Hazy oil market outlook for OPEC. Two views of Alaska’s Senate Race.

by wp_sysadmin | Jun 30, 2021 | News

NEWS OF THE DAY:

Exclusive: White House signals “clean” standard push in budget reconciliation
Ben Geman, Axios, June 30, 2021

The White House hopes to use the filibuster-proof budget reconciliation process to mandate that power companies supply escalating amounts of zero-carbon electricity, according to a memo from two top aides obtained by Axios.

Why it matters: The policy, called a “clean energy standard,” is a priority for environmentalists, and the memo comes as activists fear infrastructure talks will leave major climate measures on the cutting room floor.

• President Biden has set a target of achieving 100% carbon-free U.S. power by 2035.
• A CES would help meet that goal by requiring that growing percentages of power sales over time come from sources like renewables and nuclear power.

Driving the news: The memo promotes environmental pieces already in the bipartisan infrastructure outline, touting climate measures “embedded throughout” the framework.

But it also lists other steps President Biden supports through the budget process.

• That includes, per the memo from domestic climate chief Gina McCarthy and senior adviser Anita Dunn, “sending a market signal that brings additional private investment off the sidelines and into modernizing our electric grid through an Energy Efficiency and Clean Electricity Standard.”
• The memo also lists $10 billion for “mobilizing the next generation of conservation and resilience workers” and touts the idea of a “Civilian Climate Corps” to achieve it.
• Another goal is expanded clean energy tax credits, which Biden has cited repeatedly as a priority for the reconciliation bill Democrats plan to craft.

Our thought bubble: The memo is the latest step in the delicate and uncertain push to build support for the bipartisan plan, while also appealing to climate-focused lawmakers and activists who want much more.

• The sections touting grid, clean water and transit investments in the bipartisan outline mirror other sales pitches earlier this week.
• Meanwhile, the pledges around the CES and other provisions could help reassure Biden’s left flank.
• The “Civilian Climate Corps” is a priority for the Sunrise Movement, but they’re seeking much more funding than Biden has floated.
• The memo also argues provisions in the bipartisan outline — like cleaning abandoned mines — and reconciliation ideas will boost union jobs.

Catch up fast: Biden recently abandoned threats to veto the bipartisan plan unless a much larger, Democrats-only reconciliation package moves too.

But both packages — which have yet to even be unveiled in legislative form — face extremely high political hurdles.

What we’re watching: How a CES could fit within reconciliation, which is meant for spending- and revenue-related measures but not general policy ideas.

The groups Evergreen Action and Data for Progress released a proposal in February about CES designs consistent with that process.

The intrigue: The memo, while citing Biden’s reconciliation goals, leaves wiggle room.

• It offers a commitment to pushing priorities outside the bipartisan plan “through additional congressional action, including budget reconciliation, to ensure we build back our economy and country better.”
• However McCarthy, when asked by Punchbowl News this morning about non-negotiable items in the reconciliation package, pointed to the CES. “We need that second package. We need tax credits. We need a clean energy standard. [We’d] love to see a Civilian Climate Corps,” she said.

OIL:

Still hazy on the oil market’s outlook, OPEC+ prepares to negotiate August output quotas
Herman Wang, Alisdair Bowles, S & P Global Platts, June 30, 2021

HIGHLIGHTS

Uncertain forecasts open to interpretation, delegates say

OPEC and allies to hold flurry of meetings on July 1

Iran deal, end of summer could be downers for oil prices

OPEC and its partners are poring over oil market forecasts and scenarios, buoyed by what Secretary General Mohammed Barkindo called an “overall brighter picture” in the world’s battle against COVID-19 but without a consensus so far on how to set August production levels.

The 23-country OPEC+ alliance is scheduled to convene July 1 for what could be a long day of talks.

That the oil market will be in deficit in the second half of the year is not a matter of debate.

But stubbornly persistent infection rates in many parts of the world and OPEC kingpin Saudi Arabia’s customary conservatism on production policy has somewhat tempered expectations for how much the alliance will raise output quotas.

Analyst predictions have largely coalesced around a production increase of 500,000 b/d or so, far short of the volume many say is needed to satisfy rebounding global oil demand, prompting fears of a price squeeze.

But some delegates have told S&P Global Platts that they remain wary of a jump in Iranian crude exports if Washington relieves oil sanctions on Tehran with a revived nuclear deal later this year. The coming end of the summer driving season and the onset of autumn refinery maintenance schedules may also give members pause.

“Saudi Arabia remains cautious on demand and Iran nuclear talks, while Russia is more focused on regaining market share,” Platts Analytics said in a note. “However, with Brent already in the mid-$70s, both will likely be committed to not overheating the market.”

An advisory technical committee met June 29 to review the latest forecasts devised by the OPEC secretariat, the base case of which sees oil demand rising 6 million b/d in 2021, with world economic growth at 5.5%. OECD oil inventories have dipped below the 2015-2019 average that OPEC+ members are targeting.

How that translates into production policy is still undetermined, delegates said.

“We just left open the deficit in the market for the second half of 2021 for interpretation and for the ministers to make decisions,” one said on condition of anonymity to discuss the private deliberations. “Of course, we highlighted the uncertainties, for example the new Delta variant and the potential return of Iranian production.”

Another delegate said the technical committee examined market outlooks through 2022, which contained many uncertainties.

“I hope the ministers will not be confused,” the delegate said.

Quota discipline

For now, the near-term prospects for the market appear to favor the bulls.

Platts assessed Dated Brent on June 29 at $75.95/b, a more than 50% rise since the start of the year and a far cry from when the price bottomed out at $13.24/b on April 21, 2020.

“The overall brighter picture in relation to the pandemic recovery efforts has led to significantly improved oil market conditions and prospects for future growth,” Barkindo said in his opening remarks to the technical committee meeting.

A 500,000 b/d increase in quotas for August would bring the OPEC+ alliance’s collective production cuts down to about 5.3 million b/d, continuing the unwinding of the historic 9.7 million b/d cut that was implemented in May-July 2020.

The group’s compliance with its quotas has largely been solid, though overcompliance by some members, such as Saudi Arabia and Angola, has papered over lax discipline by others, notably Russia, Iraq, and Kazakhstan.

Inconsistent conformity has been a source of tension at previous OPEC+ meetings and could be another flashpoint as the alliance seeks to apportion a production increase. Under the deal, Iran, Libya, Venezuela, and Mexico are exempt from quotas.

The formal negotiations will kick off July 1 with OPEC’s 13 members meeting at 1 pm Vienna time (1100 GMT).

The nine-country OPEC+ Joint Ministerial Monitoring Committee co-chaired by Saudi Arabia and Russia, which had been scheduled to meet June 30, will instead convene after the OPEC meeting, delegates said.

Then Russia and nine other allies will join with OPEC for a full OPEC+ meeting beginning at 5 pm Vienna time (1500 GMT).

Related:               The worst of COVID-19 may be over, but it’s still a factor in the price of oil

GAS:

U.S. Supreme Court backs pipeline companies in New Jersey land dispute
Reuters, June 29, 2021

The U.S. Supreme Court on Tuesday ruled in favor of a consortium of energy companies including Enbridge Inc seeking to seize land owned by New Jersey to build a $1 billion natural gas pipeline despite the state’s objections.

The 5-4 ruling, authored by conservative Chief Justice John Roberts, handed a victory to PennEast Pipeline Company LLC, a joint venture seeking to build the 116-mile (187-km) pipeline from Pennsylvania to New Jersey. The justices overturned a lower court ruling in favor of New Jersey’s government.

Other companies joining Enbridge in the consortium include South Jersey Industries Inc, New Jersey Resources Corp (NJR), Southern Co and UGI Corp.

The court ruled that a 1938 U.S. law called the Natural Gas Act that lets private energy companies seize “necessary” parcels of land for a project if they have obtained a certificate from the Federal Energy Regulatory Commission (FERC) can be applied to state-owned land.

The law effectively gives private companies the power of eminent domain in which government entities can take property in return for compensation.

“Specifically, we are asked to decide whether the federal government can constitutionally confer on pipeline companies the authority to condemn necessary rights-of-way in which a state has an interest. We hold that it can,” Roberts wrote for the court.

The court, which has a 6-3 conservative majority, was divided on non-ideological lines. Roberts was joined in the majority by two conservative justices, Samuel Alito, and Brett Kavanaugh, and two liberals, Stephen Breyer, and Sonia Sotomayor.

Roberts wrote that the U.S. Constitution’s 11th Amendment, which prevents courts from hearing certain lawsuits against states, does not bar the lawsuit, as the state had argued.

FERC in 2018 approved PennEast’s request to build the pipeline. The company then sued to gain access to properties along the route.

New Jersey did not consent to PennEast’s seizure of properties that the state owns or in which it has an interest.

PennEast wants the land to build a pipeline designed to deliver 1.1 billion cubic feet per day of gas – enough to supply about 5 million homes – from the Marcellus shale formation in Pennsylvania to customers in Pennsylvania and New Jersey.

After a federal judge approved the property seizure, the Philadelphia-based 3rd U.S. Circuit Court of Appeals ruled in 2019 that PennEast could not use federal eminent domain to condemn land controlled by the state, prompting the appeal to the Supreme Court.

MINING:

Copper price set for smallest quarterly gain since March 2020
Mining.Com, June 30, 2021

Copper prices rose on Wednesday but were set for their smallest quarterly gain since March 2020 on pressure from a firm dollar and China’s efforts to tame a red-hot metals rally.

Copper for delivery in September rose 1.6% from Tuesday’s settlement price, touching $4.335 per pound ($9,537 per tonne) midday Wednesday on the Comex market in New York.

Click her for an interactive chart of copper prices.

POLITICS:

Murkowski has the moxie to take on Trump. Will she?

How energy will steer the Alaska Senate race

CLIMATE CHANGE:

Enbridge Raises Funds from Sustainability Bonds in Climate-Goal Push
Pipeline & Gas Journal, June 30, 2021

Enbridge Inc said on Monday it has closed its inaugural sustainability-linked bond (SLB), the first company in the midstream sector to raise sustainable bonds in North America, as it moves a step closer to its environment goals.

Enbridge said in a statement that as part of a larger $1.5 billion financing, it issued a $1 billion 12-year term senior note, integrating emissions and inclusion goals into the financing terms.

The energy infrastructure firm said it also closed a 30-year $500 million term senior note issuance with a coupon of 3.4%.

The SLB carries a coupon of 2.5%, Enbridge said, adding that the proceeds from the issuance will be used mainly to repay existing indebtedness, partially fund capital projects.

The Calgary, Alberta-based company had published a framework of the SLB a few weeks ago that laid out the principles for bond issuance and performance indicators that impact its borrowing costs.

Enbridge has been under the scanner of environmental campaigners as they have argued for years that there is a risk its Line 5 oil pipeline in Michigan, built in 1953, could rupture in the Straits of Mackinac.

Biden redefining waters – again. Selling infrastructure deal amidst green angst.

by wp_sysadmin | Jun 29, 2021 | News

NEWS OF THE DAY:

Democrats in Oil Country Worried by Party’s Natural-Gas Agenda
Siohban Hughes, Aaron Zitner, The Wall Street Journal, June 29, 2021

Democratic Party progressives are pushing President Biden to include in his infrastructure agenda stringent measures to address climate change, including policies designed to end the nation’s reliance on natural gas as a fuel source.

The more the progressives succeed, the more moderate Democrats in energy-producing states become vulnerable to losing seats that are crucial to the party’s hold on Congress, current and former House members say.

The White House announced a deal last week with centrist lawmakers in the Senate on a roughly $1 trillion package focused on traditional infrastructure such as roads and bridges. On a separate track, Democrats are advancing a second bill—without Republican input—that among other goals aims to eliminate greenhouse-gas emissions from electric power generation by 2035.

The Democrats have a similar target of 2050 for other emissions sources, including factories, trucks, automobiles and homes. That is a political headache for moderates such as Rep. Lizzie Fletcher (D., Texas), who in 2018 flipped a Republican-held House seat. Ms. Fletcher’s Houston-area House district ranks second in the nation for employment tied to the oil and gas industries, according to the American Petroleum Institute.

“Gas is a part of our energy mix, “said Ms. Fletcher. She has overcome Republican attack ads portraying her as a problem for the natural-gas industry with a message that contrasts with that of the rest of her party: “I think it will be a part of our energy mix well into the future.”

Energy policy is high on the list of issues creating strife among Democrats, along with other themes such as universal healthcare and police reform. Energy would be at the center of the second, all-Democrat infrastructure bill, which would require support from centrists—including Sen. Joe Manchin, who hails from West Virginia, a fracking state—given the Democrats’ narrow 220-211 majority in the House and the evenly divided Senate.

Some moderates are distancing themselves from the progressive push to increase regulation of natural gas extraction. In January, four Texas House Democrats wrote to Mr. Biden asking him to abandon an executive order suspending new oil and gas leases on federal public lands and waters.

Along with Ms. Fletcher, the letter was signed by Reps. Vicente Gonzalez, Henry Cuellar, and Marc Veasey, who said Mr. Biden’s policy “would have far-reaching negative consequences,’’ including the “near-term loss of potentially one million jobs.’’

Texas is the nation’s top producer of natural gas, according to U.S. government statistics, and gas production is a key economic driver in the country as a whole. A fracking boom in recent decades enabled the U.S. to tap into vast new sources of domestic energy. Gas displaced coal in 2016 as the biggest source of U.S. electricity and helped the U.S. become a net fuel exporter for the first time since the 1950s.

Natural gas not only fuels power grids but is used in factories and homes by businesses and consumers alike. Revenues from natural gas production contribute to federal, state and local government budgets. And gas industry jobs pay about twice as much as the U.S. average.

The oil and gas industries are big employers in several competitive House districts that Democrats won or lost by narrow margins in 2020. They include the Texas districts represented by Ms. Fletcher and Mr. Gonzalez, both of whom won re-election by about 3 percentage points.

Those districts rank among the top 15 of all congressional districts for employment tied either directly or indirectly to the oil and gas industries as of 2019, data from the American Petroleum Institute show. So do two House districts that Democrats picked up in 2018 only to lose in 2020, in New Mexico and Oklahoma.

“Texas voters get pretty anxious when they start thinking that their wages are going to go down,” said Rep. Filemon Vela (D., Texas), who isn’t running for re-election next year.

“There’s no guarantee,” Ms. Vela said. “Nobody’s told them, ‘We’ve got a new job for you. It’s going to pay as much as you’re making now.’”

For years, natural gas escaped the scrutiny directed at oil and coal because it released half as much carbon-dioxide as coal when burned for electricity. When investor T. Boone Pickens, a Republican, touted gas, his pitch resonated with Democrats. “I’ve been converted,” said former Senate Majority Leader Harry Reid (D., Nev.) in 2009. “I now belong to the Pickens church.”

Scientists later determined that pipeline leaks of methane, a large component of natural gas, wiped out much of its climate advantages, given that methane is more than 25 times as potent as carbon dioxide in trapping gas in the atmosphere. The Obama administration sought to make gas more climate-friendly through regulation aimed at controlling methane leaks. After the Trump administration reversed those efforts, the Senate and House reinstated the rules in a measure that Biden is soon expected to sign into law.

The House Energy and Commerce Committee has drafted legislation that treats gas as a clean energy so long as its emissions can be used, captured or sequestered. But the industry has struggled to commercialize the technology needed to capture them. Many Democrats now say the goal should be to switch away from natural gas entirely rather than invest new money in gas infrastructure that may propagate emissions for decades.

Senate Majority Leader Chuck Schumer (D., N.Y.) is pushing measures to provide incentives to reduce electricity emissions 80 percent by 2030. That is consistent with Mr. Biden’s jobs plan, which calls for 100% carbon-free electricity by 2035.

“You’re producing carbon dioxide, so you want to do everything you can to have as fast a transition as possible off of natural gas,” said Sen. Jeff Merkley (D., Ore.), who says he refuses to back any infrastructure package that lacks robust measures to respond to climate change.

Senate Minority Leader Mitch McConnell (R., Ky.) saw political opportunity in a similar dynamic a decade ago, when he and his Republican colleagues hammered Democrats for “waging a war” on coal, an industry Democratic administrations had targeted as uniquely dangerous to the environment. The attacks helped Republicans retake the Senate in 2014 and changed the U.S. political map.

In 2005, the heart of Appalachian coal country was dotted with Democratic-leaning districts. Now, those same areas, cutting through states like Pennsylvania or Ohio, have turned Republican as coal miners blamed job losses on Obama-era policies. More than a dozen House seats in the region that were held by Democrats in 2005 are held by Republicans today.

Former Democratic Rep. Nick Rahall of West Virginia lost his seat in 2010 when the industry blamed him for not fighting harder against legislation to combat climate change. “If we ignore these people,” Mr. Rahall said, “we will never win states in the future like Pennsylvania, West Virginia, Ohio, even Indiana, Illinois.”

The 2020 elections showed the vulnerability that some energy-state Democrats feel from the perception that their party isn’t supportive of the industry. House candidates in Texas, New Mexico, Oklahoma and Pennsylvania told voters that they were independent from their party on energy policy and would support energy extraction.

“If Washington or members of my own party try to ban fracking,” said Xochitl Torres Small, a Democrat from New Mexico, in a 2020 television ad seeking re-election, “they’ll have to come through me.’’

Ms. Torres Small lost her 2020 re-election bid after a single term.

OIL:

Oil firms as demand hopes outweigh rise of COVID-19 variant
Noah Browning, Reuters, June 29, 2021

• Market broadly expects COVID-19 vaccines to bolster oil demand
• Delta variant prompts new travel curbs
• OPEC+ to meet on July 1 to discuss output increase

MELBOURNE, June 29 (Reuters) – Oil prices rose on Tuesday as broad hopes for a demand recovery persisted despite new outbreaks of the highly contagious Delta variant of the coronavirus prompting fresh mobility curbs worldwide.

Brent crude futures were up 50 cents, or 0.7%, at $75.18 a barrel by 1400 GMT, having slumped by 2% on Monday.

U.S. West Texas Intermediate (WTI) crude futures rose 55 cents, or 0.8%, to $73.46 after a 1.5% retreat on Monday.

“From a global perspective, there are seemingly growing concerns over the increase in the COVID-19 Delta variant,” said StoneX analyst Kevin Solomon.

“The market has grown relatively immune to COVID-19 developments, but if lockdowns occur in larger demand centers in Asia, we may see the market’s nonchalance abate.”

Spain and Portugal, favorite summer holiday destinations for Europeans, imposed new restrictions on unvaccinated Britons on Monday, while Australians also faced tighter curbs owing to flare-ups of the virus across the country. read more

However, the market still expects the rollout of vaccination programs to brighten the demand outlook, analysts said.

“The narrative of the past few months has not changed: the war against the virus is being gradually won, the global economy and oil demand are recovering,” said PVM Oil analyst Tamas Varga.

“Oil supply is being effectively managed. Therefore, dips are probably viewed by ardent bulls as attractive buying opportunities.”

The virus flare-up comes as the Organization of the Petroleum Exporting Countries (OPEC), Russia and allies, together known as OPEC+, are set to meet on July 1 to discuss easing their supply curbs.

OPEC’s demand forecasts show that in the fourth quarter global oil supply will fall short of demand by 2.2 million barrels per day (bpd), giving the producers some room to agree to add output. read more

Analysts expect OPEC+ to step up supply in August because the market has tightened on strong growth in fuel demand in the United States and China, the world’s two biggest oil consumers.

Investors will be looking to the latest U.S. inventory data for cues on the demand outlook. Crude stocks are likely to have extended their fall for a sixth straight week while gasoline stocks are also expected to have declined, a preliminary Reuters poll showed.

GAS:

FERC repeats it cannot assess gas project’s climate impact in expanded review
Corey Paul, S & P Global Platts, June 28, 2021

The US Federal Energy Regulatory Commission has released the draft version of an additional climate review of a pending Columbia Gulf Transmission pipeline project in Louisiana, finding once more that agency staff could not draw conclusions about the significance of natural gas projects’ contributions to climate change.

The pipeline developer’s eight-mile, 725 MMcf/d East Lateral XPress Project is one of five pending gas projects that received a May 27 notice from FERC, saying the regulator planned to perform additional environmental assessments of their potential contributions to climate change. The draft environmental impact statement issued by FERC on June 25 marked the third draft review issued for projects on track to receive the additional consideration of climate change impacts (CP20-527).

The conclusions reached by FERC staff are similar in the three draft reviews released so far, underscoring the uncertainty for developers of gas projects as the regulator develops its approach to assessing climate change impacts.

“Commission staff conclude that construction and operation of the project would not result in significant environmental impacts, with the exception of climate change impacts, where FERC staff is unable to determine significance,” the draft review for the East Lateral XPress Project said.

FERC Chairman Richard Glick has defended the added climate reviews, saying they will strengthen the legal durability of permitting decisions and that it remains up to commissioners to work out how to determine the significance of projects’ contributions to global warming. Glick has also said the commission would analyze climate impacts of pipeline projects on a case-by-case basis while it prepared a potential update to the agency’s decades-old policy for permitting pipelines.

“From my perspective, I do see the analyses that are going to come down from the environmental impact statements as potentially helping the commissioners, including myself, determine whether the emissions associated with those projects are significant,” Glick told reporters June 17. “In my opinion, we can make that analysis, we should make that analysis, and the courts have told us we have to do that analysis.”

Each of the five projects being subjected to the expanded reviews already received less-extensive environmental assessments from FERC. Each of the projects had also been protested.

The recommendations on assessing climate could evolve by the time final environmental impacts for the projects are finished, and Glick said he would be “comfortable going forward” with decisions on certificate applications once they are. FERC has said it plans to release final environmental impact statements in the fall and that the expanded reviews would build off the environmental assessments that had already been completed.

Columbia Gulf, a subsidiary of TC Energy, filed an application at FERC for the East Lateral Xpress Project in September 2020. The project would add 183,000 Dt/d of incremental gas transportation capacity and feed Venture Global LNG’s proposed Plaquemines LNG export terminal south of New Orleans. Combined with existing capacity, the project would allow for open access firm transportation service of up to 725,000 Dt/d on the East lateral. The Plaquemines LNG project has not yet been commercially sanctioned by Venture Global.

The previous two projects to receive the expanded climate reviews were Iroquois Gas Transmission System’s 125 MMcf/d Enhancement by Compression Project in Connecticut and New York (CP20-48) and Adelphia Gateway’s Marcus Hook Electric Compression Project, proposed under a blanket certificate in Pennsylvania (CP21-14).

The remaining two gas projects that received notices on May 27 that they should expect added environmental impact statements were TC Energy’s 495 MMcf/d North Baja XPress project in Arizona and California (CP20-27) and Tennessee Gas Pipeline’s 115 MMcf/d East 300 Upgrade Project in New Jersey and Pennsylvania (CP20-493). The FERC notices indicated that the draft environmental impact statements would be issued in June or July.

MINING:

Biden seeks federal mining law overhaul
Shane Lasley, North of 60 Mining News, June 24,2 02

From reinstating the Roadless Rule in the Tongass Forest to replacing the General Mining Law of 1872, federal regulations being proposed by President Joe Biden threaten to rain on a parade of strong metals prices, growing demand for critical minerals, and robust investments into mineral exploration and mining across Alaska.

“We recommend Congress develop legislation to replace outdated mining laws including the General Mining Law (GML) of 1872 governing locatable minerals (including nickel) on federal lands, the Materials Disposal Act of 1947 to dispose of minerals found on federal lands, and the Mineral Land Leasing Act of 1920 among others,” the Biden administration penned in a June 8 statement on battery supply chains. “These should be updated to have stronger environmental standards, up-to-date fiscal reforms, better enforcement, inspection and bonding requirements, and clear reclamation planning requirements.”

While a complete overhaul of these regulations could have wide-reaching effects on how mining companies explore for and produce minerals on federal lands, the Environmental Protection Agency’s plans to once again broaden the definition of “waters of the United States” could have much wider implications for domestic mining across the nation, and especially Alaska.

“For the Biden administration and the EPA to redefine waters is nothing more than a naked power grab for federal rule from Washington, D.C.,” Alaska Gov. Mike Dunleavy commented on EPA’s June 9 announcement of plans to redefine WOTUS.

The mining reform proposals come at a time when the U.S. is going to need much larger quantities of the copper, graphite, rare earths, and other raw materials that Alaska could feed into the reliable and secure electric vehicle and renewable energy supply chains being sought by the White House.

“With the global lithium battery market expected to grow by a factor of five to ten by 2030, it is imperative that the United States invests immediately in scaling up a secure, diversified supply chain for high-capacity batteries here at home,” the White House penned in a June 8 statement on battery supply chains. “That means seizing a critical opportunity to increase domestic battery manufacturing while investing to scale the full lithium battery supply chain, including the sustainable sourcing and processing of the critical minerals used in battery production all the way through to end-of-life battery collection and recycling.”

Redefining waters, again

The reason Dunleavy is concerned about a potentially new and expanded redefinition of WOTUS is that Alaska would be disproportionately affected.

“Nearly half the nation’s water is within Alaska, with over three million lakes, 365,000 miles of rivers, and countless unnavigable glaciers, permafrost, and wetlands,” the Alaska governor penned in a June 12 statement.

According to federal agency surveys, nearly 175 million acres, or more than 43% of the surface area of Alaska, are already considered wetlands.

With a broader definition of what is considered waters of the U.S., it is expected that much larger swaths of the state would fall under the federal Clean Water Act and the burdensome regulatory requirements that come with that. Mining, road construction, pipeline and utility installations, commercial, and even residential construction would be affected by an expanded WOTUS definition.

This has been a hot topic since the Obama administration set out to broaden the definition of U.S. waters in 2014.

Tributaries under a WOTUS rule finalized in 2015 would have included anything that remotely resembled a stream – a bed, bank, and ordinary high-water mark – even arroyos and other gullies where water only flows during infrequent heavy rainfall events. Nearby waters, including wetlands and other watery features within 1,500 feet of navigable waters and sometimes such features within 4,000 feet of high tide or high-water mark of a stream, also would have been covered under the rule.

Even if a small portion of one of these neighboring wet features falls within the guidelines, the entire body falls under the new WOTUS rule, regardless of its connection to downstream waters.

For Alaska – with by far America’s largest coastline and wetlands inventory, along with plentiful rivers, streams, and rivulets – this redefining of U.S. waters would have resulted in vast swaths of state-regulated lands falling under the federal Clean Water Act and the regulatory agencies that administer it.

This 2015 definition, however, was never fully implemented due to federal courts blocking it until a lawsuit brought by nearly 90 parties, including 32 states, was resolved.

Almost immediately after taking office, Trump signed a presidential order to undo Obama’s WOTUS rule.

“The EPA’s so-called ‘Waters of the United States’ rule is one of the worst examples of federal regulation, and it has truly run amok,” the former president said during the February 2017 signing of the order.

Trump’s order resulted in the Navigable Waters Protection Rule, which included a more traditional definition of waters of the U.S. – seas, lakes, rivers, ponds, and wetlands. The 2020 rule expressly excluded features that only contain water in direct response to rainfall, groundwater, many ditches, and prior converted cropland.

Now, the Biden administration has instructed the EPA and Department of the Army to again broaden the definition of WOTUS “to better protect our nation’s vital water resources.”

“We are committed to establishing a durable definition of ‘waters of the United States’ based on Supreme Court precedent and drawing from the lessons learned from the current and previous regulations, as well as input from a wide array of stakeholders, so we can better protect our nation’s waters, foster economic growth, and support thriving communities,” said EPA Administrator Michael Regan.

Upon review of the Navigable Waters Protection Rule, the EPA and Army identified 333 projects that would have previously been subjected to federal Clean Water Act Section 404 permitting but were reverted to state permitting under the Trump rule.

As a result of these findings, EPA said the U.S. Department of Justice has filed a motion requesting the court to remand the Navigable Waters Protection Rule.

“Today’s action reflects the agencies’ intent to initiate a new rulemaking process that restores the protections in place prior to the 2015 WOTUS implementation and anticipates developing a new rule that defines WOTUS and is informed by a robust engagement process as well as the experience of implementing the pre-2015 rule, the Obama-era Clean Water Rule, and the Trump-era Navigable Waters Protection Rule,” EPA penned in its June 9 announcement.

Dunleavy sees the administration’s attempts to undo the Navigable Waters Protection Rule and reinstate WOTUS definitions similar to those established while Vice President Biden was in office as a move that would put vast swaths of Alaska off-limits.

“Make no mistake, the ability of Alaskans to harvest timber, develop oil and gas, mine the critical minerals needed for national security, and the ability to farm and hunt are in danger with this announcement, the Alaska governor wrote. “It would be less insulting to the State of Alaska if the Biden EPA came out transparently with its intent to turn our land into a national park under the management of rangers.”

Roadless rule revisited

While not as far-reaching in its scope, the Biden administration’s plans to “repeal or replace” a Trump-era decision that exempts the Tongass National Forest from the 2001 Roadless Rule has wide implications for mining and other development in Southeast Alaska.

Established by the Clinton administration in 2001, the roadless rule prohibited road building and logging on 58.5 million acres of national forest lands, including more than 9.2 million acres of the Tongass National Forest.

While primarily established to impede logging, the roadless nature of the rule also makes it difficult to carry out other activities.

Considering the 16.8-million-acre Tongass Forest extends for more than 500 miles and covers roughly 80% of the Southeast Alaska Panhandle, the 2001 ruling stifled economic opportunities in that part of the state.

“As Alaskans know well, the roadless rule hinders our ability to responsibly harvest timber, develop minerals, connect communities, or build energy projects to lower costs – including renewable energy projects like hydropower, all of which severely impedes the economy of Southeast,” Sen. Dan Sullivan, R-Alaska said in 2019.

Due to Southeast Alaska’s unique situation, the Bush administration exempted the Tongass from the Roadless Rule in 2003, only to have the conservation measure re-instated by U.S. District Judge John Sedwick in 2011.

Acting on a 2018 state of Alaska petition to establish a more permanent exemption, the Trump administration enacted the Alaska Roadless Rule in October of last year. While this lifted the roadless restrictions on large swaths of the forest, more than 7 million acres remain highly protected. This includes 5.8 million acres of Tongass Forest covered by 19 wilderness areas that are completely off-limits to development with the exemption of some subsistence uses of resources by Alaska Natives.

Stating that “the Trump administration’s decision on the Alaska roadless rule was controversial and did not align with the overwhelming majority of public opinion across the country and among Alaskans,” the U.S. Forest Service recently announced plans to once again reinstate 2001 Roadless Rule protections for the entire Tongass.

Much like WOTUS, Dunleavy sees this proposed move by the Biden administration as an affront to Alaska’s economic wellbeing.

“I am yet again disappointed in the Biden Administration’s latest suppression of Alaska’s economic opportunity,” the governor penned in a June 11 statement. “From tourism to timber, Alaska’s great Tongass National Forest holds much opportunity for Alaskans, but the federal government wishes to see Alaskans suffer at the lack of jobs and prosperity. North to the Future means North to Opportunity, and we will use every tool available to push back on the latest imposition.”

Mining law revamp

The Biden administration’s rule changes that could disproportionately affect mine permitting and development in Alaska comes at a time when the president is making a push to secure America’s supply chains that will require massive inputs of the minerals and metals the 49th State have to offer, especially for the EV and green energy transition envisioned by the White House.

The administration addressed the battery metals and other critical minerals needed in a June report that followed a 100-day assessment of the vulnerabilities to America’s supply chains.

In preparation for the “sustainable sourcing and processing of the critical minerals used in battery production all the way through to end-of-life battery collection and recycling,” the White House is assembling a working group of federal agencies led by the U.S. Department of Interior and supported by the White House Office of Science and Technology Policy to identify sites where critical minerals can be responsibly produced and processed in the U.S.

“This working group will collaborate with the private sector, states, Tribal Nations, and stakeholders – including representatives of labor, impacted communities, and environmental justice leaders – to expand sustainable, responsible critical minerals production and processing in the United States,” according to a statement outlining the administration’s strategy to strengthen supply chains.

The White House, however, wants to ensure that any such critical mineral projects are developed at the highest standards for environmental protections.

To identify gaps in mining-related statutes and regulations that may need to be updated by Congress, the White House is assembling a second federal interagency team composed of staff from DOI, USDA, EPA, and others with expertise in mine permitting and environmental law.

Information collected by this group will be used for an expected push for U.S. lawmakers to establish a whole new mining regulatory framework with strong environmental standards throughout the entire mine life, from development to reclamation.

“We recommend Congress develop legislation to replace outdated mining laws including the General Mining Law (GML) of 1872 governing locatable minerals (including nickel) on federal lands, the Materials Disposal Act of 1947 to dispose of minerals found on federal lands, and the Mineral Land Leasing Act of 1920 among others,” the Biden administration wrote. “These should be updated to have stronger environmental standards, up-to-date fiscal reforms, better enforcement, inspection and bonding requirements, and clear reclamation planning requirements.”

The three laws cited by the White House, however, are not related to the environmental regulations governing mining in the U.S. Instead, they detail how federal lands are prospected and staked (Mining Law of 1872); how minerals on federal lands are sold or leased (Materials Disposal Act of 1947); and royalties on mineral products on federal lands (Mineral Land Leasing Act of 1920).

Much of the federal regulations relating to environmental standards and permitting process for mining projects in the U.S. are found within the Clean Water Act and National Environmental Policy Act.

The NEPA process is both renowned for its strong environmental protections and infamous for the nearly a decade it takes for a large domestic mine in the U.S. to gain permits under its process.

“Mine permitting in the U.S. takes on average seven to 10 years, and often longer,” National Mining Association President and CEO Rich Nolan wrote in a February column for RealClearEnergy. “In Canada and Australia, nations with comparably robust environmental standards, permitting is achieved in just two to three years.”

Earlier this year, the Biden administration indicated that it would look to these jurisdictions with more efficient mine permitting processes to feed much of the needed minerals and metals into American supply chains.

A March 18 Reuters article said, “Washington is increasingly viewing Canada as a kind of ’51st State’ for mineral supply purposes and plans to deepen financial and logistical partnerships with the country’s mining sector over time, according to a U.S. government source.”

Dunleavy questions the logic of this when the administration could further spur America’s economy by focusing on the mineral wealth in the 49th State.

“Alaska has nearly all the minerals & rare earths needed to provide a domestic supply for electric vehicle manufacturers,” the Alaska governor posted on Facebook following the Reuters article. “President Joe Biden, why would you send jobs & investments to Canada, when we can do this in the USA?”

The Biden administration has signaled that despite efforts to redefine WOTUS and prompt Congress to undertake a massive overhaul of U.S. mining law, it would like to see the process for permitting domestic mines feeding minerals and metals into U.S. supply chains streamlined.

As such, the White House is directing the federal mining regulation working group to fully explore “opportunities to reduce time, cost, and risk of permitting without compromising strong environmental and consultation benchmarks.”

This echoes legislation recently introduced by Sen. Lisa Murkowski, R-Alaska – S.1352: A bill to improve the quality and timeliness of federal permitting and review processes with respect to critical mineral production on federal land, and for other purposes.

The legislation introduced by Murkowski in April and cosponsored by ten senators aims to improve the efficiency and effectiveness of the U.S. permitting process by requiring federal agencies to:

• Establish clear timelines for decisions regarding applications, operating plans, leases, licenses, permits, and other use authorizations for critical mineral-related activities on federal land.

• Create clear, quantifiable permitting performance goals and to track progress toward those goals.

• Engage in early collaboration with agencies, stakeholders, project sponsors, and consult with state, local, and tribal governments to resolve concerns.

• Provide clear and logical ways to make the process cost-effective and timely.

“America’s reliance on foreign countries for the production and recycling of our critical minerals is a vulnerability to our national security, a disadvantage to our economy, and a hindrance to our global competitiveness,” Murkowski said. “By improving the permitting processes, we have in place, we are creating greater opportunity for America to rebuild a robust domestic critical minerals supply chain.”

The White House seems to agree that the federal mine permitting proposal introduced by Murkowski is in the best interest of strengthening America’s supply chains. The administration, however, will likely also want to see federal jurisdiction of domestic mine permitting expanded.

POLITICS :

Alaska House votes to avert government shutdown, send budget to Gov. DunleavyJ
James Brooks, Anchorage Daily News, June 29, 2021

The Alaska House of Representatives has approved a state budget that will avert a government shutdown, and Gov. Mike Dunleavy said he will sign it.

In a 28-10 vote on Monday, the House approved the “effective date clause,” which allows the budget to take effect July 1, the start of the state’s fiscal year.

“Once I receive the budget, and review individual items, I will make a decision on possible line-item vetoes and prepare the budget for implementation on July 1,” Dunleavy said in a brief written statement. “This action will avert a government shutdown.”

The vote ended almost two weeks of uncertainty caused when House Republicans voted against the clause.

Other legislators urged Dunleavy to sign the budget without the start date, but Dunleavy said doing so would be unconstitutional. The Alaska Department of Law said that without the clause, Alaska would have no budget until September. That would have caused a government shutdown starting July 1. Thousands of state workers would have been laid off, many state services would have been suspended and many state-paid contractors would have been forced to stop work.

“We’ve got a lot of Alaskans that are probably jumping for joy about now thinking that their paychecks are going to continue on coming,” said Speaker of the House Louise Stutes, R-Kodiak.

The House and Senate adjourned an ongoing special session immediately after the House approved the effective date clause.

That clause required two-thirds of the House and two-thirds of the Senate to agree. Fully funding the budget as written requires three-quarters of the 40-member House and three-quarters of the 20-member Senate. Neither the House nor Senate have passed the budget by the needed margin.

As a result, the Permanent Fund dividend in the budget is cut to $525, and there will not be enough moneyfor programs that subsidize the cost of rural home electricity and pay college scholarships to Alaska high school students. Some construction projects in the Matanuska-Susitna Borough are also defunded.

But lawmakers believe those issues will be resolved later this summer or in the fall, during an upcoming special session of the Legislature. Dunleavy could intensify the need for a fix by vetoing affected items

Those problems have been secondary to the prospect of a total government shutdown.

“We’ve been so focused on not shutting down this state that I haven’t taken that next step,” Stutes said.

Failed leverage led Alaska to the brink of a shutdown

Alaska’s House of Representatives is divided between an 18-member Republican minority and a 21-member majority coalition that includes Democrats, Republicans and independents. Rep. Sara Rasmussen, R-Anchorage, is not a member of either group.

For weeks, members of the minority have asked for action on a long-term state fiscal plan. The specific requests have varied. Kenai Republican Rep. Ron Gillham asked for a lengthy list of things including changes to the state’s constitutional spending cap and “a 15% cut across the board from all departments.”

One of his requests — and one repeated by many minority Republicans — is a constitutional amendment proposed by Dunleavy. That amendment would increase the dividend to about $2,350 per person if approved by voters next year.

But the proposal has been opposed by legislators in the House and Senate who say it is unaffordable without major new taxes. The Dunleavy administration’s projections call for $500 million in new taxes or spending cuts, plus spending from the Permanent Fund beyond a limit set by the Legislature in 2018.

Republicans sought to use the vote on the effective date — and the vote on fully funding the budget — as levers to move the majority, but neither side was willing to budge.

That led the state to the brink of a shutdown.

Members of the majority suggested Dunleavy could sign the budget without the effective date clause, but the governor said he believes that would be an unconstitutional act.

Attorney General Treg Taylor has sued a legislative agency in an attempt to force a legal decision on the matter.

Taylor said Monday that he intends to continue with the lawsuit. Courtroom arguments are scheduled for Tuesday, with an initial verdict afterward.

In addition to the legal maneuvering, the House majority and minority had been talking behind closed doors for days about a deal to end the deadlock in the House.

The details of that deal were revealed Monday: The House and Senate will create a “bicameral nonpartisan working group” that will try to create a comprehensive state fiscal plan before the Legislature’s next special session. The Republican minority will appoint its own members to the working group, as will the House’s coalition majority, the Senate’s Republican majority and the Senate’s Democratic minority.

Miscommunications cause a tense final day

After a weekend of offers and counteroffers, Stutes and Tilton had one final meeting about the deal Monday morning. Because of miscommunications, Stutes said she left that meeting thinking the minority was unwilling to make a deal. Tilton said she believed negotiations were continuing and that a tentative schedule was in place.

“There was definitely some communication challenges there,” Tilton said.

Despite believing there was no deal, Stutes called for a vote anyway.

” I felt it was time that people knew where they stood, whether there was an effective date or there wasn’t,” Stutes said.

Three votes, each requiring approval from 27 House members, were necessary.

After two of the three votes, members of the minority asked for a break in order to vote on a “sense of the House,” a nonbinding statement that called for the creation of the budget working group.

The House took an extended break to finalize the wording of that document, allow legislators to read it, then vote upon it.

” It was a very, very heated discussion on how we were going to move forward,” Tilton said.

After legislators approved the creation of the working group, they voted to avert the shutdown.

Republican Reps. James Kaufman of Anchorage, Ken McCarty of Eagle River, Tom McKay of Anchorage, Laddie Shaw of Anchorage and Cathy Tilton of Wasilla switched and voted in favor of the effective date clause and against the shutdown.

Also voting yes was Rep. Sara Rasmussen, R-Anchorage, who was absent from the first vote and is not a member of either the majority or minority. All members of the majority voted in favor of the clause.

Voting no were Republican Reps. Ben Carpenter of Nikiski; Mike Cronk of Tok; David Eastman of Wasilla; Ron Gillham of Kenai; DeLena Johnson of Palmer; Christopher Kurka of Wasilla; Kevin McCabe of Big Lake; Mike Prax of North Pole; George Rauscher of Sutton; and Sarah Vance of Homer.

Excused absent from the votes were Reps. Tiffany Zulkosky, D-Bethel, and David Nelson, R-Anchorage. Nelson said he was at National Guard training that had been postponed from April. Zulkosky did not respond to a text message asking why she was absent.

Tilton said she isn’t completely satisfied with the outcome, though she voted against the shutdown. Members of the minority disagree with the idea of funding the dividend and some Mat-Su construction projects from special accounts, and that didn’t change in the final budget.

They also didn’t get a firm commitment on fiscal action in the next special session.

Two years ago, the House and Senate created a similar working group to advise the Legislature on the future of the Permanent Fund. That group’s recommendations were never implemented.

” That is a cause for concern,” Tilton said, “and especially — I think our members have said it on record — what does it take to make change happen?”

CLIMATE CHANGE :

White House sells infrastructure deal amid green angst
Ben Geman, Axios, June 29, 2021

The White House is trying to build support for clean energy and climate pieces of the $1.2 trillion bipartisan infrastructure outline at a time when activists are calling the plan far too modest.

Why it matters: The White House faces growing urgency to corral progressive lawmakers now that President Biden has abandoned threats to veto the plan unless a much larger, Democrats-only package moves too.

Driving the news: The sales pitch ramped up on several fronts Monday.

• Biden wrote an op-ed touting clean energy and climate provisions while acknowledging it’s missing some “critical” climate pieces that he “intends” to pass under the Democrats’ separate reconciliation plan.
• Two top White House aides, in a public memo, highlight the plan’s $49 billion for public transit, $15 billion for electric vehicle infrastructure and buses, and $73 billion in grid investments, among various other provisions.
• White House press secretary Jen Psaki opened her briefing by claiming the plan would make “unprecedented strides in climate and clean energy leadership” — while also emphasizing that Biden wants to go further.

The big picture: The efforts aim to promote much more than environmental provisions. Biden and his aides are talking up the measure’s spending on road, broadband, ports and more.

• But Democrats who prioritize global warming are among Biden’s needed constituencies in the fraught climb to get a deal through both chambers of Congress.
• On Monday activists with the Sunrise Movement, joined by progressive lawmakers including Alexandria Ocasio-Cortez and Jamaal Bowman, rallied near the White House under the banner of “no climate, no deal.”
• Even beyond Sunrise, which is on the green movement’s left flank, more Democratic-aligned groups like the League of Conservation Voters and Evergreen Action are pushing for big measures in a reconciliation plan.

Yes, but: White House officials are trying to navigate all kinds of political crosscurrents.

• The infrastructure bill and the reconciliation package both face huge political hurdles (and neither bill even exists yet). Senate Minority Leader Mitch McConnell has powerful leverage over the bipartisan framework, Axios’ Alayna Treene reports.
• The White House and Capitol Hill Democratic leaders face a thicket of competing interests — on both spending levels and policy — even within their party’s ranks as they craft a separate reconciliation package.
• A Wall Street Journal story last night explored concerns among Democratic lawmakers in natural gas-producing states about proposals to curb reliance on natural gas.

What’s next: Biden will pitch the infrastructure plan in a Wisconsin speech later today.

Frack King says: Drill, Baby Drill! AK Future Fund Invests in CORE.

by wp_sysadmin | Jun 28, 2021 | News

News of the Day:

‘Drill, Baby, Drill’ Is the Future
Andy Kessler, The Wall Street Journal, June 27, 2021

Fracking techniques could be used to generate energy with no carbon emissions.

Remember the cringeworthy “Drill, baby, drill” slogan from the 2008 Republican Convention? Maybe they were on to something, but not what you think. We’re bombarded daily with calls for sustainable, renewable and carbon chewable technologies to meet our energy needs. But the solution may be just underfoot.

Dig deep enough and, no surprise, it’s hotter than hell down there. Isotope reactions in the mantle under the Earth’s crust generate 20 terawatts of constant heat flow. Typically, the temperature rises about 25 degrees Celsius for every kilometer, or 75 degrees Fahrenheit for each mile, and more the deeper you go. The steam wafting out of hot springs in Yellowstone National Park or Iceland, places where the Earth’s crust is thin, shows how much heat the mantle gives off.

We already have a good-sized surface geothermal industry in the U.S. For $15,000 to $30,000, you can hire someone to dig a few hundred feet and install a heat pump that circulates heated water to keep your house cozy.

But that’s just scratching the surface. There is huge upside to digging down miles and injecting water into underground reservoirs—think radiators—and then the heated water is pushed back out to generate steam and electricity. It’s carbon-free—clean, green, and mostly unseen.

The trick is to get a large enough surface area to do the heat exchange. A typical vertical oil well might have 1,000 to 10,000 square feet of surface area. But it turns out that the same thing that’s been perfected over the past 30 years to make America energy independent can also increase that surface area—horizontal drilling and hydraulic fracturing.

I called one of the industry pioneers, University of Texas engineer Mukul Sharma, who is sometimes called the Frack King (get it?) and has a startup named Geothermix that develops enhanced geothermal systems.

Mr. Sharma walked me through the process. Millions of oil and gas wells have been drilled in the U.S. over the past century. Maps exist that show the thermal conductivity of underlying rock by region—suggesting how deep you’d have to drill to get a temperature hot enough to generate cost-effective electricity, typically 0.5 to 4 miles down. After drilling down you can then drill horizontally and hydraulically fracture the rock to create an underground reservoir. With this technique you could get 10 million to 20 million square feet of surface area for the heat exchanger, thousands of times more than a standard well.

Mr. Sharma thinks we’ll have several commercially viable deep geothermal systems operating in the next five years, maybe costing $10 million to $15 million each, from his company and others like Sage Geosystems and Fervo Energy. He thinks by 2030 we’ll have second- and third-generation systems operating much more efficiently, just as fracking constantly gained in output as technology improved.

The promise of geothermal energy keeps getting better. The deeper you drill, the hotter the rock, and at maybe 10 kilometers, temperatures can reach 373 degrees Celsius or higher. The water that emerges is what physicists call “supercritical,” which means it holds more energy and can be 10 times as efficient doing heat exchange. A lot of invention is still required, especially for high-heat materials and drills that can operate at such high temperatures—not a trivial problem, but not insurmountable. For now, Mr. Sharma says, “the costs go up exponentially as you dig deeper and hotter.” A supercritical-water geothermal system might cost $50 million. But it might be worth it. Some scientists even think drilling into volcanoes might make sense.

Further in the future, we may not even need to fracture the rock, but instead use horizontal drilling and pipes to run fluid through closed-loop systems, with the heat exchange done through the pipes. You could do this anywhere if you drill deep enough, under New York or any other city.

So why are so few talking about deep geothermal? Eco-warriors seem to pine only for solar panels, carbon sinks and bird-slicing wind turbines. Maybe because anything having to do with drilling is considered dirty, even if deep geothermal is carbon-free. The knock on enhanced geothermal systems is the same as for fracking: Critics go on about the risk of seismic activity. But according to Mr. Sharma, that’s a canard. He says seismic activity from fracking wells is “fairly uncommon” and would be even less so with deep geothermal, because the wells are much deeper and you’re merely “circulating fluids” after the initial drilling to create the underground hot reservoir.

It’s early but, like fracking, this technology could change the energy industry over the next 20 to 30 years. Those that can absorb the risk could see huge rewards. Mark Twain once said, “Go to Heaven for the climate, Hell for the company.” Maybe toward hell for both. Drill, baby, drill.

OIL:

Oil and gas exports give the US a strategic geopolitical tool
Ellen R. Wald, The Hill, June 28, 2021

Earlier this month, Judge Terry Doughty of the Western District of Louisiana lifted the Biden administration’s attempt to halt lease sales for oil and gas production on federal lands and waters. Doughty issued a preliminary injunction on the administration’s plan after 13 states sued. The lease of federal lands for oil and gas production provides millions of dollars of revenue for the states and local governments and economies. Beyond the legal arguments, though, the resumption of federal land leases is critical to pursuing America’s geopolitical goals. 

The United States is blessed with an abundance of natural resources, among them plentiful reserves of oil and natural gas. We can either use these resources to our own advantage, both domestically and as exports, or we can cripple our own energy production, limiting our potential. In this decision, we must consider that exported fuel is not only a source of wealth; it is also a powerful tool of geopolitical influence. 

It can be tempting to dream of a world that uses less fossil fuel, but the Biden administration’s plan to halt lease sales would do nothing to further this aspiration. Rather, the Biden administration’s plan would curb only domestic oil and gas production, not consumption. In other words, it would cut supply while demand keeps rising. 

The immediate result would be two-fold: higher prices and increased imports, often from countries that don’t align with our interests. Supply would stagnate or drop if domestic oil and gas production is not allowed to prosper. When supply is lower and demand continues to rise, as it inevitably will, prices rise. Under the Biden plan, we would pay more for our oil and gas. 

President Obama lifted the ban on exporting U.S. produced oil in 2015. From then until 2020, U.S. exports grew while imports shrunk to the point where the U.S. actually exported more crude oil and petroleum products than it imported. Increased natural gas production not only enabled the U.S. to reduce coal use in favor of cleaner natural gas, but to start exporting liquified natural gas to other countries. And now the prices for these commodities are rising, so we should be experiencing an economic boon.

However, many oil producers are neglecting to pursue new projects, because they are wary of the Biden administration’s plans for oil and gas drilling. U.S. production is holding steady at 11 million barrels per day, whereas before in 2019, production was at 13 million barrels per day. The U.S. is now, again, a net importer of petroleum instead of a net exporter. Oil and gas demand, meanwhile, is within a hair of May 2019 levels. If the Biden administration continues to constrain production on federal land, we are heading toward a situation in which, despite vast and accessible resources, the U.S. once again would rely on foreign oil and natural gas. 

Energy exports aren’t just about trade and growing the U.S. economy. In oil and gas exports, the U.S. holds a critical strategic geopolitical tool. For example, the Trump administration, in its Phase 1 trade deal with China, negotiated a requirement for China, the world’s largest oil importer, to purchase large amounts of American oil and petroleum products. In another part of the world, America’s abundance of natural gas can be used to counteract Russia’s influence on Europe. Through deals like the one recently concluded between the U.S. and Poland, we can halt Russian geopolitical encroachment on a Europe desperate for fuel.

The U.S. recently started selling crude oil to India, which used to rely on Iran and Arab Gulf countries for most of its oil. U.S. oil helps India remain independent of Iran’s influence and also has helped it stand up to OPEC and Saudi Arabia. If American oil is no longer competitive on the global market, a strategic democratic partner in a largely non-democratic region would be at the mercy of those powers. 

One of the most important geopolitical benefits of domestic oil production and exports is countering Iran. For three years, U.S. sanctions crippled Iran’s oil exports. Many countries that used to buy Iranian light oil started buying the same type of oil from the United States. Now the U.S. is negotiating with Iran to end those sanctions, which would permit Iran to openly export oil. If U.S. oil leaves the market at the same time Iranian oil returns, the U.S. will hand our market share to Iran, a state sponsor of terrorism.

The future of oil and gas production on federal lands and waters likely will face additional legal wrangling. However, from a strategic perspective, the answer is clear. We must continue to lease federal land for oil and gas production — both for the U.S. economy and to maintain American power and influence around the world.  

GAS:

There Isn’t Enough Natural Gas to Calm Down a Global Price Rally
Stephen Stapczynski, Ann Koh and Anna Shiryaevskaya, Yahoo! Finance, June 25, 2021

(Bloomberg) — Natural gas markets around the globe are rallying as the world’s importers have come to a stark realization: there isn’t enough supply to go around.

A long, frigid winter drained gas stockpiles from Louisiana to Germany, and utilities are struggling to build them back up. But unforeseen supply disruptions and a rebounding global economy are making it impossible to keep up. That’s setting up a desperate scenario as hot summer temperatures approach, and it’s bound to get even worse when demand peaks this winter.

Higher gas prices, which hit a 13-year high in Europe this week, will make it more costly to keep the lights on in Madrid or cool apartments in Tokyo, after scorching heat waves in some regions are already making it more expensive to run air conditioners. The cleaner-burning fuel is the latest commodity to add to the global inflation scare as the price of everything from crude oil to corn and copper surge.

If a gas deficit does develop during the winter months, it could spur European utilities to burn more coal, which has already started happening, and cause China’s power producers to curtail supplies to industries and cause blackouts like it did last winter. Households are set to pay sky-high utility bills and the worst-case scenario — albeit unlikely — is they won’t have heating or electricity when freezing temperatures hit.

“Supplies are already very tight, and that could get much worse if there is a cold winter,” said James Whistler, the global head of energy derivatives at Simpson Spence Young, an international commodity and ship broker. “We are seeing strong competition between Europe and Asia, and that is manifesting in the continuous rally.”

European gas prices have surged as inventories fell hit the lowest in more than a decade for this time of year, while rates in the U.S. and Asia have jumped to the highest seasonal level in years.

The gas sector had long been segmented between geographical regions, but the ramp-up in new supply of liquefied natural gas and growing liquidity in spot trading over the past several years has helped transform it into a genuinely global market. That evolution comes at a price, as Europe and North Asia now compete for a finite supply of LNG, which results in bidding wars that catapult spot rates.

At the center of the action is China, which in a surprise move is set to overtake Japan as the world’s top LNG importer for the first time this year. China is stockpiling supplies of the super-chilled fuel in order to power its booming economy and help it shift away from dirtier fossil fuels.

“China’s LNG demand in the past years keeps outperforming even the most bullish analysts,” said Henning Gloystein, global director of energy and natural resources at consultants Eurasia Group.

The mad dash is putting Europe at a major disadvantage, as Asian end-users increase prices to attract supplies away from the Atlantic. Europe — where spot prices have rallied by more than 65% this year — is facing thin gas inventories amid lower flows from pipeline suppliers and near record carbon prices.

Europe’s end-users have been forced to depend more on Russian pipeline supplies. Yet Gazprom PJSC’s unwillingness to ship extra gas via Ukraine has been one of the key factors that has catapulted prices at the Dutch Title Transfer Facility, the spot benchmark for Europe, to the highest level since 2008.

“We see TTF prices rising for the remainder of 2021 as Asian LNG demand is robust,” said Santosh Gupta, assistant manager at Drewry Maritime Financial Research. “I don’t see a catalyst in the short term that would bring down prices.”

Indeed, the situation is made worse by the energy demands caused by extreme weather — from last winter’s bitter cold in Asia to the current heat waves in the Western U.S. and severe droughts across the globe that have curbed hydro output.

With fresh memories of record-high Asian spot LNG prices last winter, the world’s top importers in China, Japan, South Korea, and Taiwan have been busy buying shipments for delivery between November and February, well ahead of normal, according to traders surveyed by Bloomberg. China’s importers were scolded by the government for not being well prepared last winter and they don’t want to make the same mistake twice, traders said.

The Japanese government last month asked utilities to ensure stable fuel supplies this summer and winter amid forecasts for abnormally thin power reserves. Traders at Japan’s biggest importers said that they have been under more pressure to stock up on fuel and even restart retired gas-fired power plants.

There isn’t enough fresh LNG supply to meet this growing demand. The market had become accustomed to a steady stream of new mega-export projects, but the industry is currently in the midst of a lull period, where the next raft of new supply isn’t expected until the middle of the decade.

In the U.S., the so-called Henry Hub futures prices have more than doubled over the past year to the highest seasonal level since 2014. Inventories are 5.8% below normal for the time of year, the widest deficit since 2019 on a seasonal basis, signaling tighter supplies for next winter.

Winter Outlook

Shipping restraints could also add to winter woes. The odds of congestions at the Panama Canal are “very high,” which will force U.S. LNG cargoes en route to Asia to take longer passages around the Cape of Good Hope or the Suez Canal, limiting availability, according to Oystein Kalleklev, chief executive officer of shipowner Flex LNG in Oslo.

To be sure, there are a few factors that could help the global gas market avoid a crunch this winter.

An early start of the Nord Stream 2 pipeline, which connects Russia to Germany and has faced delays because of U.S. sanctions, could add much-needed supply to Europe and help the region avoid a crunch. Still, while pre-commissioning work is currently under way, the timing of first flow remains uncertain.

Likewise, a milder winter could reduce gas consumption and help utilities coast along with their lower inventory levels.

“Weather will have the final word on both price levels and volatility patterns,” said Gergely Molnar, an energy analyst at the International Energy Agency.

Meanwhile, traders may be forced to adapt to this volatile market as the supply deficit isn’t expected to disappear anytime soon.

“Supply will likely remain tight for the next two or three years as the industry makes up for the lack of new supply investments in 2020 and catches up with robust demand growth,” said Whistler.

MINING:

Alaska Future Fund invests $10M in CORE
Shane Lasley, North of 60 Mining News, June 25, 2021

Contango ORE Inc. June 21 announced that it has raised US$10.9 million to fund its share of exploration and development of Manh Choh, a 1.2-million-ounce gold mine project in eastern Alaska being explored and developed in partnership with Kinross Gold Corp., as well as exploration on three other gold properties wholly owned by CORE.

The financing involved the issuance of 523,809 CORE shares at US$21 each.

Alaska Future Fund, an Alaska investment program launched in 2019 by Barings and Alaska Permanent Fund Corp., invested US$10 million into the financing.

Managed by Barings, a US$325 billion financial services firm owned by Massachusetts Mutual Life Insurance Company, the Alaska Future Fund was formed to invest in projects that will benefit Alaska’s development while also generating strong market-based investment returns.

“This financing represents yet another important milestone for the company,” said Contango ORE President and CEO Rick Van Nieuwenhuyse. “I believe attracting two premier financial institutions, the Alaska Future Fund and Barings, demonstrates the excitement around building Alaska’s next gold mine in partnership with Kinross and the Tetlin Tribe.”

Also excited about Manh Choh and the exploration projects owned by CORE, Van Nieuwenhuyse contributed US$1 million to the financing.

“I am also pleased to participate personally in this financing to demonstrate my resolve to add value for our shareholders, as well as to grow long-term value for the state of Alaska and Alaskans by building an Alaska-based and focused exploration and mining company,” he added.

The centerpiece of this Alaska-centric plan is the development of Manh Choh, where CORE outlined two gold deposits on a 675,000-acre land package leased from the Tetlin Alaska Native Tribe. These deposits – Peak and North Peak – host 9.2 million metric tons of measured and indicated resources averaging 4.08 grams per metric ton (1.21 million oz) gold and 14.19 g/t (4.2 million oz) silver in two adjacent deposits on the project.

With the idea of processing high-grade ore from Manh Choh in the mill at its Fort Knox Mine north of Fairbanks, Kinross paid US$93.7 million to buy a 70% joint venture interest in Manh Choh, with CORE owning the remaining 30% stake in the Peak Gold JV.

Based on the current resource, Kinross expects to produce 1 million oz of gold-equivalent, which includes the value of both the gold and silver recovered, from Peak Gold ore over a 4.5-year mine life slated to begin in 2024.

To advance this project, the Peak Gold JV budgeted US$18 million for 2021 to fund in-fill drilling, engineering, and environmental studies needed to complete a feasibility level study for a mine at the Peak Gold deposits; exploration to test other intriguing targets across the expansive Manh Choh property; as well as community relations activities in the Tetlin area.

CORE says the in-fill, metallurgical and geotechnical drilling portion of this program is complete, and the Peak Gold partners recently met to discuss and finalize targets for the exploration phase of the 2021 program. This exploration, already underway, is testing extensions of the Peak Gold deposits, as well as exploring additional potential resource areas on the property.

In addition to the work at Manh Choh, CORE is carrying out exploration on its Hona and Eagle projects, which are comprised of state mining claims adjacent to Manh Choh, and Shamrock, which is on state claims alongside the Alaska Highway about 70 miles southeast of Fairbanks.

Located about 15 miles northwest of the Peak Gold deposits, Hona hosts a gold-copper prospect originally identified and drilled by Kennecott Exploration in 1997.

Subsequent work by Alaska Division of Geological & Geophysical Surveys found evidence of intrusion-related gold or porphyry copper-gold deposits at Hona.

Rock samples collected from a 5,000-meter-long mineralized area of Hona returned assays as high as 12.5 g/t gold, 10.09% copper, and 494 g/t silver.

Two holes drilled by CORE in 2019 encountered copper-gold-silver mineralization at Hona, with one of the holes cutting 17 meters averaging 0.41 g/t gold, 5.4 g/t silver, and 0.33% copper.

Reconnaissance level stream sediment and pan sampling at Eagle, a robust but earlier staged gold target northwest of Hona, has identified a six-mile- (10 kilometers) long corridor where every creek draining the northeast slopes of the mountains are strongly anomalous in gold, arsenic, and copper. Further sampling continued along the northwest trend shows additional anomalous creeks up towards the Dome prospect, albeit far fewer streams have been sampled in this area.

Follow-up field exploration, expected to largely focus on identifying drill targets in the highly prospective area between the Eagle and Dome prospects, is being carried out this summer at this exciting early-stage project.

Shamrock, the newest addition to the CORE portfolio, was staked by the company this spring.

Covering a large portion of the Richardson Mining District, the 52,920-acre Shamrock property is prospective for three types of gold deposits: gold in low angle quartz veins similar to those being mined at Northern Star Resources Ltd.’s Pogo Mine about 50 miles to the northeast; intrusive related gold deposits similar to Kinross’ Fort Knox Mine about 55 miles to the northwest; and high-level rhyolite intrusive dikes with associated clay and silica alteration which occurs in the Democrat and Banner dikes area of the property.

A compilation of all previously acquired geochemical sampling, drilling and geophysical surveys carried out at Shamrock is being used to guide the 2021 exploration on the road-accessible gold exploration property.

POLITICS:

Remembering former Alaska Sen. Mike Gravel
Rhonda McBride, KTOO, June 28, 2021

Throughout his 12 years as Alaska’s U.S. Senator, Mike Gravel relished stirring controversy, but he died quietly at his home in Seaside, California, on Saturday at the age of 91, surrounded by family.

Gravel, who served from 1969 to 1981 has been described as quixotic, quirky, and charismatic.

Gravel made a brief splash in the national headlines when he announced his bid for the U.S. presidency in 2019. He said he entered the race after a couple of teenagers asked him to run.  But, it wasn’t his first bid for the office.  

During his 2006 campaign for the presidency, one of his ads called “Rock” went viral on social media. It featured a stern-faced Gravel, who stood next to a pond and stared silently into the camera for about a minute, picked up a rock, hefted it into the water and then walked away without so much as a word.

“It was a metaphor for human life,” Gravel said in a 2017 interview. “You decide what you want to do in life, then you go ahead and do it. That causes ripples. You go ahead to your demise, and the ripples continue to have an effect on society.”

So, what ripples did Gravel’s political career set in motion?

During his 1968 bid for the U.S. Senate, he changed the way campaigns were run in Alaska forever.

Weeks before the Democratic primary, he rolled out a black-and-white film biography called “Man for Alaska” – a strategic slingshot that knocked out a political Goliath, Sen. Ernest Gruening, who had also served as Alaska’s territorial governor.

Gravel, who had a classic Hollywood “tall, dark, and handsome” magnetism, was filmed traveling across the state, surrounded by Alaska Natives.

In the final weeks of the primary race, the film aired repeatedly on Alaska TV stations — hand-carried by campaign workers, who flew to remote communities across the state. In most cases, the entire village turned out to watch.

“People really enjoyed the film,” said Irene Rowan, one of the campaign staffers who traveled the state. “You have to remember at the time there were no television or radio stations in rural Alaska or movie theaters in the villages.”

Rowan said she was part of a team of women, led by Gravel’s first wife, who went door to door at each stop.

Prior to Gravel, statewide campaigns focused almost exclusively on Alaska’s cities. Gravel was the first to court the state’s rural vote so widely, and the film became a turning point in his campaign. Within days of its release, Gravel, who had lagged in the polls, catapulted into the lead.

It would be the first of many times Gravel would defy conventional wisdom.

“I was very much a maverick,” he would later say of himself. “In my case, it was natural. I really didn’t have to do anything but be myself.”

Gravel said he did things differently, “I did not genuflect to authority. I questioned authority.”

Perhaps the best example of that personality trait: His efforts to put the Pentagon Papers in the congressional record on June 29, 1971. Gravel died just days away from the 50th anniversary of his dramatic midnight reading from top-secret documents, which revealed the U.S. government had systematically lied to the American people about the Vietnam War.

After Gravel was shut down for trying to read the Papers on the Senate floor, he used a subcommittee he chaired to make the report public. He intended to read all 4,000 pages of the report. Grainy film of the hearing shows an overwrought Gravel, who wiped his brow with a handkerchief and occasionally choked up in tears. Although he only managed to read a small portion of the report, he did enter the entire document into the record, which made it available to the public and the media.

Gravel said he received the Pentagon Papers from a Washington Post reporter, but there is no mention of him in “The Post,” a recent movie about the newspaper’s efforts to bring them to light.

At the time, Gravel’s actions reinforced his reputation as a showboat among his colleagues. He had also been ridiculed for some of his big ideas – such as a plan to build a domed city near Denali, which Gravel claimed the media distorted. He said his idea was inspired by large tents to shelter crowds at the Winter Olympics, a concept he said was very doable.

“We could cover hundreds of acres at the base of Mt. McKinley,” Gravel said, “by stretching a large, large tent.”

“We could control the climate so that we could truly enjoy a winter wonderland,” he said.

Gravel also proposed a train system to Denali, which used mag-lev, or magnetic levitation technology.

While most of Gravel’s big ideas fell by the wayside, one of them did hit the mark.

Tim Bradner, a longtime Alaska natural resources writer, says it was Gravel who came up with a way to rescue the Trans-Alaska Pipeline from the environmental lawsuits that stalled its construction. He pushed for Congress to pass a law that declared the pipeline in compliance with NEPA, the National Environmental Policy Act.

“Nobody ever thought of doing anything like this before. It’s so out of the box. People thought, here’s another Gravel shoot-from-the-hip, pie-in-the-sky thing,” Bradner said. 

But he said Gravel, who usually sought the political spotlight, ran a stealth campaign to sell his idea to senators. He made effective use of lawyers and energy experts to make his case.

It was not a surprise that Republican Sen. Ted Stevens fought the measure. He and Gravel were often at odds, but Stevens later voted for the legislation.

“Once there were 40 votes behind this strategy, the White House put its support behind it,” Bradner said. “It was quite a dramatic event when it happened. History tells us it was a 50-50 vote in the U.S. Senate. Vice President Spiro Agnew at the request of the White House cast the deciding vote.”

It was what Bradner calls a “classic Gravelian moment,” that eventually faded into history, because Gravel lost his bid for a third term in the Senate and left the state to launch other national political initiatives.

Gravel supporters say he never got credit for legislation that helped to build the state, such as his fight for the Alaska Native Claims Settlement Act, as well as his efforts to secure funding for the Alaska Marine Highway and other infrastructure projects such as early satellite communications.

Gravel’s family says he spent his last years working on what he called a “citizen’s amendment to the Constitution,” which he said was necessary to give the American people more direct legislative power.

Even as a state legislator, Gravel worked to get lawmakers more engaged with their constituents, especially in rural communities.

He served in the State House from 1963 to 1966, and in that short period of time rose to become Speaker of the House.

Bradner, who followed Gravel’s career closely, believes he may have been the first Speaker to conduct field hearings in rural Alaska.

“It was the first time that many urban legislators had been to a rural village,” Bradner said. “It had the effect of energizing rural political awareness.”

Gravel’s last visit to Alaska was in 2017 when he was invited to speak on the 40th anniversary of the pipeline.

Gravel said he hoped he would be remembered for his role in the pipeline, but also as “a person who tried to stir the pot, so people would question authority.”

“And if I have any advice to young people, it’s to question authority, because it may not be the right thing,” Gravel said. “Follow your bliss, if you want to be happy.”

CLIMATE CHANGE:

Study: Climate lawsuits aren’t relying on the latest science
Andrew Freedman, Axios, June 28, 2021

Lawsuits filed against fossil fuel companies and governments for causing global warming have met a decidedly mixed fate, with most getting dismissed for failing to prove a causal link between emitters’ actions and harm done to the plaintiffs. However, that could soon change, a new study finds.

Why it matters: Courts are an important venue for cities, states and citizens’ groups seeking carbon-cutting mandates — especially as governments fail to slash greenhouse gases fast enough to avoid potentially devastating effects.

Driving the news: There have been a few recent successes in court cases, such as the move by a court in the Netherlands to require Royal Dutch Shell to make deeper cuts to its emissions.

Now a new study published Monday in Nature Climate Change that examined 73 court cases examined in 14 jurisdictions finds that plaintiffs aren’t using the latest and most compelling scientific evidence in court.

• Such evidence, researchers argue in the study, could help plaintiffs prove that a particular fossil fuel company or government has caused them harm via global warming.

What they found: The study finds that ongoing improvements in climate “attribution” science could help plaintiffs meet evidentiary tests for showing causation. That’s the research field that explores the extent to which human-caused climate change is altering the likelihood and severity of extreme weather events, such as heat waves and floods.

• The researchers, from European institutions and Harvard Law School, found that limitations in the scientific evidence presented to courtrooms may have contributed to their failure to prove a causal link between an entity’s emissions and harm suffered.
• The researchers found that those arguing climate cases are simply not taking advantage of the latest climate science findings. For example, the study says it’s now possible to break down the attribution of climate impacts to individual greenhouse gas emitters, such as a single oil and gas company.
• “Attribution science is a fundamental source of evidence for informing and substantiating causal claims about climate change impacts,” the study states.
• The study concludes that courts have wrongly found that it is too difficult to determine how an individual emitter has caused particular climate impacts.

What they’re saying: “There seems to be a considerable lag between scientific understanding and that filtering through into society. A much larger lag than I had expected,” Friederike Otto, a climate researcher who researchers extreme event attribution at the University of Oxford and study co-author, told Axios.

• “For me, as a scientist that means we really need to explain more what we do, how we do it and what that means in terms of what we know and what we don’t know for losses from climate change.”
• “In fact, recent months have shown that the courts can really catalyze some change. This will only be possible though if the evidence presented is as strong as it can be.”

What’s we’re watching: Whether this study results in any shifts in litigation strategies in the U.S. or abroad, which could raise the level of risk for business as usual at oil and gas firms and national governments alike.

Friday Fact Check: Natural Gas Is Here To Stay

by wp_sysadmin | Jun 25, 2021 | News

Moniz, Brouillette: Natural gas is here to stay
Mike Lee, E & E News, June 24, 2021

Former Energy Secretaries Ernest Moniz and Dan Brouillette said yesterday that the U.S. needs to continue exporting natural gas to support its allies around the world.

Gas will continue to be an important source of fuel worldwide as more countries try to reduce their greenhouse gas emissions, they said during a forum sponsored by the nonprofit group Meridian.

Other speakers, including officials from Japan and Vietnam, echoed their remarks, saying gas will be important even as more countries try to achieve net-zero emissions by 2050 and as financiers press the gas industry to curb its pollution.

“It’s going to be a transition, but I think that the ground truth is that natural gas is going to remain a very important part of the global picture,” Moniz said.

Gas produces about half as much carbon dioxide as coal when it’s burned for electricity. However, it can also be a potent greenhouse gas when it’s released into the atmosphere during production and transportation. Neither of the former Energy Department heads addressed the gas industry’s downside.

Moniz, who was secretary during Obama’s second term, credited the fracking boom of the 2000s and 2010s with helping reduce U.S. greenhouse gas emissions, mostly by replacing coal as a power plant fuel.

Brouillette said the Trump administration viewed gas for its value as an export product, particularly in the growing liquefied natural gas (LNG) market. He said gas provides environmental benefits since it typically replaced dirtier fuels in the countries that bought it.

“The demand in emerging economies around the world is simply astounding,” said Brouillette, who served as DOE secretary from 2019 until Trump’s departure from office. “It’s important we provide that marketplace with U.S.-produced natural gas because we are the cleanest producer in the world.”

Japan is among the countries that have committed to cutting its emissions by 2050. That will require cooperation among nations, and it’s important for the U.S. and other developed nations to support emerging countries that are trying to both modernize and adopt clean forms of energy, said Ejima Kiyoshi, Japan’s minister of economy, trade and industry.

“These transitions must take into account the different circumstances of each country and utilize all energy sources and technologies, including not only renewable energy and energy efficiency improvement, but also incorporating the clean use of fossil fuels,” Kiyoshi said.

Vietnam plans to more than double its imports of LNG between 2026 and 2035, and it’s looking for investors to help build re-gasification plants, pipelines, and other infrastructure, said Ha Kim Ngoc, the country’s ambassador to the U.S.

“We need investors who have long-term vision, financial support and expertise, just like the United States, Japan and some other countries to help Vietnam on LNG,” he said.

Biden Backs off Ban. AIDEA & ANWR. AK Production, Price Increase Beat Forecast.

by wp_sysadmin | Jun 24, 2021 | News

NEWS OF THE DAY:

Interior sec’y says no plan ‘right now’ to ban new oil, gas leasing
Valerie Volcovici, Reuters, June 23, 2021

U.S. Interior Secretary Deb Haaland on Wednesday told a congressional hearing that there is no plan to permanently ban new oil and gas drilling on federal land but her agency will soon release a report that will assess the future of the federal oil and gas leasing program. The Biden administration paused the government’s oil and gas leasing auctions on federal acres in January pending a review that is expected to be completed in the coming weeks. The move was part of a sweeping plan to rein in fossil-fuel extraction and combat the effects of climate change.

Republican and some Democratic lawmakers in oil-reliant states have raised concerns that the pause would lead to a permanent ban, depriving those states of revenue.

“I don’t think there is a plan right now for a permanent ban but … the review will come out early summer and we will assess the fossil fuel programs at that time,” Haaland told a House natural resources subcommittee.

She said oil and gas production “will continue well into the future” but said the administration wants “to make sure American taxpayers are getting a good return on their investment.”

Last week, a federal judge in Louisiana granted a preliminary injunction to Louisiana and 12 other states that sued Democratic President Joe Biden and the Interior Department over the freeze on new drilling auctions. Louisiana is a major hub for offshore oil and gas production.

Republican Congressman Garret Graves of Louisiana asked Haaland at the hearing whether the Interior Department has taken any steps to resume new leasing activity in light of that court decision, including publishing a new lease sale in the Federal Register.

Haaland said the Interior Department has not published details of a new lease sale in the Federal Register and said her agency and the Justice Department were reviewing the decision.

Separately, Republican Congressman Pete Stauber of Minnesota asked Haaland why the Biden administration plans to rely on ally countries for the bulk of the metals needed to build electric vehicles. Reuters first reported the strategy last month.

Stauber’s district includes Antofagasta Plc’s proposed Twin Metals copper mine, which is under regulatory review by the Interior and Agriculture departments. The Interior Department has also taken steps that impede U.S. critical minerals projects from Rio Tinto Ltd, ioneer Ltd and others.

Haaland did not answer Stauber’s question directly but said that Biden supports U.S. energy independence.

“We agree that ensuring the availability of critical minerals and the future of our energy needs is very important to Americans,” she said.

OIL:

Alaska agency challenges Biden over ANWR oil freeze
Heather Richards, E&E News reporter, June 24, 2021

A state development agency in Alaska wants to map oil reserves in the Arctic National Wildlife Refuge, moving toward a face-off with an administration that has expressly forbid searching for crude in the remote coastal region.

The Alaska Industrial Development and Export Authority board voted yesterday to put the Biden administration freeze to the test by authorizing $1.5 million to conduct pre-permitting activity for a 3D seismic surveying proposal to map hydrocarbon potential beneath the refuge.

Board Chair J. Dana Pruhs called it a “first step” toward determining what crude oil reserves lie beneath the leases AIDEA purchased in January and dismissed potential opposition from the White House.

“I don’t think the state should give up any of its rights regardless of who’s in the executive offices in Washington, D.C.,” he said.

But if AIDEA wants to perform seismic surveying, it may run into a federal wall. The Biden administration has made no secret of its opposition to any oil activity in the refuge.

A spokesman for the Fish and Wildlife Service pointed to Interior Secretary Deb Haaland’s order this month halting any oil and gas activities in the coastal plain (E&E News PM, June 1).

“[It] indicates that the Bureau of Land Management and the U.S. Fish and Wildlife Service will not process any pending or future applications for activities such as leasing, exploration, development, production or transportation related to the Coastal Plain Oil and Gas Leasing Program in the Arctic National Wildlife Refuge,” said Laury Marshall, a FWS spokesperson, in an email.

The secretarial order mandated a reevaluation of the oil program to correct any deficiencies in the environmental analysis conducted by the Trump administration, which finalized the ANWR drilling program and sold leases just before leaving office.

Board members of AIDEA — which is charged with financing industrial activity in the state through funds managed independently from the state — said yesterday their ultimate intention was for industry to develop the refuge leases.

AIDEA officials recently told S&P Global Inc. that the authority was preparing for a multiyear seismic program to scout for oil reserves, beginning as early as this winter.

The agency’s $1.5 million sum for seismic permitting is a small slice of the $20 million it set aside last year to advance oil and gas development in the refuge, a longtime aim of the state of Alaska, one of the most oil- and gas-dependent states in the nation.

The organization spent nearly $13 million securing several ANWR leases in the first-ever sale of drilling rights in January, according to AIDEA public documents.

A state development organization participating in a federal oil sale was unprecedented. But the stakes were high for pro-oil Alaska to ensure rights were secured in that first sale. Drilling proponents feared that a future Congress could overturn the oil program, or a new president could try to bar activity.

Additionally, at the time oil prices were low and industry interest in bidding on the leases was expected to be anemic.

Large corporations like BP PLC, as well as independents like Anadarko Petroleum Corp. or Marathon Oil Corp., have exited Alaska oil fields, where development is more expensive than in other parts of the country. Meanwhile, public pressure has pushed the largest banks in the U.S. to bar direct funding for Arctic oil development, sometimes specifically banning financing for ANWR oil projects.

The Republican-majority Congress in 2017 created the federal oil program in the refuge, overturning a decades long successful campaign against oil exploration there by Democrats and conservation organizations. The program requires two oil and gas lease sales in the coastal plain.

The Trump administration advanced the first lease sale in January, conveying leases to high bidders — there were two other participants in the sale in addition to AIDEA — shortly before leaving office.

The Biden administration then immediately froze oil and gas activity, but its long-term plan for the refuge is unclear.

Earlier this year, the administration dismissed a push from an Alaska Native corporation to conduct seismic in the refuge. Federal officials ran out the clock on the environmental review for the proposal (Greenwire, March 17).

Arctic champions argue seismic surveys leave lasting scars on the sensitive tundra and the heavy equipment could disrupt or kill denning polar bears and their cubs.

Interior did not provide an update on the status of that seismic application when asked by E&E News.

The AIDEA board meeting yesterday underscored the simmering controversy over development in the refuge, even in oil-friendly Alaska.

During public comments, groups including the Alaska Resource Development Council and the Associated General Contractors of Alaska expressed support for furthering oil development in the refuge to generate jobs and other economic activity.

Others dissented, noting the refuge’s unique cultural and environmental sensitivity.

Nauri Toler, an Iñupiaq community organizer for Native Movement, said support for ANWR oil drilling in the Arctic is overblown and opposition from residents of the small community within the refuge has been “stifled.”

“You are hearing from corporations that financially benefit from this. I think it’s important to hear from them, but not just from them,” she said.

“I urge you to read the room,” Toler said. “The cards are stacked against this project.”

Board member Bernie Karl said he respected the critics and considered himself “the most environmental puke you’ve ever met,” but he insisted oil was a necessity of modern life.

“There isn’t a better place to do it than where the oil is at, and the oil happens to be there,” he said.

GAS:

Reuters Events: Power CEOs defend role for natgas in shift to climate-friendly grid
Valeri Volcovici, Isla Binnie, Ross Kerber, Reuters, June 24, 2021

Power company executives argued during a global energy conference this week that natural gas will have a long-lasting role in the transition to a climate-friendly global economy, even as environmental groups, progressive politicians, and intergovernmental organizations contend fossil fuels of all types must be phased out fast to stop global warming. 

The heads of U.S. utilities Duke Energy Corp and Edison International, Spanish multinational Iberdrola SA, power equipment and technology provider GE Gas Power, and engineering firm John Wood Group PLC, told the “Reuters Event: Global Energy Transition” conference this week that natural gas will be needed for decades to come.

They said its near-term role would be to continue to replace its dirtier rival coal, and that its longer-term role would be as a complement to renewables, switching on during periods when emissions-free sources, like solar and wind energy, are unavailable.

“As we look into the future, we see it transitioning away from being a baseload, all-the-time, resource to more of a peaking and balancing resource,” said Lynn Good, chief executive of Duke Energy, the largest electric utility in the United States, who estimated natural gas would be part of the energy mix well into the 2040s.

Ignacio Galan, CEO of Iberdrola, agreed: “Natural gas is going to be needed still for a long period of time but not as baseload.”

He predicted that regulators would need to figure out new ways to pay gas-fired power plants to remain on standby, so they are “readily available whenever it is needed.”

Scott Strazik, CEO of GE Gas Power, said he expects gas to be long-term complement to solar and wind power, and that its emissions would eventually be dealt with through carbon capture and sequestration technology, which stores greenhouse gases underground.

“Gas is a force multiplier for growing renewables. It allows us to take advantage of the awesome power of the wind and sun … for the inevitable periods when renewables alone are not able to meet demand,” Strazik said.

Pedro Pizarro, CEO of Edison International which operates in California, said his company believed 6% of wholesale power would still come from natural gas in 2045.

Gas continues to be a bridge fuel, I don’t think you can pull the plug on it overnight,” he said.

CLEAN BREAK VS ENERGY SECURITY

The comments clash with some climate advocates who want a clean break from fossil fuels. While gas has long been seen as a relatively clean-burning source of energy, research has been mounting that its use leads to unintended emissions of methane, a powerful greenhouse gas, leading environmental groups and some local governments to push for anti-gas regulation.

The International Energy Agency, an intergovernmental group, meanwhile, issued a report last month that said reaching net-zero emissions by 2050 would require an end to all fossil fuel investments, including for gas, and that the world’s electricity should be made up of a combination of renewables and nuclear power by that point.

U.S. President Joe Biden wants utilities to achieve net zero emissions in power plants by 2035. And in Europe, the European Commission has proposed rules to restrict funding for natural gas projects because of the risk they pose to the bloc’s climate goals to decarbonize by 2050.

Robin Watson, CEO of consulting and engineering company John Wood Group, told the Reuters conference that he believed funding of existing gas assets should be optimized even as more money is funneled to building more sustainable future sources.

“To maintain energy security, which still underpins our quality of life, we need to accept and shape a role for hydrocarbons that is still compatible with our net-zero ambitions. This is a pragmatic and important compromise, not a cop-out,” Watson said.

Scotland-based Wood’s business lines include work in both renewable energy and the oil and gas and chemical sectors.

MINING:

Russia prepares to hit metals firms with $2.3b in export taxes
Mining.Com, June 24, 2021

Russia is preparing new export taxes for steel products, nickel, aluminum, and copper which will cost their producers $2.3 billion between Aug. 1 and December 31, its officials told a government meeting on Thursday.

Moscow wants to protect its defence and construction industries from further growth in raw materials costs as prices for metals rise at a global level.Top of Form

“Our economy is not ready for the kind of avalanche-like shock transfer of global prices to the domestic market that we have seen over the past year,” First Deputy Prime Minister Andrei Belousov said.

“The increase in domestic prices for certain metals ranged from 60% to 100%.”

Moscow will use the August to December period, while the extra taxes are in place, to prepare a permanent mechanism to “accumulate part of the profits from these super favorable market conditions”, the economy minister Maxim Reshetnikov said.

Taxing ferrous metals such as steel will bring in 114-billion roubles ($1.6 billion), and base metals such as nickel and aluminum 50-billion roubles, Belousov said, adding that that represents 20%-25% of the “excessive income” firms will get from a favorable market.

He said he believed the size of metals exports from Russia would remain unaffected by the tax.

The expected tax take is above Belousov’s previous estimate. He said in May that Russian metals producers could face a demand to pay 100 -million roubles in additional tax to the government for what he termed ‘screwing the state’.

Russia’s Nornickel, the world’s largest producer of refined nickel, and Rusal, the world’s largest aluminum producer outside China, as well as the main steel producers, did not reply to a Reuters request for comment.

POLITICS:

North Slope crude production outpaces state forecast as prices improve
Elwood Brehmer, Alaska Journal of Commerce, June 24, 2021

Improving oil prices and a little better than expected North Slope production are bits of good news for Alaska’s budget situation, but everything is relative when compared against the worst of 2020.

The price for Alaska North Slope crude has been on a consistent upward trend in recent weeks and closed June 22 at $74.64 per barrel, according to state Revenue Department figures, which is far greater than the department’s average price forecast of $53.05 for state fiscal year 2021 that ends June 30.

However, the forecast, made in March, is very close to the actual yearlong average North Slope price of $53.64 per barrel. When releasing the updated forecast in March, the state estimated the better price per barrel would result in an additional $322 million in unrestricted General Fund revenue for the current fiscal year.

Oil market analysts largely believe prices will remain strong — they are currently as high as they’ve been since fall 2018 — as global demand continues to recover from the pandemic.

On the production side of the equation, actual North Slope production of 487,368 barrels per day has outpaced the spring forecast compiled by the Department of Natural Resources by 5,391 barrels per day, which adds up to nearly 2 million barrels over the course of the year.

Division of Oil and Gas spokesman Sean Clifton noted via email that the official forecast figures are the mean in a production forecast range and the modest increase in production above the mean forecast is still well within the broader forecast range.

Clifton wrote that while it’s possible the operators could be responding to improved prices, it’s not likely given the more methodical approach to North Slope oil development as compared to the more agile shale operations across much of the Lower 48.

The average daily production for most of fiscal year 2021 is also a 2.5 percent increase over 2020, when production averaged just less than 475,000 barrels per day after ConocoPhillips curtailed much of its North Slope production during the worst of the pandemic-induced oil price collapse.

The to-date 2021 production of 487,368 barrels per day is still a decline of nearly 12,000 barrels per day from 2019, when North Slope production averaged approximately 499,100 barrels per day.

All of the recent-year figures mark the lowest levels of North Slope production since startup of the Trans-Alaska Pipeline System in 1977, according to state production records.

Department of Natural Resources officials believe North Slope production will bottom out next year at roughly 460,000 barrels per day before new projects start to bring new oil online and starts a steady increase back to more than 565,000 barrels per day by 2030, according to the spring forecast.

CLIMATE CHANGE:

Startup that makes homes climate-friendly raises $16 million
Andrew Freedman, Ben Geman, Axios, June 24, 2021

Sealed, a startup that helps homeowners overcome cost barriers to efficiency upgrades and electrification, just raised $16 million to fuel its expansion into more states.

Why it matters: Many important climate tools rely on the far wider deployment of well-known methods and concepts — in this case upgrading homes to waste less energy.

Homes account for an estimated 20% of U.S. carbon emissions, and they can be lowered by addressing leaks and installing modern equipment.

Driving the news: The New York-based company raised the Series B funding from investors including the real estate-focused VC firm Fifth Wall and Robert Downey Jr.’s FootPrint Coalition Ventures.

How it works: Sealed assesses homes’ energy profiles, drafts upgrade plans and oversees them.

• It matches customers with contractors for services like better insulation and sealing, modernizing heating and cooling, and changing from oil heaters and boilers to electric heat — a way to cut emissions as grids get cleaner.
• They cover upfront costs, track performance and structure repayment around how much energy is actually saved — the company vows that if energy use isn’t reduced, it doesn’t get paid.

The big picture: Sealed said it has now raised $33 million and has partnerships with all the major New York State power companies including Con Edison.

The company said the latest fundraise will help it expand beyond New York, starting with New Jersey and Connecticut, with launches in additional markets, eyed over the next year.

What they’re saying: “Sealed is a company that’s on a mission to take homes off of fossil fuels. And we’re doing that by trying to modernize home heating and cooling,” CEO and co-founder Lauren Salz tells Axios.

• “What Sealed is doing is lowering the barriers to doing it by making it as easy and affordable as possible,” she said.
• Salz also said: “We’ve created technology that is very accurate at predicting people’s future energy usage based on the improvements that they’re going to make. And that’s what enables us to have this unique financing product.”

The intrigue: A big part of the pitch is to enhance comfort and value, not simply appeals to the planet or lowering energy bills, and Salz said this helps Sealed position itself.

• “Traditionally…the value of the improvements has been undersold by just focusing on the planet or energy savings,” she said.
• The proposition “allows us to capture a much bigger portion of the market.”