEADLAMP appreciates this decision, the likely appeal will delay payments that are owed and continue to create an environment of instability. Instability is the enemy of investment “When the earned credits weren’t paid off in full in the fiscal years 2016-18 state budgets, as had previously been done, the banks holding them mostly stopped lending into the Alaska oil sector.” Enough said.
Alaska gives Chinese firms more time to consider LNG deal
Carl Surran, Seeking Alpha, January 4, 2019
Alaska’s government says it extended a deadline for Sinopec (NYSE:SNP) and other Chinese companies to agree on liquefied natural gas purchases and financing for the $43B Alaska LNG project. State-owned Alaska Gasline Development Corp. says it is typical in negotiations on large energy projects to see deadlines extended – by six months, in this instance – but that the current U.S.-China trade dispute has added complications. If built, the project would export up to 20M metric tons/year of LNG, with 15 tons/year reserved for China in the deal now being discussed and 5M available for other potential customers such as Japan and Vietnam.
China looks to LNG as cold weather sweeps in
Xu Yihe, Upstream Online, January 3, 2019
China is again relying on liquefied natural gas imports to meet peak energy demand this winter but is expected to see fewer spot cargoes coming in as major importers have already secured enough long-term supplies. Industry officials said that in the winter season running from November 2018 to March 2019, China’s LNG purchases from the spot market or based on short- term supply contracts will be down by 30% to about 3.4 million tonnes versus the last winter season. “Chinese buyers are well prepared for the possible supply crunch this winter and therefore have tried to secure more supplies based on long-term contracts in order to cushion against possible price hikes in spot cargoes,” said one official from China National Petroleum Corporation (CNPC).
Happy 60th Birthday Alaska!
The House is expected to agree to a 60-page set of rules in the first set of votes today that would establish a new select committee on climate change, even as some liberals worry it could get in the way of a Green New Deal. Republican Jim Sensenbrenner wants to be ranking member on the new climate panel, a title he held on a previous iteration, but he may face competition this time. Progressive Rep. Ro Khanna and Rep.-elect (for a few more hours) Alexandria Ocasio-Cortez say they’ll vote against the first House Democratic legislative action — a rules package that will be taken up today. But their objections are unlikely to sink the overall package, and the debate is largely theoretical, as House leaders regularly waive rules that stand in the way of top priorities. A key concern: The rule would make it harder to bring major progressive priorities like a Green New Deal from getting a vote due to their enormous cost, POLITICO’s Rachael Bade and Heather Caygle report. Warren Gunnels, staff director for Sen. Bernie Sanders, asked whether “enough progressives” will “have the courage to vote no on the first roadblock to #MedicareForAll, #GreenNewDeal & #CollegeForAll?”
Our Take: Reality check. The enormous cost of “everything for everybody” makes the majority of the new house priorities DOA, not to mention a Senate and a President that don’t support their priorities. #checksandbalances.
Eni buys out partner in Alaska
Anamaria Deduleasa, Upstream Online, January 3, 2018
Eni has entered into agreement to buy out its Alaska project partner Caelus Natural Resources. The company said on Thursday that it reached a deal, with an undisclosed value, to acquire a 70% interest in, and take over operatorship of the offshore Oooguruk oilfield from the Alaskan business group.
Our Take: Eni will be able to immediately increase its Alaska production by 7000 bpd, drill further production wells at Oooguruk and Nikaitchuq, and work towards increasing their total Alaska production beyond 30,000 bpd. Good for Alaska! Good for Eni!
Renewables overtake coal as Germany’s main energy source
Reuters, January 3, 2018
Renewables overtook coal as Germany’s main source of energy for the first time last year, accounting for just over 40 percent of electricity production, research showed on Thursday. The shift marks progress as Europe’s biggest economy aims for renewables to provide 65 percent of its energy by 2030 in a costly transition as it abandons nuclear power by 2022 and is devising plans for an orderly long-term exit from coal.
Outlook 2019: Upstream oil exploration, development set to surge in Alaska
S & P Global Platts, December 28, 2018
Alaska’s upstream oil industry is expecting to see a surge in exploration and development in 2019 as companies drill to delineate new North Slope and National Petroleum Reserve-Alaska discoveries. But some are concerned that high-profile federal initiatives, like exploration in the Arctic National Wildlife Refuge and the opening of prospective parts of NPR-A, could get bogged down by increased opposition as Democrats gain a majority in the US House of Representatives, slowing production growth down the road. Alaska oil production is expected to increase in 2019 and 2020 thanks to new North Slope oil discoveries being brought online.
The state’s gasline corporation was supposed to have a deal with three Chinese partners, a buyer, an equity partner and a lender by Dec. 31. But this is a deadline the Alaska LNG project is likely to miss. In late 2017, Alaska Gasline Development Corporation head Keith Meyer and then-Gov. Bill Walker flew to Beijing and inked a deal with three entities in China to explore options for financing, building and buying gas from the Alaska LNG project. At the time, Meyer told a group of reporters that they had been trying to woo the Chinese companies for months. “So we’ve been through the courtship. We are now engaged,” Meyer said. The “engaged” phase was supposed to last about a year, and the parties would come to a decision by Dec. 31, 2018 on whether to get hitched. Now, the state corporation wants a six-month extension on that original agreement.
OPEC-led cuts should rebalance oil market in first quarter: UAE energy minister
S & P Global Platts, January 2, 2019
The OPEC-led deal to cut 1.2 million b/d from the start of January should bring balance back to the oil market in the first quarter of 2019, the UAE’s energy minister Suhail al-Mazrouei said Tuesday. “As we start a new year, I remain optimistic toward achieving the market balance during the first quarter after [the] OPEC and Non-OPEC production cut. At this time last year we remember the same pessimistic views which we disagreed with and as we expected 2018 was a good year,” he said in a tweet Tuesday. The minister said last month that OPEC and non-OPEC producers would consider “deeper cuts” if the reduction wasn’t enough to restore balance.
Craig Medred, December 28, 2018
Why is it that reporters with a good story to tell sometimes can’t seem to avoid the pit of embellishment that makes journalism look so bad? Here’s Hillary Rosner writing in The Atlantic about the plight of the woodland caribou, a subspecies on the verge of extinction in the lower 48 and a cousin of Alaska’s barren ground caribou: “Though that news barely registered with the American public, it was powerful: the imminent disappearance of a large mammal species from the Lower 48. And the Selkirk caribou are only the tip of the melting iceberg. Across a broad swath of Canada and Alaska, caribou populations have been plummeting for decades. The main cause: industrial development in their habitat.”
From the Washington Examiner, Daily on Energy:
ZINKE’S DEPUTY IS THE FAVORITE TO REPLACE HIM, BUT NO DECISION YET: Trump’s search to replace departing Interior Secretary Ryan Zinke did not conclude last month as it was expected to and could stretch well into the new year.
Trump had promised on Dec. 15 to name Zinke’s replacement the following week, but the president has been preoccupied with the government shutdown fight, the resignation of Defense Secretary Jim Mattis, and the fallout from his decision to remove U.S. troops from Syria.
The favorite is familiar: David Bernhardt, the Interior Department deputy who is expected to be named acting secretary as soon as Zinke leaves office today, is still viewed as Trump’s safest bet to run the agency on a permanent basis, according to allies of his and sources close to the White House.
But Bernhardt has competition for the job: At least two more candidates, Cynthia Lummis, a former congresswoman from Wyoming, and Rep. Steve Pearce, R-N.M. are expected to receive interviews for the job, sources tell Josh.
Pearce is leaving Congress after failing in a bid for governor of New Mexico, where he lost in November to Democrat Michelle Lujan Grisham, and is actively pursuing the role, a congressional staffer familiar with the process told Josh.
Others like Rep. Jeff Denham, R-Calif. and Sen. Dean Heller, R-Nev., both of whom recently lost re-election, are interested in the job, but it’s unclear whether they are serious contenders.