Today’s Key Takeaway: Modernizing permitting is not about removing environmental safeguards but increasing accountability and improving efficiency. Streamlined permitting will stretch taxpayer dollars further and inject more private capital into natural climate solutions.
Last week I had the honor of testifying before the House Select Committee on the Climate Crisis on the importance of investing in America’s ecosystems. Investing in nature-based climate solutions is one of the most cost-effective tools that we have to reduce the impacts of climate change.
The following is adapted from my oral testimony made before the Select Committee on the Climate Crisis:
Furthermore, innovative agricultural technologies and practices enable farmers and ranchers to produce more with less. The result is higher yields, cost savings and healthier soils that prevent erosion and sequester more co2.
Without active care and investment, however, the mismanagement of America’s ecosystems can increase greenhouse gas emissions and pollution, exacerbate the risks of extreme weather, and be an economic drain on communities. For instance, the 2020 wildfires in California emitted more carbon dioxide than the entire state’s fossil fuel emissions that year. Addressing the fuel load through controlled burns and timber harvesting will reduce the size and intensity of wildfires and improve the health of America’s forests.
Another major challenge is invasive species, which devalue properties, damage infrastructure, devastate ecological systems, and threaten economic livelihoods. Whether it is cheatgrass increasing wildfire risk or zebra mussels compromising water infrastructure, invasive species impose significant economic and environmental harm.
Allocating resources toward prevention, early detection, and rapid response are the most cost-effective solutions as they prevent the invasive species from becoming too invasive. Harnessing the power of incentives is also an effective mechanism to reduce invasive species.
For instance, the nutria is a semi-aquatic rodent that adversely affects wetlands and vegetation in Louisiana and several other states. Through a federal-state program, participants can hunt and trap nutria and receive six dollars per nutria delivered to a collection center. Another example is a resource incentive, where Florida’s Fish and Wildlife Service provides a permit to harvest one additional spiny lobster for every 25 lionfish captured. The state also held a contest to see who could capture the most lionfish, and last year, participants collected more than 3,400 in total. These collaborative relationships that utilize incentives are an effective tool to reduce, and ideally eradicate, invasive species.
Importantly, reducing or removing barriers that obstruct or delay investments in healthy ecosystems will allow preventative and restorative ecosystem investments to occur more resourcefully.
These projects frequently run into burdensome, time-consuming permitting challenges. In addition, conservation projects can be held up for years in litigation. The significant loss of time to actively thin forests or eradicate invasive species often causes much worse environmental and climate outcomes.
Rather than have pragmatic evaluations of risk and trade-offs, environmental reviews have too often devolved into a tool to stunt the development of cleaner infrastructure and to delay projects that will restore America’s ecosystems.
To be clear, environmental reviews are a critical part of any project, as is the participation of the public and communities affected by the project. Modernizing permitting is not about removing environmental safeguards but increasing accountability and improving efficiency. Streamlined permitting will stretch taxpayer dollars further and inject more private capital into natural climate solutions. Federal agencies, states, the private sector, and non-profits will be able to tackle our backlog of environmental priorities with more urgency and efficiency.
With respect to agriculture, pro-growth tax policies will incentivize investment in new farming technologies and equipment. And leveraging Department of Agriculture programs to provide technical assistance for farmers and ranchers who want to pursue regenerative and precision agriculture will improve soil health and better optimize seed planting and treatment application, which will reduce the use of fertilizers, pesticides, fuel, and water.
Investment in healthy ecosystems is smart economic and climate policy. Rehabilitating forests, preventing, and eradicating invasive species, promoting sustainable agriculture, and encouraging responsible land and water use practices will result in better ecological health, will reduce emissions, and will build up natural resiliencies to a changing climate.
Nature-based climate solutions and healthy ecosystems will not come from treating America’s lands and waters as if they should be stored behind glass in a museum. Instead, they require active attention, investment, and management. Policies and regulations should reflect those needs.
You can read my full written testimony here or watch the full hearing here.
Pipelines are the safest and most efficient way to transport energy. It’s time state and federal regulators streamline permitting frameworks to quickly approve critical infrastructure projects and enable the market to work as intended.https://t.co/4Zpbdd4Swu
Today’s Key Takeaways: Germany no longer opposed to Russian oil embargo – oil prices rally in response. Momentum for U.S. LNG builds. Highest bid for lithium in an online sale – up 140% in six months. Rooftop solar in Florida got a last-minute reprieve with Governor DeSantis’ unexpected veto of net metering bill. States ask Supremes to stop “social costs” metric.
A group of Republican-led states on Thursday asked the Supreme Court to reinstate a court order blocking a key climate accounting measure put in place by the Biden administration amid a legal dispute with potentially high stakes for climate change regulation.
Led by Louisiana, the GOP-led states urged the justices to revive a federal judge’s February ruling that temporarily stopped the Biden administration’s use of a metric known as the “social costs” of planet-warming gases to quantify the climate costs and benefits of regulatory actions.
That ruling, by Trump-appointed U.S. Judge James Cain in Louisiana, was halted last month by a New Orleans-based federal appeals court.
In court papers filed Thursday, Republican attorneys general from 10 states trained their fire on the metric at issue, formally known as the Social Cost of Greenhouse Gas Estimates, which was first implemented under then-President Obama.
“The Estimates are a power grab designed to manipulate America’s entire federal regulatory apparatus through speculative costs and benefits so that the Administration can impose its preferred policy outcomes on every sector of the American economy,” the group of GOP-led states wrote in their brief.
The Obama-era figures gave much more weight to climate damages than figures used under the Trump administration. These “social costs” have been used to help quantify the climate benefits of regulation — or, conversely, the climate costs of deregulation — in agency rulemaking. Higher costs of greenhouse gases can be used to justify more stringent regulations.
The Biden administration last year temporarily returned to Obama-era figures for calculating the costs of these planet-warming gases, and it was expected to soon issue its own findings.
In his February ruling, Cain sided with the Republican-led challengers, who argued they would be harmed if those values resulted in less production of fossil fuels — and less revenue for the states.
But a panel of judges from the U.S. Court of Appeals for the 5th Circuit last month halted Cain’s preliminary injunction, saying that the states’ claims are largely hypothetical, coming from potential regulations that may happen rather than actual harm.
Oil prices rallied on Thursday after reports that Germany is no longer opposed to an embargo on Russian oil, which could further tighten supplies in the already stressed global crude market.
German representatives to the European Union are no longer objecting a full Russian oil embargo as long as Berlin is given time to secure alternative supplies, the Wall Street Journal reported on Thursday.
The article echoes comments from Germany’s Economy Minister Robert Habeck on Tuesday, when he said the EU’s largest economy, could cope with an EU embargo on Russian oil imports and it was hoping to find ways to replace Russian oil with other supply. read more
Brent crude futures rose $1.41 to $106.73 a barrel by 11:35 a.m. EDT (1535 GMT.) U.S. West Texas Intermediate crude rose $1.95, or 1.9% to $104.05.
Germany is heavily reliant on Russian energy imports and had previously opposed a full ban.
Before the war in Ukraine, Russian oil accounted for about a third of Germany’s supply. A month ago, Germany’s economic minister said that Germany had reduced its dependence on Russian oil to 25% of its imports.
“As a result of this, oil from the free world is going to be more expensive, and Iron Curtain oil will plunge further in value and be discounted more heavily,” said John Kilduff, partner at Again Capital LLC in New York.
Russia has started to use energy exports as a cudgel following the response by the United States and allies over Moscow’s invasion of Ukraine.
Russia has cut off gas supply to Poland and Bulgaria and is trying to push the EU to adopt its new gas payments system that involves opening accounts at Gazprombank where payments in euros or dollars would be converted to roubles. read more
Russian oil production could fall by as much as 17% in 2022, according to an economy ministry document seen by Reuters, as the country contends with Western sanctions. read more
Despite this expected shortfall, the OPEC+ group of producers comprising the Organization of the Petroleum Exporting Countries and allies led by Russia is expected to maintain its modest pace of increasing output when it meets on May 5, sources told Reuters. read more
The U.S. dollar surged to its highest levels in two decades on Thursday, propelled by weakness in its major rivals, such as the yen and the euro. A stronger dollar is usually bearish for oil prices which are priced in the greenback, as it makes it more expensive to holders of other currencies.
In China, Beijing closed some public spaces and stepped up COVID-19 checks at others as most of the city’s 22 million residents embarked on more mass testing in an effort to avert a Shanghai-like lockdown. The most recent lockdown has disrupted factories and supply chains, raising fears over the country’s economic growth. read more
But Asia’s biggest oil refiner, Sinopec Corp (600028.SS), expects the country’s demand for refined oil products to recover in the second quarter as COVID-19 outbreaks are gradually brought under control. read more
A slowdown in global growth owing to higher commodity prices and an escalation in the Russia-Ukraine conflict could further exacerbate oil demand fears.
GAS:
From the Washington Examiner, Daily on Energy:
MOMENTUM FOR US LNG: Gazprom’s shut-off of gas supplies to Poland and Bulgaria puts even more momentum behind growing U.S. liquefied natural gas as the EU seeks out alternatives to Russian imports.
European leaders slammed the Russians’ “blackmail” in cutting off supplies to those countries, while EU Commission President Ursula von der Leyen looked forward to an era of a Russian energy-dependent Europe coming to an end.
EU Energy Commissioner Kadri Simson emphasized the necessity of buying energy elsewhere, saying to help Ukraine through the war, the Europeans “have to reduce the financing of Putin’s war machine.”
“We need alternatives for imported natural gas and oil products from Russia,” Simson said yesterday during a forum on offshore wind alongside Energy Secretary Jennifer Granholm.
The green focus: The EU, like the Biden administration, sees green energy as best available too able to help usher in the end of that era of dependency.
Simson said “renewables are the obvious choice” alternative to Russian energy.
But: The EU and the administration have made clear more U.S. LNG and LNG from other countries will be necessary to wean Europeans off Russian fuels, and EU countries are planning new LNG terminals where, in at least one notable case, they had been passed up previously in favor of greener alternatives.
Simson also said that if more of the EU’s allies were to increase renewables, it would reduce overall demand for Russian fossil fuels and suggested it would allow more gas to enter the global market for the Europeans to purchase.
“We have mapped all the available volumes worldwide, and that means that even if our trading partners can replace some of their consumption with renewables, [this] also helps us achieve our goals,” she said.
Helping out a friend: President Joe Biden has already promised to help Europe field an additional 15 billion cubic meters of gas from the U.S. and other sources this year to help the EU fill its stores before winter.
The administration also committed to providing 50 bcm of additional U.S. gas per annum in the coming years, and the Energy Department is making headway to that end.
DOE issued orders yesterday authorizing nearly four million metric tons worth of additional exports from two in-the-works LNG facilities on the Gulf Coast.
The highest bid for lithium at an online sale surged by 140% in just six months, an indication the stampede for supplies of the main ingredient used in electric vehicle batteries could get even more intense.
Pilbara Minerals Ltd.’s auction of spodumene concentrate — a partly-processed form of lithium — attracted a top bid of $5,650 a ton on Wednesday for a cargo of 5,000 tons. That compares with $2,350 at the previous sale in late October on the Australian miner’s Battery Metal Exchange.
The surging prices are unnerving battery makers and EV firms. Tesla Inc. Chief Executive Officer Elon Musk said this month that lithium had gone to “insane levels” and is the “fundamental limiting factor” for EV adoption, adding the car giant might consider mining or refining it directly. Contemporary Amperex Technology Co. Ltd., the world’s largest battery maker, said last week it had won exploration rights for a lithium clay deposit in China.
“The pricing received on the BMX sales trading platform is indicative of the critical shortage that exists in respect of lithium raw material supply,” Pilbara Minerals said in a statement. It’s the company’s fourth online spodumene sale.
The jump in the auction bid is roughly in line with the increase in lithium carbonate — a chemical used in battery production — in China. It started rising in the middle of last year as the global recovery from the pandemic coincided with a surge in EV demand.
The rally has lost momentum in recent weeks — prices are currently at 467,500 yuan ($71,182) a ton, according to Asian Metal Inc. — as the worsening virus outbreaks upended supply chains and clouded the consumption outlook. The auction result suggests Chinese lithium compound prices are unlikely to drop below 400,000 yuan a ton, Daiwa Capital Markets’ analysts Dennis Ip and Leo Ho said in a note.
Miners are cranking up production to meet the skyrocketing demand and also enjoying bumper profits. Chinese producer Ganfeng Lithium Co. reported a more than 600% jump in first-quarter net income from a year earlier, while Pilbara’s share price rose as much as 6.5% on Wednesday.
The Perth-based miner said it plans to hold the auctions more frequently as it ramps up production at its Ngungaju mine in Western Australia. However, it also warned that virus-related labor disruptions may result in output being in the lower half of the 340,000-380,000 ton guidance for the year through June.
Florida Governor Ron DeSantis (R) vetoed an unpopular solar net-metering bill on Wednesday. The surprise move handed a last-minute reprieve to solar industry groups and supporters who feared the utility-backed legislation would have undermined the economics of rooftop solar systems in the state.
In issuing the veto, DeSantis cited the bill’s potential to raise costs on Florida residents in the midst of increasing prices for food and gasoline. “The state of Florida should not contribute to the financial crunch that our citizens are experiencing,” he wrote in a four-paragraph veto letter.
The bill, HB 741, has faced public opposition from solar companies, consumer groups, businesses and veterans organizations. A recent poll commissioned by pro-solar groups found that more than eight in 10 respondents expressed support for net-metering as it now exists, including 76 percent of registered Republicans.
“There’s extremely broad bipartisan support for solar in Florida,” said Heaven Campbell, Florida director of the Solar United Neighbors nonprofit group, in a Wednesday interview. “People want to go solar for many different reasons,” but one chief reason is to reduce electric bills that are among the highest in the Southeast U.S., she said.
HB 741 would have changed the net-metering structure in the state, reducing the rates that utilities pay rooftop-solar owners for the excess power their solar systems produce starting in 2024, from the current rate of 11 cents per kilowatt-hour down to 2 cents per kilowatt-hour by 2029. The bill, which would have applied to new solar customers but not the roughly 100,000 existing net-metered solar customers in the state, would also have allowed state regulators to consider additional fees on owners of new net-metered solar systems.
Today’s Key Takeaways: Russia targets European economies by halting gas supplies. Exxon has three new discoveries in Guyana. John Kerry said yesterday that natural gas companies will be part of a clean energy transition, can help cut methane emissions. ESG minded investors invest heavily in coal stocks. Democrats downplay Manchin’s Build Back Better efforts.
Russia demands payment in roubles to shield it from sanctions
EU denounces gas cut-off as ‘blackmail’
Kyiv reports some Russian gains in villages in east
Explosions hit Russian regions on border; Kyiv calls it ‘karma’
Concern grows over unrest spilling to Moldova
Russia halted gas supplies to Bulgaria and Poland on Wednesday for rejecting its demand to pay in roubles, taking direct aim at European economies in its toughest retaliation so far against international sanctions over the war in Ukraine.
The step was denounced by European leaders as “blackmail” and comes as European countries have joined the United States in ramping up arms shipments to help Ukraine fend off a new Russian assault in the east.
Ukraine reported on Wednesday that Russian troops had made gains in several villages there. Russia reported a number of blasts on its side of the border, including a blaze at an arms depot, which Kyiv called “karma”.
Moscow says the gas cut-off is to enforce its demand for payment in roubles, needed to shield its economy from sanctions. Kremlin spokesperson Dmitry Peskov said Russia was a reliable energy supplier and denied it was engaging in blackmail.
Gazprom (GAZP.MM), the Russian gas export monopoly, said in a statement it had “completely suspended gas supplies to Bulgargaz and PGNiG (PGN.WA) due to absence of payments in roubles,” referring to the Polish and Bulgarian gas companies.
“Basic legal principles have been broken, violated,” Polish President Andrzej Duda said. “Appropriate legal steps will be taken and there will be appropriate compensation from Gazprom for violations of the provisions of the contract.”
Bulgarian Energy Minister Alexander Nikolov said: “It is clear that at the moment the natural gas is being used more as a political and economic weapon in the current war.”
Russian President Vladimir Putin demanded last month that buyers from “unfriendly” countries pay for gas in roubles or be cut off. The European Union says this violates contracts that called for payment in euros.
“The announcement by Gazprom that it is unilaterally stopping delivery of gas to customers in Europe is yet another attempt by Russia to use gas as an instrument of blackmail,” European Commission President Ursula von der Leyen said.
“This is unjustified and unacceptable.”
Poland and Bulgaria are both former Soviet-era satellites of Moscow that have since joined the EU and NATO. Poland has been one of the Kremlin’s most vocal opponents over the war. Bulgaria has long had warmer relations with Russia, but Prime Minister Kirill Petkov, an anti-corruption campaigner who took office last year, strongly denounced the invasion of Ukraine.
Petkov was due to travel on Wednesday to Kyiv, the latest European leader to meet President Volodymyr Zelenskiy.
Poland receives its Russian gas through the Yamal-Europe pipeline from Russia’s huge gas fields in the Arctic far north, which continues west to supply Germany and other European countries. Bulgaria is supplied through pipes over Turkey.
Supplies from Gazprom (GAZP.MM) cover about 50% of Poland’s consumption and about 90% of Bulgaria’s. Poland said it did not need to draw on reserves and its gas storage was 76% full. Bulgaria has said it is in talks to try to import liquefied natural gas through Turkey and Greece.
Other European countries, including Germany, the biggest buyer of Russian gas, did not report cuts. Peskov, the Kremlin spokesperson, declined to say how many countries had agreed to pay in roubles.
Russia’s energy exports had until now continued largely unhindered since the war began, by far the biggest loophole in sanctions that have otherwise cut off Moscow from much of its trade with the West.
Kyiv has long called on Europe to stop funding Moscow’s war effort by cutting off imports that bring Russia hundreds of millions of dollars a day.
Germany said this week it is hoping to stop importing Russian oil within days. But weaning Europe off cheap and abundant Russian natural gas, which heats its homes, fuels its factories, and generates its electricity, would be a far more disruptive prospect.
Andriy Yermak, chief of staff to Ukraine’s President Volodymyr Zelenskiy, said Russia was “beginning the gas blackmail of Europe”.
Since the Russian invasion force was driven back at the outskirts of Kyiv last month, Moscow has refocused its operation on eastern Ukraine, starting a new offensive from several directions to fully capture two provinces known as the Donbas.
Ukraine’s general staff acknowledged Russia had made gains in the east, capturing the town of Zavody and some outskirts of the town of Velyka Komyshuvakha on one front, and the Zarichne and Novoshtokivske settlements in Donetsk region.
Blasts were heard early on Wednesday in three Russian provinces bordering Ukraine, authorities said, and an ammunition depot in the Belgorod province caught fire. The regional governor said the blaze near Staraya Nelidovka village had been put out. read more
Russia this month accused Ukraine of attacking a fuel depot in Belgorod with helicopters and opening fire on several villages in the province. A fire also broke out this week at a fuel depot in nearby Bryansk.
Kyiv has not confirmed responsibility for such incidents but described them as payback. “Karma is a cruel thing,” Ukrainian presidential advisor Mikhaylo Podolyak wrote on social media.
An aide to the mayor of the ruined port city of Mariupol said Russian forces had renewed their attacks on the Azovstal steel plant, where fighters and some civilians are holed up. No agreements had been reached on trying to evacuate civilians from Mariupol on Wednesday.
Concern has increased in recent days over the prospect of the conflict widening to neighbouring Moldova, where pro-Russian separatists have blamed Ukraine for reported attacks this week in a region occupied since the 1990s by Russian troops. Kyiv denies this.
The separatists reported firing across the border from Ukraine near an arms depot on Wednesday. Moldova’s pro-Western government has blamed forces inside the separatist region for attacks aimed at provoking conflict.
The invasion of Ukraine has left thousands dead or injured, reduced towns and cities to rubble, and forced more than 5 million people to flee abroad.
Moscow it a “special operation” to disarm Ukraine and defeat fascists. Ukraine and the West say the fascist allegation is baseless and that the war is an unprovoked act of aggression.
U.S. oil supermajor ExxonMobil has made three new discoveries offshore Guyana and increased its estimate of the recoverable resource for the Stabroek Block to nearly 11 billion oil-equivalent barrels.
Exxon said that the three discoveries – Barreleye-1, Patwa-1, and Lukanani-1 – were southeast of the Liza and Payara developments and bring the number of Exxon’s Guyana discoveries in 2022 to five.
The Barreleye-1 well encountered approximately 230 feet of hydrocarbon-bearing sandstone and was drilled in 3,840 feet. Drilling at Patwa-1 encountered 108 feet of hydrocarbon-bearing sandstone and was conducted in 6,315 feet of water. The Lukanani-1 well encountered 115 feet of hydrocarbon-bearing sandstone and was drilled at a water depth of 4,068 feet. Operations are still ongoing at Barreleye-1 and Lukanani-1.
“These discoveries and the updated resource estimate increase the confidence we have in our ambitious exploration strategy for the Stabroek Block and will help to inform our future development plans for the southeast part of the block,” said Liam Mallon, president of ExxonMobil Upstream Company.
“ExxonMobil remains committed to delivering value at an accelerated pace to the people of Guyana, our partners, and shareholders and reliably supplying affordable energy to meet increasing demand around the world,” Mallon added.
ExxonMobil currently has four sanctioned projects offshore Guyana. Liza Phase 1 is producing approximately 130,000 barrels per day using the Liza Destiny FPSO vessel.
Liza Phase 2, which started production in February, is steadily ramping up to its capacity of 220,000 barrels per day using the Liza Unity FPSO.
The third project, Payara, is expected to produce 220,000 barrels per day. Construction on its production vessel, the Prosperity FPSO, is running approximately five months ahead of schedule with start-up likely before year-end 2023.
The fourth project, Yellowtail, is expected to produce 250,000 barrels per day when the One Guyana FPSO comes online in 2025.
At least six FPSOs with a production capacity of more than 1 million gross barrels of oil per day are expected to be online on the Stabroek Block in 2027, with the potential for up to 10 FPSOs to develop gross discovered recoverable resources.
In a separate statement, the CEO of Exxon’s Stabroek partner Hess, John Hess, said: “These new discoveries further demonstrate the extraordinary resource density of the Stabroek Block and will underpin our queue of future development opportunities. We look forward to continuing to work with the Government of Guyana and our partners to realize the remarkable potential of this world-class resource for the benefit of all stakeholders.”
Guyana’s Stabroek Block is 6.6 million acres. ExxonMobil affiliate Esso Exploration and Production Guyana Limited is the operator and holds a 45 percent interest in the Block. Hess Guyana Exploration holds 30 percent interest while CNOOC Petroleum Guyana Limited holds the remaining 25 percent.
GAS:
‘We need gas.’ Kerry pivots after putting industry on notice Carlos Anchondo, Energywire, April 26, 2022
The comments come after Kerry said last week the gas sector should have “no more than 10 years or so” to come up with a means to capture its emissions.
U.S. climate envoy John Kerry said yesterday that natural gas companies will be part of a clean energy transition and can help cut methane emissions, days after raising concerns about the fossil fuel.
“We need gas, which is automatically a reduction from the level of emissions of either coal or oil,” Kerry said at the start of a weeklong forum hosted by the Edison Electric Institute, which represents U.S. investor-owned electric utility companies.
Last week, Kerry told Bloomberg Television that no one should be making it easy for the gas industry to “be building out 30- or 40-year infrastructure, which you’re then stuck with” (Energywire, April 22). That drew pushback from the gas sector.
But yesterday the former secretary of State made a point of saying the nation’s gas is much cleaner than Russian gas. He stressed that the private sector, particularly gas companies, will be part of an energy transition.
Kerry also discussed the potential to curb flaring, which is the burning of gas at well sites, and venting, which is the direct release of gas into the atmosphere. That could help address issues related to producing gas before it is used to generate electricity at a power plant, for example.
“Just by stopping venting and flaring, you would absolutely replace the amount of gas that is being lost from Russia,” Kerry said. “It’s an incredible amount.”
Kerry said more than 100 countries have now signed onto the Global Methane Pledge, which the Biden administration and the European Union announced last year (Greenwire, Sept 16, 2021). Countries joining that pledge commit to a goal of “reducing global methane emissions by at least 30 percent from 2020 levels by 2030.”
On Capitol Hill, House Democrats have urged EPA to expand on the methane regulations the agency proposed in November, calling for more aggressive action to eliminate routine flaring (E&E News PM, Dec. 22, 2021).
Also yesterday, Kerry said power companies have the credibility to influence Congress because they’re large employers and keep “the engine of our economy moving.” His comments come as lawmakers remain at a stalemate over potential climate action, including sweeping plans proposed in President Joe Biden’s stalled “Build Back Better” legislative agenda.
Kerry suggested companies could play a role in potential policies going forward, whether tax credits for renewables or perhaps a price on carbon emissions.
“I think if you will speak to the brightness of the future of the other side of this,” Kerry said, “that would have a profound impact on our ability to get the production tax credit, the investment tax credit, to do the things we need to do, and who knows, maybe even ultimately there will be a conversation about pricing carbon, which would have a profound impact on our ability to leap forward.”
In his comments to Bloomberg Television last week, Kerry said the gas industry should have “no more than 10 years or so” to come up with a means to capture its emissions.
“And if you’re not capturing, then we have to deploy alternative sources of energy,” he said.
Mike Sommers, CEO of the American Petroleum Institute, took issue with Kerry’s comments last week on Twitter, while The Wall Street Journal‘s editorial board offered its own critique Friday.
“Mr. Kerry knows that technologies that capture [carbon dioxide] emissions are a long way from being scalable,” the Journal’s editorial writers said in the piece. “He also knows that no one will invest in building new pipelines if gas is time-limited to less than a decade.”
Kerry answered with a written response, saying, “Natural gas is central to a smart and achievable policy to cut greenhouse-gas emissions today. In the near term, that means pairing with renewables to clean up electricity. In the next decade, it also means abating emissions from gas itself.”
Frank Macchiarola, API’s senior vice president of policy, economics, and regulatory affairs, said in a statement yesterday that while the Biden administration “seems to recognize the role of natural gas for supporting global energy security, their inconsistent rhetoric contributes to a difficult investment environment and continues to send mixed signals regarding the long-term future of the industry.”
Industry groups have said more U.S. gas exports could help lower global emissions and aid U.S. energy security.
“Last week Sec. Kerry put the natural gas industry ‘on notice’ and today he is calling for what we all know to be true, increase domestic natural gas production to reduce emissions from foreign coal,” Leslie Beyer, CEO of the Energy Workforce & Technology Council, said in a statement.
In March, the Biden administration pledged to send more U.S. liquefied natural gas to Europe as the region moves to curb its reliance on Russian energy (Energywire, March 25).
The White House did not respond to a request for comment on Kerry’s remarks yesterday.
The Department of State directed E&E News to remarks shared last week, which said, “It will take a full suite of investments in clean energy innovation and deployment to meet the world’s energy needs while transitioning entirely off unabated fossil fuel use.”
Anglo American Plc’s spinoff, Thungela Resources Ltd., has emerged as the world’s best-performing major coal stock. It’s also one of the most profitable bets by a group of fund managers who’ve promised to reduce their financed greenhouse gas emissions.
Since its June listing, the South African company is up roughly 1,000% amid a rebound in demand for the dirtiest fossil fuel. Thungela Chief Executive Officer July Ndlovu has said he’s planning to develop new coal resources, noting the company is now free of an owner that had questioned further investment in mining.
Coal’s stunning ascent is the product of a post-pandemic energy crisis that’s being turbocharged by Russia’s war on Ukraine. And with coal companies in Europe under pressure to shut down, those operating in emerging markets, like Johannesburg-based Thungela, are posting outsized returns. The $2 billion company’s stock-price gains are multiples of the roughly 260% increase in coal futures over the past year.
For the asset managers who purchased Thungela shares after its spinoff, the investment has been lucrative. It also raises questions about their stated commitment to accelerate the financial sector’s transition to net-zero emissions.
Abrdn Plc and Vanguard Group Inc. are among Thungela’s biggest holders. Both got in from the start, though Abrdn confirmed it has since “topped up” its position to 4.7%. Vanguard holds an equivalent stake.
In an emailed response to questions, Abrdn’s Peter Silver, an investment analyst, said Thungela currently plans to replace declining production at one mine and improve productivity at another. He also said Abrdn recently held a meeting with the mining company’s management, at which “other uses” of its capital were discussed, without elaborating.
Other asset managers holding Thungela stakes declined to comment, including Vanguard and Schroders Plc, which owns 1.5% of the company. Blackrock Inc., which holds 1.8%, referred to existing policies on its website. The three firms, as well as Abrdn, are signatories to the Glasgow Financial Alliance for Net Zero, meaning they’ve committed to support the goal of net-zero emissions by mid-century or sooner, in line with global efforts to limit warming to 1.5 degrees Celsius. A sizable proportion of the Thungela shares held by BlackRock and Vanguard are in passively managed index-tracking funds, data compiled by Bloomberg show.
For the world to avoid catastrophic levels of warming, the United Nations Intergovernmental Panel on Climate Change has urged a halt to investment in and a rapid phase-out of coal mining. And the International Energy Agency has said there should be no new coal mines or mine extensions from 2021.
“Before we see an exit from coal in the real world, there has to be an exit from coal in the finance industry,” Heffa Schuecking, director of German nonprofit Urgewald, said in an interview. If institutions making net-zero pledges “aren’t even able to exclude coal developers, then I’d come to the conclusion” that such pledges are “useless,” she said.
Thungela told Bloomberg that it plans to seek board approval for two projects to replace those that are either slated to close down or where production is declining. In its annual report, released last week, it lists another mine extension project and a potential new mine.
Anglo sold its last shares in the mining company in March for about $115 million. “How Thungela chooses to allocate its capital is between Thungela and its shareholders,” Anglo said in a response to questions.
GFANZ members have the option of complying with one of five different coal positions. For example, an asset manager can show a general commitment to “phase out investments,” according to its website. Or it can commit to “immediately ceasing financial or other support” to companies building new coal infrastructure or investing in expansion. (Michael Bloomberg, owner, and founder of Bloomberg News parent Bloomberg LP, is co-chair of GFANZ).
The alliance, which is now a year old, has been urged by nonprofits to tighten its guidelines for members. “We have seen very few indications that the major members of GFANZ are serious about withdrawing financial services from the fossil-fuel industry,” a group of more than 100 nonprofits wrote in a recent letter. “Members’ actions on coal are shockingly inadequate.”
Thungela’s biggest shareholder, South Africa’s Public Investment Corp., has been increasing its stake in recent days. The fund manager, which oversees $152 billion of mainly government worker pensions, raised its holding to 12.6% on April 19 from 8% on April 7, according to a statement issued by the coal company to the stock exchange in Johannesburg. The PIC, which didn’t respond to a request for comment, said on its website that it integrates “environmental, social and governance principles as the fundamental principles of its investment process.”
Smaller fund managers also have invested in Thungela, while at the same time touting their commitment to environmental, social and governance principles.
Fairtree Capital Ltd., which owns 3.1% of the coal producer, notes on its website that its reforestation support measures are helping protect South Africa’s only endemic parrot. Fairtree declined to comment when asked about its coal investment.
Coronation Fund Managers Ltd., which oversees $40 billion in assets, has built a 3% stake in Thungela. In August last year, Neville Chester, a portfolio manager at Coronation, wrote in a note to clients “that a 100% thermal coal operation is unlikely to find a home in many portfolios, which means that capital markets are, for all intents and purposes, closed’’ to Thungela.
In a response to queries this month he said the allocation reflects a bet that coal gains will continue.
“The merits of the investment case for Thungela” are “determined by our long-term view of thermal coal prices,” he said.
Sen. Joe Manchin (D-W.Va.) is sketching out his vision for what a scaled-down budget bill could look like as his party eyes a second run at moving a major policy bill through a reconciliation process that would negate a GOP filibuster.
This time, however, Democrats are playing down the chances for an imminent deal.
Manchin in December nixed the roughly $2 trillion House-passed Build Back Better package, sending the party into a legislative depression.
The party now faces significant hurdles to renew the tax-and-spending plan at the heart of their agenda as they feel growing pressure to provide deliverables to their own voters.
Sen. Dick Durbin (Ill.), the No. 2 Senate Democrat, said that there were “varying levels of optimism” within the caucus about reviving reconciliation, the budget process that cuts off a GOP filibuster and would allow Democrats to pass a measure with votes just from their members.
“I am the most skeptical,” Durbin said. “I want to see the results. I want to put two of my colleagues in the room with a blank sheet of paper and ask them, ‘What will you agree to?’ There seems to be some problems with that.”
Sen. Ben Cardin (D-Md.) indicated that Democrats were largely delegating talks with Manchin about reconciliation to Senate Majority Leader Charles Schumer (D-N.Y.).
“You’re not going to hear much about it until a decision is made,” Cardin said. “There’s been no reports to us, and we don’t expect any reports.”
Democrats and the White House have acknowledged that there are conversations going on, but they are also being careful to draw hard red lines or hype their talks after they set deadlines, and missed them, repeatedly last year.
“We always are hopeful. That’s all I’m saying,” said Sen. Sherrod Brown (D-Ohio), the chairman of the Senate Banking Committee.
Manchin on Tuesday met with Schumer about how to combat inflation.
After the meeting, the West Virginia senator said he thought the focus of any reconciliation bill should be lowering inflation and deficit reduction.
Manchin indicated that the way to do that included making changes to the tax code.
He outlined part of what he could support on tax changes as part of a reconciliation bill, including increasing the corporate rate to 25 percent, putting capital gains at 28 percent, getting rid of “loopholes” and “making sure everyone pays their fair share.”
Manchin also wants half of any revenue to go toward deficit reduction, saying that it’s the “only way you’re going to fight inflation.”
“Just a fair, competitive tax code,” Manchin added about what he wants to see in a reconciliation bill.
Both Manchin and Schumer tamped down any expectation that they were deep in the sort of formal negotiations that could cement a quick agreement that would allow the party to finally move what was meant to be the center of its legislative agenda.
“There’s nothing formal. There’s no false hopes here. There’s nothing, as far as Build Back Better, there’s no talk about any of that. Just saying how do we get a handle on inflation,” Manchin said.
Schumer also stressed that the talks with Manchin were “preliminary.”
“Our meetings were both preliminary and good, and we’re going to continue to keep talking. If you want to get rid of inflation, the only way to do it is to undo a lot of the Trump tax cuts and raise rates,” Schumer said.
Three producing regions drove U.S. #naturalgas production in 2021.
Today’s Key Takeaways: Biden blocks petroleum expansion in petroleum reserve. Three things will take a bite out of global oil demand this year. Exxon receives top grade for methane emissions management in the Permian. Ucore Rare Metals Inc. streamlined management, technical teams and secured new feedstock for rare earths separation plant. Democratic Senator Joe Manchin is exploring an energy and climate package aimed at winning enough Republican support to skirt the partisan budget reconciliation process
President Joe Biden’s administration has blocked a major expansion of oil and gas leasing in the National Petroleum Reserve in Alaska (NPR-A) that could have allowed drilling on an additional 7mn acres (28,000km²) of federal land.
The administration today issued a final record largely reinstating a development plan from 2013 that allowed leasing on 11.8mn acres of NPR-A, or just more than half of the reserve’s 22.8mn acres. The plan will allow oil development to continue, but without the potential for drilling to expand in ecologically sensitive areas like Teshekpuk Lake that offer habitat to migratory birds and caribou herds.
The NPR-A’s remaining 11mn acres “are closed to oil and gas leasing under this plan in order to protect and conserve important surface resources and uses in these areas,” the US Bureau of Land Management said in its record of decision. The Biden administration proposed reinstating the 2013 development plan earlier this year.
Alaska producers have long pushed to allow drilling near Teshekpuk Lake based on geologic data suggesting it may hold vast amounts of oil. Former president Donald Trump’s administration in late 2020 signed a record of decision opening more than 80pc of NPR-A to oil and gas leasing, but it never had time to hold a lease sale that could have awarded contractual rights to drilling.
The ongoing war in Ukraine, Covid-19 lockdowns in China and surging commodity prices are going to take a significant bite out of global oil demand this year.
That’s according to Rystad Energy’s senior vice president of analysis Claudio Galimberti, who made the comment in a statement sent to Rigzone recently.
“Oil demand is set to shed 1.4 million barrels per day, dropping below the highs set in 2019, with a rebound unlikely until at least 2023,” Galimberti warned.
“Additional Covid-19-related lockdowns or geopolitical issues could lead to further GDP growth reductions, applying additional downward pressure to demand forecasts,” he added.
“The global economy is battling surging inflation, additional strict Covid-19 lockdowns in one of the world’s largest economies, and continuing supply chain disruptions, and the impact on oil demand will be significant,” Galimberti continued.
Rystad is now predicting that oil demand will average 99.6 million barrels per day this year, Galimberti highlighted. A pre-pandemic high of 100.2 million barrels per day was set in 2019, the VP outlined.
Tighter Lockdowns, Prolonged War
Galimberti noted that the risk of tighter lockdowns in China cannot be ruled out, although he added that road traffic activity in the country has stabilized lately.
“Market hawks will be closely monitoring Beijing’s decisions regarding lockdowns in the coming days as an indicator of additional oil demand impacts,” he said.
The Rystad VP also noted that a prolonged war between Russia and Ukraine may be accompanied by a significant increase in commodity prices, in particular oil and gas, especially if Europe decides to embargo Russian imports.
“The Russian war worst case for oil demand is premised on Brent prices reaching $180 per barrel in the fourth quarter, triggering a further economic slowdown and outright destruction of oil demand,” Galimberti said.
The Rystad VP highlighted that, in April, the IMF downgraded its 2022 world GDP growth forecast from 4.4 percent to 3.6 percent, citing the impact of global inflation, hawkish monetary policies in the U.S., lockdowns in China and supply chain disruptions worldwide.
“It also cited the war in Ukraine, sanctions against Russia and elevated commodity prices as the other key factors weighing on the global economy,” Galimberti said.
Demand Under 100MM Barrels Per Day in 2022
In a report sent to Rigzone last week, Standard Chartered forecasted that overall 2022 global oil demand will stay below 100 million barrels per day. The company projected that demand will increase from 97.5 million barrels per day in 2021 to 98.9 million barrels per day this year.
The International Energy Agency (IEA) and Energy Information Administration (EIA) 2022 oil demand forecasts, which were highlighted in Standard Chartered’s report, also see overall global oil demand coming in below 100 million barrels per day this year.
The IEA expects this figure to rise from 97.5 million barrels per day in 2021 to 99.4 million barrels per day in 2022 and the EIA expects demand to increase from 97.4 million barrels per day in 2021 to 99.8 million barrels per day in 2022.
Conversely, the OPEC secretariat oil demand forecast predicts that demand will rise from 96.8 million barrels per day in 2021 to 100.5 million barrels per day this year, Standard Chartered’s report highlighted.
A” grade awarded by independent certifier after review of methane emission management programs
Certification process expanding to other U.S. shale operations
Independently certified natural gas helps meet customer demand for energy produced with fewer methane emissions
IRVING, Texas, April 26, 2022–(BUSINESS WIRE)–ExxonMobil said today that approximately 200 million cubic feet per day of natural gas produced from its Permian Basin facilities at Poker Lake, New Mexico have been independently certified and received the top grade for methane emissions management. The certification from MiQ helps the company meet customer demand for energy produced with fewer emissions. ExxonMobil is the first company to achieve certification for natural gas production associated with oil.
In preparation of bringing its Alaska Strategic Metals Complex online in 2024, Ucore Rare Metals Inc. has streamlined its management and technical teams and secured new feedstock for the future rare earths separation plant.
To be developed near the Southeast Alaska port town of Ketchikan, the Alaska SMC is a processing facility that will do the hard work of separating rare earths into the individual elements that are used in a variety of high-tech applications.
Though often referred to as a single entity, rare earths are a group of 17 elements – the 15 lanthanides that make up the second row from the bottom on the periodic table plus yttrium and scandium, a pair of elements almost always found in REE deposits and have similar characteristics – each with its own distinct traits.
Several of the lanthanide elements are used for the permanent magnets in electric vehicle motors, wind turbines, computer hard drives, high fidelity speakers, and other high-tech applications. Other rare earths are used for the color phosphors in televisions and computer monitors, various alloys, lasers, rechargeable batteries, and catalysts.
Rare earth deposits typically contain some mix of all these elements and are mined together. The difficulty is separating these closely related and tightly interlocked elements once they are recovered.
Untangling these elements so that they can be used across a wide span of high-tech and industrial sectors is where Ucore and its Alaska SMC come in.
Reorganizing Innovation Metals
Two years ago, Ucore acquired Innovation Metals Corp., a private Canada-based company that developed RapidSX for the separation and purification of rare earth and other critical metals to be used at the Alaska facility.
RapidSX is basically a modernization and technological upgrade to the conventional solvent extraction method that has been the standard for separating rare earths for more than 40 years.
Traditional solvent extraction, which remains the primary method of REE separation in China, involves running a mixed rare earths product through vats of various solvents that progressively separate the notoriously interlocked rare earths into individual elements – a long process that requires dozens of steps and a relatively large environmental footprint.
Utilizing an innovative column-based platform developed by IMC, RapidSX is more than ten times faster and much more environmentally sound than the mixer-settler units used for traditional SX separation.
“Ucore’s May 2020 acquisition of IMC and RapidSX was a transformative decision for the company,” said Ucore Rare Metals Chairman and CEO Pat Ryan.
Testing of this separation technology was completed last year and is now ready to be upgraded to a demonstration-scale plant before being implemented at the Alaska SMC.
In February, Innovation Metals Chairman and CEO Gareth Hatch, President Tyler Dinwoodie, and COO Kurt Forrester turned in their resignations. This forced Ucore to reorganize the management structure to continue to advance RapidSX and its Alaska SMC project.
To do this, the company turned to partners Kingston Process Metallurgy Inc. and Mech-Chem Associates Inc., which have played key roles in the development and testing of RapidSX.
KPM founders Alain Roy and Boyd Davis have taken more prominent positions in the Kingston RapidSX Commercialization and Development Facility in Ontario, which is where the demonstration plant is being developed.
Under their leadership, the KPM team of scientists and engineers will be working closely with Forrester and Jaan Hurditch, the RapidSX platform development manager at Innovation Metals, on the RapidSX demonstration plant, now scheduled for commissioning in mid-2022.
At the same time, Mech-Chem is working with Ucore to prepare the process designs for the production operations to manufacture commercial-grade rare earth oxides from rare earth concentrates at the new Alaska SMC manufacturing facility.
“This new SMC manufacturing facility will produce high purity REOs to meet the growing North American market demand for these products as the United States shifts toward electrification. Mech-Chem is proud to be a partner in the engineering, design, and construction of Ucore’s US-based rare earth oxide manufacturing facility,” said Mech-Chem President Ralph Cook.
As part of the streamlining process, Innovation Metals will be directed by the Ucore board, which is led by Ryan.
“The RapidSX technology platform uniquely positions Ucore to compete with the world in the most difficult aspect of the rare earth supply chain – the separation of REEs into high-purity individual REOs. And to do so in an efficient and environmentally friendly manner based on industry-established and well-proven chemistry. I am very proud of the team we have assembled to enable this transition to commercialization, and we look forward to delivering for our shareholders and for North America,” said the Ucore chairman.
Securing Alaska SMC supply
Reorganized and ready to move forward, Ucore announced that it has entered into a preliminary agreement to source mixed rare earth carbonate from Germany-based thyssenkrupp Materials Trading for processing at the Alaska SMC.
“Thyssenkrupp Materials Trading is a stalwart in the global critical metals industry and the perfect prospective partner for Ucore’s development of an independent rare earth supply chain in North America,” said Ryan.
Under a memorandum of understanding between the companies, thyssenkrupp will supply Ucore with feedstock for the demonstration plant in Ontario and at least 1,000 tons per year of this rare earth precursor material for the Alaska SMC beginning in 2024.
“Together with our partner, we now have the opportunity to significantly contribute to the establishment of a strategically important and reliable supply chain of rare earth products in North America through the supply of high-quality carbonate,” thyssenkrupp Materials Trading CEO Wolfgang Schnittker said about the deal with Ucore.
The Alaska SMC will be initially designed to produce up to 2,000 metric tons of individual rare earth oxides per year, and then expand to more than 5,000 metric tons per year by 2026.
In addition to the material to be supplied by thyssenkrupp, Ucore plans to process rare earth carbonates produced by Vital Metals Ltd., which has a rare earths mine in Northwest Territories and a processing facility in Saskatchewan.
Under an MOU signed by the parties in October, Vital will sell to Ucore a minimum of 500 metric tons of rare earths oxides, not counting cerium, to Ucore by 2024 and will expand its Canadian operations to supply at least 50% of Ucore’s planned 5,000 metric ton per year capacity at Alaska SMC by 2026.
The agreements with thyssenkrupp and Vital are key to Ucore’s mission of the Alaska SMC part of a complete rare earths supply chain with no links to China.
“Ucore continues to cultivate relationships with potential like-minded upstream and downstream partners in the evolving Western world market; with the ultimate goal of ensuring that original equipment manufacturers transforming to an electrified economy continue to have access to a comprehensive North American raw material and finished goods supply chain,” Ryan said last year.
“If I can find something bipartisan, we don’t need reconciliation,” Manchin, of West Virginia, said in an interview on Monday.
A bipartisan energy package, like the infrastructure bill passed last year, could undercut the broader Democratic agenda but give President Joe Biden an election-year victory on an issue voters care about.
Manchin met with other senators from both parties Monday to “gauge bipartisan interest in a path forward that addresses our nation’s climate and energy security needs head on,” said his spokeswoman, Sam Runyon.
Manchin told reporters after the meeting that one area of common ground could be reform of the federal oil and gas leasing process. The administration, which has sought ways to increase domestic oil production, has called on Congress to make oil drillers pay penalties when they don’t use leases.
“You’re going to have to have a leasing program that works, O.K., and making sure that leases are fair, and people are not sitting on leases,” Manchin said. “We need to look at all that,” he said. “We haven’t done that.”
Manchin also said Congress could focus on increasing domestic production of energy in the near term and provide incentives for climate-related projects in the longer term.
The approach could revive some of the $550 billion in climate and energy spending in the Build Back Better Act, which stalled in December after Manchin declared he couldn’t support it. He has since talked about a possible reconciliation package that would include energy, tax, and drug pricing pieces along with substantial deficit reduction.
In addition to reform on permitting, a potential package could include revisions to federal land policy, aid for domestic pipelines, efforts to bolster production of both liquefied natural gas at home and abroad and critical minerals, a person familiar with the matter said. It’s possible the changes could be paired with hundreds of billions of dollars in new and expanded tax credits for wind and solar power, nuclear plants, biofuels, and advanced energy manufacturing sought by Democrats and the White House and included in earlier iterations of the Build Back Better spending bill, the person said.
Runyon didn’t immediately respond to a request for comment about the possible elements of a deal.
The move could be a long shot. An effort to side-step the budget reconciliation process would require at least 10 Republicans to reach the 60 votes needed for passage, while at the same time winning the support of progressive Democrats in the House.
A bipartisan deal could also provide a path forward for other energy priorities that Manchin has called for in recent weeks, including action on Equitrans Midstream Corp.’s Mountain Valley Pipeline, construction of which stalled in his home state after a federal court in January rejected its permit to cross a national forest.
Manchin last month publicly called on the administration to move forward with a litany of energy requests including increasing oil-and-gas production on both federal and private lands, a new five-year Gulf of Mexico oil-and-gas leasing plan from the Department of Interior to replace one expiring in June, and the construction of new natural-gas pipelines and export terminals.
While an increase in PM2.5 is minor and pollution levels in North Pole are half of what they were in 2014, it's not clear if levels will drop enough to satisfy federal requirements by 2024. https://t.co/u5IxeeHHRO
Today’s Key Takeaways: ConocoPhillips is challenging a land use permit issued by the state of Alaska for Santos’ Pikka project. Experts predict gasoline prices will rise even higher. Oil sunk below $100 a barrel as fears of a COVID-19 lockdown in China’s capital ease the global demand crunch. Top Republican on House climate change panel harangued the American Petroleum Institute for preparing to propose a carbon tax. US could enter lithium market in a big way.
ConocoPhillips (COP.N) is challenging a land use permit issued by the state of Alaska that may block the development of Santos’ (STO.AX) $3 billion Pikka project, the biggest new oil project on Alaskan land in decades.
The appeal marks the latest move in a dispute between ConocoPhillips and Pikka developer Oil Search, which Santos acquired last year, over fees that Oil Search would pay ConocoPhillips to use roads in the U.S. independent’s Kuparuk River Unit (KRU), next to Pikka.
Oil Search rejected ConocoPhillips’ proposal to pay $95 million in fees and applied to the state for a permit to access the roads, which the Alaska Department of Natural Resources granted on March 29, until the two companies reach a road use agreement. read more
ConocoPhillips is challenging that permit on the grounds the department “improperly granted” Oil Search “access to KRU roads that are the private property of the KRU lessees”, according to a letter dated April 5, and reviewed by Reuters, from the company to department Commissioner Corri Feige.
Feige has granted ConocoPhillips until May 18 to file additional information and given Oil Search until June 7 to respond, according to an April 8 letter reviewed by Reuters from Feige to the two companies.
Feige denied a request from ConocoPhillips to put a hold on the land use permit while the appeal is being considered.
The roads dispute casts a cloud on Santos’ effort to attract buyers for its 51% stake in Pikka. ConocoPhillips, the largest oil producer in Alaska, had earlier held talks with Oil Search to buy a stake in Pikka and is still seen as a likely bidder.
In a quarterly report on Thursday, Santos reaffirmed its guidance on Pikka, saying the project’s Phase 1 has received all major environmental and regulatory approvals and is on track to be ready for a final investment decision by mid-year.
In a whiplash turn, oil has again sunk below $100 a barrel as fears of a COVID-19 lockdown in China’s capital ease the global demand crunch.
The international benchmark Brent crude fell 4.6% to $101.74 a barrel at 4:34 a.m. ET; the U.S. crude West Texas Intermediate fell 4.9% to $97.07.
The oil price downturn comes after a rise in the number of COVID-19 cases in China’s capital Beijing prompted mass-testing, lockdown rumors and panic-buying. In Shanghai, the Shanghai composite stock index saw its worst day since February 2020 after the city reported record daily deaths over the weekend.
In addition to a drop in demand for oil in China—the world’s biggest crude importer—analysts believe the Ukraine War and surging inflation are also destroying the demand for oil.
“The ongoing war in Ukraine, COVID-19 lockdowns in China and surging commodity prices are going to take a significant bite out of global oil demand this year, with the potential to calm high prices,” Claudio Galimberti, senior vice president of analysis at research company Rystad Energy, wrote in a note.
Rystad Energy estimates oil demand will drop around 1.4 million barrels per day with a rebound unlikely until at least 2023. It projects annual world average of oil demand will hit 99.6 million barrels per day, dropping well below the pre-pandemic high of 100.2 million barrels set in 2019.
And as GDP growth is further weighed down by COVID-19 related lockdowns and geopolitical issues—the International Monetary Fund recently downgraded its 2022 world GDP growth forecast from 4.4% to 3.6%—global oil demand will continue to feel downward pressure.
Supercycle or demand destruction
Falling oil prices have been welcomed by the Western world, which was grappling with rising inflation even before many countries shut off the tap to Russian oil following the country’s invasion of Ukraine.
The U.S., Canada, the U.K., and Australia have banned Russian oil outright, while the EU, which is far more dependent on Russian energy, is planning to roll out its own embargo. Sanctions on Russian exports are sustaining high oil prices, which analysts at Rystad say will lead to a broad economic slowdown, negatively impacting the demand for oil.
Oil has also weakened on the prospect of higher U.S. interest rates. A strong U.S. dollar makes dollar-priced commodities like oil more expensive for other currency holders and increases risk aversion among investors.
But China’s lockdown policy is the greatest threat to rising oil prices, as millions of residents in a Beijing district were told to submit to three days of virus testing starting Monday, stoking fears of another city-wide lockdown. “It seems that China is the elephant in the room,” Jeffrey Halley, analyst at brokerage OANDA told Reuters. “The tightening COVID-zero restrictions in Shanghai, and fears Omicron has spread in Beijing, torpedoed sentiment today,” he said.
“The big story in oil continues to be China,” said Keshav Lohiya, founder of consultant Oilytics told Bloomberg. “The hit to domestic demand will be significant if Beijing follows Shanghai’s route.”
As risks to consumption escalate, analysts have turned bullish on oil prices. “Shrinking demand is a direct result of the impact of lower economic activity globally,” Galimberti wrote, adding, “despite continued supply tightness, a demand slump could provide some respite for global prices.”
In this week’s preview of what to watch in oil and gas markets, Rigzone’s regular energy prognosticators take a look at gasoline prices, Congress action, crude production rates, and more. Read on below to find out the specifics.
Rigzone:What developments/trends will you be on the lookout for this week?
Phil Kangas, Advisory Leader for Natural Resources & Mining, Grant Thornton LLP: According to AAA, gasoline prices nationwide stand roughly $1.20 above where they were this time last year. Forecasters are now predicting these prices will rise even higher, despite efforts by the Biden administration to lower summer gasoline prices with increased use of ethanol. In Washington, the U.S. House and Senate each held committee hearings earlier this month on the rising price of gasoline and its effect on American consumers. As both chambers of Congress return from spring recess … it will be worth watching to see if any substantive legislative action follows.
Hillary Stevenson, Director, Industry Relations at oil and gas data firm Validere: U.S. Crude Production rose 100,000 barrels per day to 11.9 million barrels per day last week. Production forecasters expect production to reach anywhere from 12 to 12.9 million barrels per day by the end of the year. Production increases are anticipated for the back half of the year, especially given the June oil and gas drilling lease sales on public lands announced by the U.S. Department of Interior. Most of the acreage on offer is located in Wyoming. U.S. production is being closely watched with global supply hindered by outages in Libya, CPC pipeline damage, and continued official and voluntary sanctions on Russian oil.
Experts: U.S. could enter the lithium market in a very big way.
U.S. must reduce its reliance on lithium imports from the lithium triangle.
Geothermal technologies could unlock large lithium deposits in the U.S
The US could enter the lithium market in a very big way. At least, that’s what some experts are claiming. The global demand for lithium is on the rise, especially in the US. This should come as no surprise, as lithium-ion batteries are essential to electric vehicles and energy storage. Still, the question remains: is the US capable of breaking its reliance on lithium imports from Argentina, Chile, Russia, and China?
Lithium Production Needs to Increase
Because of the increased demand for electric vehicles, lithium extraction technology has seen heavy investment. These millions aren’t just coming from the likes of General Motors either, but the US Energy Department.
Right now, much of the focus is on direct lithium extraction (DLE). These technologies aim to extract lithium from brine using filters, membranes, ceramic beads, and other “micro-level” solutions. While such methods are successful, it’s unclear whether they can be scaled up for commercial production.
DLE technology necessitates vast amounts of potable water and electricity. Before the US could boost lithium production, we would need a clear plan to provide ample amounts of both. Since these resources are not particularly abundant, it also gives detractors more ammo to criticize lithium investment.
Looking to Geothermal Sources
According to this report, geothermal technologies are about to unlock large amounts of lithium hidden in naturally occurring hot brines. These are essentially concentrated saline solutions that circulate through super-heated rock in places like San Diego’s Salton Sea. In doing so, the solutions pick up many of the elements contained within the rock, including lithium.
The previously mentioned issue of water supply is clearly addressed through this method. After all, geothermal power plants use heat from the earth to generate a constant supply of steam. This allows them to run the turbines necessary to produce electricity.
The report also stated that if current tests are successful, the 11 existing geothermal plants along the Salton Sea could produce enough lithium metal to meet US demand 10 times over.
Science Paving the Way to the Lithium Market
Cypress Development Corp recently announced results from its Lithium Extraction Pilot Plant in Amargosa Valley, Nevada. It stated that the lithium extracted via the ion exchange in the recovery area boasts superior separation efficiencies. At the same time, major cations exceeded 98%. Results have also identified preliminary extraction rates of between 83% and 85% within the washed tails.
Meanwhile, lithium extractions performed with the Lionex process are clocking in at 98%. Perhaps most importantly, the report stated that overall impurity removal exceeded 99%. US Energy Secretary Jennifer Granholm remarked at an energy conference last month that DLE technology was a “game-changer” and a “great opportunity” for the United States.
This should come as no surprise to energy insiders. Recently, Warren Buffett’s Berkshire Hathaway Inc. was given a US $15 million grant by the US Energy Dept. to test DLE technology. Again, the site of the tests will be California’s Salton Sea.
Scoping Study in North America
Just 700 km from CentrePort Canada, Snow Lake Lithium is creating the world’s first all-electric, fully renewable lithium mine. Meanwhile, Snow Lake Resources Ltd. has commissioned a scoping study to assess the proposed creation of a Lithium Hydroxide Plant in South Manitoba. The company called the study “a strategically important step” toward creating North America’s first fully renewable, fully electric, and fully integrated lithium processing operation.
Starting this month, the study will accelerate the company towards commercialized lithium production. It’s hoped the research will identify the technologies, innovations, skills, and potential partners required to create a world-class lithium hydroxide plant in Manitoba.
The creation of a lithium hydroxide plant would greatly impact North American industry. Specifically, it would enable the integration of a domestic supply of this critical resource. Electric car companies could improve output and potentially even lower prices.
Waiting for the Future
Snow Lake Lithium currently has 11.1 million metric tons of inferred resources at 1% Li2O. The mine has further plans to expand its resources based on the current active drilling campaign.
The scoping study mentioned above will commence in April 2022 and should complete by Spring 2023. Meanwhile, Snow Lake Lithium will continue its engineering evaluation and drilling program across its Thompson Brothers Lithium Project site. Company leaders expect that the mine will transition to commercial production in late 2024.
Only time will tell if the US and its northern neighbor can capitalize on this massive opportunity. Until we experience a breakthrough, the entry into the global Lithium Market remains a matter of “baby steps.”
POLITICS:
Key Republican lashes out at API over ‘crappy’ carbon tax Jean Chemnick, Climatewire, April 22, 2022
“Why don’t you just give Americans pink slips, force thousands into bankruptcy, and hand over Poland and the Baltics to [Russian President] Vladimir Putin while you’re at it?” asked Rep. Garret Graves (R-La.), the ranking member of the House Select Committee on the Climate Crisis, in a statement. “These European-based energy ideas are exactly what empowered Putin to invade Ukraine. Do us a favor and go sell these crappy ideas to North Korea, China, and Russia.”
Graves was responding to a report by The Wall Street Journal that API is in the process of moving a draft carbon tax proposal through its governing committees. The powerful oil and gas industry association first endorsed carbon pricing last year as part of a larger climate framework. The draft proposal, which was leaked to the Journal, has yet to be adopted.
Graves’ aggressive tone highlights again the growing wedge between industry and GOP lawmakers on a range of issues — including climate change (Climatewire, April 6).
His statement came the same day that Republicans in Florida’s state House voted to strip Disney — the Sunshine State’s top private employer — of long-established tax perks over the company’s opposition to Florida’s “Don’t Say Gay” law.
Graves, in his statement, cast a carbon tax as a blight to consumers in a period of rising gasoline prices.
GOP strategist Michael McKenna said that shows how the Republican Party has emerged as a “pro-consumer, pro-worker, and pro-market” party, “rather than reflexively pro-business.”
API argued that a carbon tax would not burden consumers — especially if it rebated a share of the revenue to households and replaced other regulations.
“At a time when Americans are paying for climate policy through hidden taxation and overlapping regulations that could increase the cost of energy, we are focused on analyzing solutions for the most transparent and impactful way to reduce emissions at the lowest cost to American families, and this proposal is part of that process,” said API Senior Vice President for Communications Megan Bloomgren.
API is far from the only big business organization to embrace a carbon tax, at least in theory. The U.S. Chamber of Commerce and the Business Roundtable have also expressed support for the policy.
Some advocates saw evidence as recently as last month that Republicans might be coming around to support a carbon levy if it’s written to benefit U.S. businesses over global competitors.
“In the context of climate policy, I think the lens with which [Republicans] view policy is a lens focused on U.S. competitiveness, securing supply chains, and a greater focus on ensuring the U.S. is a global supplier of clean energy and clean energy technologies,” said Greg Bertelsen, CEO of the Climate Leadership Council, in an interview with E&E News in March, before the API draft was leaked.
That trend had accelerated since Russia invaded Ukraine, he said.
While major legislation like an economywide carbon price would be unlikely to move during an election year, he said, “I feel confident in saying that you will continue to see businesses from all industries of all sizes increasingly come to a market-based solution like a carbon price as their preferred approach, and I think you will continue to see Republicans coming to climate policy in a meaningful and sincere way.”
