Today’s Key Takeaways: $90 oil in 2023 – $120 when China reopens. ExxonMobil larger than Tesla in terms of market cap. Russian plans for Turkish gas hub faces obstacles. Teck generates $1.1. billion in economic contributions to Alaska. Stidolph in as Governor’s legislative director.
S&P Global’s base case forecast for oil prices is $90 a barrel for 2023, but Dan Yergin warns there are major uncertainties looming over markets.
For example, he said there’s a chance prices could retake $120 when China fully reopens — that would be around the same level as March highs after Russia invaded Ukraine.
Dan Yergin expects oil at $90 in 2023 but says there’s a chance it could go as high as $121 when China fully reopens but warned there are three major uncertainties looming over the market.
“Our base case for 2023 is $90 for Brent but you have to look at other cases,” the S&P Global vice chairman said, adding there are three major uncertainties: the Federal Reserve’s decisions, China demand and Moscow’s reaction to the price caps.
“If China gets over Covid … then you add a lot of demand to the market,” Yergin told CNBC’s “Street Signs Asia” on Tuesday.
That could be “one big boost” and push prices to $121 a barrel, building on strains caused by underinvestment in oil and gas, Yergin said. That would be near highs set in March after Russia invaded Ukraine.
On the flipside, Yergin said prices could fall to around $70 per barrel in a recession.
In the past three weeks, local and central government authorities in China loosened several strict Covid measures that had required people to stay home and businesses to operate mostly remotely.
Oil demand from the world’s top importer could reach 15.7 million barrels per day in 2023, which is around 700,000 barrels higher than 2022, S&P said in its most recent forecast.
Other considerations include Russian President Vladimir Putin’s response to the price caps imposed by the European Union, as well as further rate hikes undertaken by the Fed.
EU energy ministers on Monday agreed to cap natural gas prices at 180 euros per megawatt hour, but the European Commission cautioned that the measure could be suspended if the “risks outweigh the benefits.” The decision came on the heels of an oil price cap of $60 per barrel at the start of December.
Yergin said he thinks the recently imposed gas price cap “probably will work. He said it also acts as an anticipation of higher gas prices in subsequent winters due to a lack of Russian gas and competing demand between Europe and Asia for LNG.
In Asia’s Wednesday morning trade, Brent crude futures added 0.40% to $80.31 a barrel, while U.S. marker West Texas Intermediate futures traded up 0.33% at $76.48 per barrel.
Clarification: This story has been updated to clarify that Dan Yergin expects oil at $90 in 2023 but says there’s a chance it could go as high as $121 when China fully reopens.
ExxonMobil is now larger than Tesla in terms of market cap, according to companiesmarketcap.com, a list of the world’s largest companies by market capitalization which excludes non-publicly traded companies and updates rankings daily.
Exxon jumped up to ninth in the list, with a market cap of $439.38 billion, while Tesla dropped down to 10th, with a market cap of $435.13 billion, companiesmarketcap.com showed Wednesday. The largest company by market cap is currently Apple, with a market cap of $2.10 trillion, and the largest oil and gas company by market cap is currently Saudi Aramco, which is second overall in the list with a market cap of $1.81 trillion, companiesmarketcap.com highlighted.
Back in June, ExxonMobil was ranked 16th in the companiesmarketcap.com list with a market cap of $362.84 billion. Saudi Aramco was the largest company by market cap at the time, with a market cap of $2.16 trillion, while Apple was the second largest company by market cap at the time, with a market cap of $2.12 trillion, the list showed in the summer.
Exxon describes itself as one of the world’s largest publicly traded energy providers and chemical manufacturers. The business, which traces its roots back to 1859, produces more oil and gas than any other U.S. energy company, according to its site. In its third quarter results statement, Exxon reported total revenues and other income of $112.07 billion and a net income of $19.66 billion.
Tesla is building a world powered by solar energy, running on batteries, and transported by electric vehicles, according to its website. The company was co-founded by Elon Musk, who recently took control of Twitter in a multi-billion-dollar deal. In its third quarter results statement, Tesla reported total revenues of $21.45 billion and a net income of $3.33 billion.
Russia is turning to Turkey as a potential natural gas hub partner with a new sense of urgency to find new export outlets for volumes left stranded by damages to the Nord Stream pipelines in September.
But any hub would likely face political, financial and supply issues that are compounded by the Kremlin’s war in Ukraine, said Maximilian Hess, a Central Asia fellow at the Foreign Policy Institute.
Russian President Vladimir Putin and Gazprom PJSC head Alexei Miller met President Recep Tayyip Erdogan in Kazakhstan in October to revive gas hub plans. Erdogan and Miller met again last month in Istanbul. Russia could divert gas planned for the Nord Stream pipeline to the Black Sea, Putin told Erdogan.
“Turkey will be a hub for natural gas,” Erdogan said in Ankara last month. “In our last meeting, we agreed with Putin on this issue. We will create a hub here with Turkish gas coming from Russia.”
Turkey has not joined western sanctions against Russia and has continued to trade with the country. However, Turkey faces its own problems with the Kremlin, including a dispute over the prices it pays for Russian natural gas imports, which “could stall regional hub talks,” Hess said.
Prepared by Deloitte, Teck’s annual Economic Contribution Report details the economic benefits created in the communities and jurisdictions where Teck operates, including payments to suppliers, employee wages and benefits, and payments to governments. It captures not only Teck’s direct economic impacts, but also the indirect impacts which arise from generating demand for goods and services provided by our suppliers and the induced impacts which arise from the spending of salaries and wages earned as a result of our operations.
For more information and to download Teck’s 2021 Economic Contribution Report, click here.
Governor Mike Dunleavy today announced Laura Stidolph has accepted the position of Legislative Director in his office.
Stidolph returns to the Dunleavy Administration after serving as Deputy Legislative Director from 2020 to 2021.
“The legislative director’s role during the legislative session can’t be overstated,” said Governor Dunleavy. “Laura has a strong grasp of the legislative process, and over the course of her career, cultivated longstanding relationships with Alaska’s lawmakers and policy leaders. I look forward to many productive sessions with her as my legislative director.”
Ms. Stidolph spent a decade in the Alaska Legislature as an aide in the House for legislators on both sides of the political aisle. The past year and a half she served as GCI’s Government Affairs Manager. Born and raised in Alaska, she lives with her family in Juneau on Douglas Island.
Her first day will be January 2, 2023.
The U.S. joins the Sustainable Critical Minerals Alliance alongside six other countries. U.S. minerals mining is a great example of the industry's environmental leadership and how it will strengthen and accelerate our transition to advanced energy: https://t.co/SbHdzshzoUpic.twitter.com/ZBayAQ2E2e
Today’s Key Takeaways: Bankers want clarity on ESG commitments to investors. Russian oil exports reduced by 54% in first week of G-7 sanctions. Europe’s proposed gas price cap threatens supply to the area. U.S. lithium project advances to final stages. From “no oil” to “more oil.”
The Net Zero Asset Managers alliance, set up just two years ago, brought together asset managers worth a combined $66 trillion.
In October, banks including JP Morgan, Morgan, Stanley, and Bank of America, threatened to leave the UN-backed group of ESG-conscious financial institutions.
Texas has also threatened to pull out its investments from large asset managers if they continued to be antagonistic to the oil and gas industry.
Earlier this month, Vanguard, the world’s largest asset manager, quit a net-zero banking alliance saying it wanted more independence and more clarity about its ESG commitments to investors.
Then, a week later, HSBC, the UK-based, developing world-focused lender, announced it would suspend direct financing and advisory services to new oil and gas projects, bowing under the pressure of shareholders and environmental activists.
The two events seem completely unrelated, but they are signs of things to come: fractures in the ESG investment movement are appearing–and they are likely to grow bigger at a time when consumption of fossil fuels is set to hit a new high.
The Net Zero Asset Managers alliance, set up just two years ago, brought together asset managers worth a combined $66 trillion. It later joined the UN-backed Glasgow Financial Alliance for Net Zero, led by former Bank of England governor Mark Carney.
In October, banks including JP Morgan, Morgan, Stanley, and Bank of America, threatened to leave the UN-backed group of ESG-conscious financial institutions on the concern of breaking U.S. antitrust legislation if they comply with the GFANZ guidelines for making investment decisions.
It is in legislation that the biggest cracks are appearing, after Republicans regained a majority of the lower house of the U.S. parliament and began a crackdown on ESG investments and the possibility of such investments violating antitrust law.
It is these same Republicans, both in Congress, and in states, that are mounting pressure on asset managers and banks with regard to their ESG commitments. And some are pulling out their investments from the majors: Florida recently pulled out $2 billion worth of investments from BlackRock because of its ESG agenda.
Country’s volumes plunged by more than half in week to Dec. 16
Russia’s seaborne crude shipments collapsed in the first full week of Group of Seven sanctions targeting Moscow’s petroleum revenues, a potential source of alarm for governments around the world seeking to avoid disruption to the nation’s giant export program.
Some of the plunge was exaggerated by work at a port in the Baltic that’s now finished, but there also appeared to be a shortage of ship owners willing to carry key cargoes from an export facility in Asia. Several other ports also showed week-on-week declines. The data must be treated carefully, because weekly flows are at the mercy of the timing of cargo scheduling, the weather, and even the quality of signals that the vessels themselves transmit.
European Union sanctions that began on Dec. 5 are designed to curb Russia’s revenue from oil. On one hand, the bloc stopped buying but it also barred the provision of key services to enable the oil to be moved. The US, alarmed at the severity of the measures, pushed for the measures to be softened with the implementation of a price cap, keeping those things — especially insurance — available for buyers
But in the first full week after the EU ban on seaborne Russian crude imports came into effect, total volumes shipped from the nation dropped by 1.86 million barrels a day, or 54%, to 1.6 million. A less volatile four-week average also plunged, setting a new low for the year. Baltic Sea volumes should recover with work now ended, but the issues in the East may take longer to solve. elsewhere in the world when traders paid $60 a barrel or less for Russian oil.
LNG exporters may send fuel to Asia if prices are better
Price ceiling without demand cap risks supply deficit: Goldman
Europe’s move to cap natural gas prices threatens to curb supply to the region and intensify its energy crisis.
European nations this week reached a deal to put a ceiling on gas prices, ending months of political wrangling over whether to intervene in its energy sector. But while the mechanism may help prevent extreme price swings, it may leave the region vulnerable to insufficient supplies and stronger competition from Asia.
A price ceiling without an associated cap on demand risks making Europe’s gas supply deficit worse by encouraging consumption, Goldman Sachs Group Inc. analysts including Samantha Dart said in a report published Monday. That could tighten global supply next year and, in a worst-case scenario, force governments to ration gas.
NEVADA LITHIUM MINING PROJECT CLEARS KEY HURDLE AMID SOARING DEMAND: Emerging lithium supplier Ioneer said yesterday that its Rhyolite Ridge lithium-boron mining project in Nevada has advanced to the final stages of federal permitting, putting it on track to begin production in 2026 amid soaring demand for the critical mineral stoked by the IRA and other EV adoption incentives.
The project is the first lithium development project in the U.S. to advance to the final stage of federal permitting under the Biden administration.
According to a Benchmark analysis, lithium demand is forecast to rise to a whopping 2.4 million tonnes LCE, or lithium carbonate equivalent, in 2030 — far higher than the 600,000 tons expected to be produced in 2022.
Ioneer announced the news yesterday after the Bureau of Land Management said it would publish a notice of intent in the Federal Register to begin preparation of an environmental impact statement—a significant advancement toward completing the NEPA review process and approving the Rhyolite Ridge project’s plan of operations.
The company struggled to get permits earlier in the process due to its proximity to Tiehm’s buckwheat, an endangered wildflower protected by the U.S. Fish and Wildlife Service. It sent a revised plan of operations in July.
Ioneer inked deals with both Ford and Prime Planet Energy & Solutions, the joint battery venture between Toyota and Panasonic, to provide thousands of tons of lithium carbonate annually for its first five years of production.
POLITICS:
Italy is racing to set up a floating liquefied-natural-gas facility off the coast of Tuscany to reduce its dependence on Russian energy. The local town's residents are fighting it tooth and nail.https://t.co/XSatjE6oRj
Today’s Key Takeaways: Wood Mackenzie’s top energy predictions for 2023. $4B windfall for U.S. on oil-reserve sales. Germany launches first LNG terminal. Green aluminum output on the rise – good for carmakers and climate. CA oil drilling ban heads to ballot.
Analyst company Wood Mackenzie has compiled ten predictions for energy developments in the year ahead.
Wood Mackenzie presented ten of its analysts’ top predictions for 2023 but noted that unexpected events could forestall some of the events that currently seem likely.
Countries will follow US lead in policy support for low-carbon energy
The extended and expanded tax credits and subsidies offered to low-carbon energy in the US Inflation Reduction Act, signed into law in August, has caused companies around the world to reconsider investment decisions. Key measures in the act, including support for wind and solar power, battery storage, carbon capture, and low-carbon hydrogen, simply outshine existing policy frameworks in most other countries.
To remain competitive, those countries will have to introduce incentives that are closer in value to what is now available in the US. That will be a net gain for the world, not a zero-sum game: a leveling-up of policy support will unlock new business opportunities for the entire globe.
World oil demand growth will bounce back
As 2022 ends, global oil demand is faltering. For the fourth quarter of 2022, we expect a sharp decline in demand of 1.2 million b/d year-on-year. However, we think this downward trend will turn out to be short-lived. We are forecasting a brisk return to oil demand growth next year, with an increase of 2.3 million b/d for 2023, driven by the easing of Covid restrictions in China and the rising use of petrochemical feedstocks. This resumption of the upward trend in demand is likely to jolt the oil market out of its current doldrums and support prices.
There will be a slowdown in LNG contract signings
2022 was a busy year for LNG contracting, with deals signed for 80 million tonnes per year. Of that total, 75% was with exporters from the US, and over 50% was for portfolio players and traders. In 2023, we expect contracting activity to slow down.
Chinese companies will continue to buy, and US independent upstream and midstream players will continue to secure deals to access global LNG prices. But portfolio players will be more selective, placing their bets only on those projects that can move quickly. Meanwhile, European buyers are unlikely to commit to much supply, as they remain concerned about demand longevity and future pricing dynamics.
Washington emerges as unlikely winner after releases from Strategic Petroleum Reserve
Volatile energy markets have made 2022 a big year for commodity traders. One of the biggest and perhaps most unlikely winners: The U.S. government.
Emergency releases from the U.S. Strategic Petroleum Reserve are slated to end this month, concluding an unusual attempt to lower gas prices after Russia’s invasion of Ukraine sent oil prices soaring.
Over the release period, Washington sold 180 million barrels of crude at an average of $96.25 apiece, well above the recent market price of $74.29—meaning the U.S., for now, is almost $4 billion ahead.
The price of West Texas Intermediate to be delivered next month is down 40% from its wartime peak, reflecting concerns that China’s pandemic reopening isn’t juicing global demand.
The question is whether the good news will last.
Some market participants criticized the Biden administration’s March decision to authorize the releases, calling it an unprecedented intervention into the market. Now, as the differential between the prices of SPR sale and crude futures widens, some analysts and investors have called on the administration to begin replenishing its stockpiles.
The Energy Department, empowered by October rule changes that give it more flexibility in such purchases, is able to wait for favorable prices as it begins to refill more of the SPR’s skyscraper-sized underground storage caverns, a senior administration official said, adding that the process will likely take months and years. On Friday, the department solicited bids for 3 million barrels from a U.S. supplier starting in February.
“At some point, they will need to start buying irrespective of the market,” said Claudio Galimberti, senior vice president of analysis at the consulting firm Rystad Energy. “You cannot expect the U.S. government to behave like a trader.”
But the administration appears to be in no rush. It has said it believes the SPR’s remaining holdings—about 382 million barrels—leave it well-positioned to weather potential supply shocks. The SPR held about 593 million barrels of oil at the beginning of this year, according to the Energy Department, down from a peak of 727 million barrels in 2009.
Since then, the U.S. has emerged as a major oil exporter.
“There is no need to refill it to previous levels due to the shale revolution,” said Anas Alhajji, a managing partner at Energy Outlook Advisers.
“This facility alone can deliver more than 8% of Germany’s consumption.” Germany launched its first LNG terminal in a bid to help fill the country’s energy gap. Bloomberg’s Oliver Crook reports from a port in Wilhelmshaven.
Aluminum makers are set to boost low-carbon metal output by 10% in 2023 and churn out even more in the years ahead, driving down the cost for carmakers seeking climate-friendly supplies and shrinking the industry’s hefty carbon footprint.
Aluminum is the most energy-intensive metal to produce, accounting for about 1.1 billion tonnes of global CO2 emissions per year. Next year’s forecast increase in “green aluminum” output would reduce that by 13 million tonnes, or about 1.2%.
Pressure by governments to cut greenhouse gas emissions has given aluminum producers an incentive to ramp up output of the low-carbon material, which emits less than 4 tonnes of CO2 per tonne of metal compared to the global average of 16.6 tonnes.
That means global surpluses of green aluminum – largely produced using hydro power or recycled material – already weigh on the premium that producers can charge buyers, from automakers and beverage can firms to construction suppliers.
“It’s (the premium) been very modest now for the last couple of years,” Ivan Vella, chief executive of Rio Tinto Aluminum, told an investor conference last month.
Vella added that the company had seen some increases in premiums recently, without giving details.
Bid to undo Calif. oil drilling ban likely headed to ballot Anne C. Mulkern, ENERGYWIRE, December 15, 2022
Oil drillers and their allies gathered nearly 1 million signatures to get a proposition on the 2024 ballot to stop S.B. 1137, said Rock Zierman, chief executive officer of the California Independent Petroleum Association. They need slightly more than 623,200 valid ones to qualify.
Election officials must now check the validity of a sampling of those signatures. If verified, the petition would block S.B. 1137 from taking effect until voters decide on the law’s fate in the November 2024 election. The law bans oil wells within 3,200 feet of homes, schools, parks, and similar facilities.
The new law “would shut down production in the state of California,” Zierman said. “We wanted to give the voters a say in whether or not this law, which [state lawmakers] jammed through in the last five days of session, should stand or not.”
California allows residents and groups to add measures to the state ballot but gathering the required number of voter signatures is costly. Successful efforts are typically funded by wealthy backers.
Oil companies and their allies donated $20 million to the latest effort, Zierman said. It comes as Democratic Gov. Gavin Newsom and legislative leaders push to limit oil production in the state and lead the nation in fighting climate change.
“Big Oil will stop at nothing to put profits over people — and now they’re spending millions to overturn California’s law to protect kids and families from drilling in communities,” Daniel Villaseñor, a Newsom spokesperson, said in an email. “The Governor fought for this law and won’t back down from protecting Californians from the oil industry’s greed.”
Jamie Court, president of Consumer Watchdog, argued that the petition’s likely success shows the power of the oil industry. Eight drillers who helped finance the effort won 86 oil drilling permits this year for wells within the controversial zones covered under S.B. 1137, Court said.
Court argued that the Newsom administration should stop granting new drilling permits for wells in the affected areas until the referendum is decided.
“It’s clearly a threat to the health and safety of residents,” Court said. “The administration has the ability to deny permits,” based on “the health and safety of residents.”
Vision, an environmental justice group, has also filed a protest with the California secretary of state’s office, arguing that the signature gathering broke state rules. Kobi Naseck, coalition coordinator with Vision, said the petition’s block on the law won’t go into effect until the secretary of state investigates the claims.
In the complaint, Vision wrote that petition circulators lied to voters to get signatures. In Los Angeles, the group wrote, two signature gatherers repeatedly stated they were circulating a “petition on lowering gas prices” and that they “work[ed] with the State of California.”
The California secretary of state’s office did not immediately respond to an inquiry about how it would handle the allegations and the complaints.
Zierman, with the oil drillers’ association, said the secretary of state would investigate any complaint that’s been made.
“We have given clear instructions to our guys on the talking points” of the proposed referendum, he said. “We’ve been public about what it’s all about, and so I think that’s why people signed the petition in record time.”
Australia-based Santos Ltd. says it will achieve “net zero” carbon emissions for its new Pikka oil project on the North Slope, a $2.6 billion project that is now under construction.
Net zero is a kind of gold standard for environmental compliance that Santos and its partner, Madrid-based Repsol, hope will help secure funding amid criticism that new fossil fuel projects, particularly in the Arctic, contribute to global warming.
Santos’ Alaska president, Bruce Dingeman, said the Pikka project’s engineering and design will allow it to perform among the top-ranked of the world’s new oil developments with 53 percent less greenhouse gas emissions than average conventional onshore oil developments.
Pikka’s owners Santos and Repsol, expect to begin production in 2026 at 80,000 barrels per day in a phase one. A subsequent expansion, in a second phase, would double output to 160,000 barrels per day. Santos owns 51 percent of Pikka with Repsol owning 49 percent.
As now designed, Pikka will produce 14 tons of greenhouse gas emissions per thousand barrels of oil equivalent, mostly carbon dioxide in its phase one, Dingeman told an Alaska business group, the Resource Development Council, at RDC’s annual conference in November.
This compares favorably with the average of 40 tons for new onshore projects and 46 tons for the industry average, he said.
Pikka’s design that will deliver this emissions-control performance includes centralized gas turbine generator power distribution from the main production facility to satellite pads and drilling rigs; waste heat recovery units for all gas-fired turbines that will reduce or eliminate the need for process and building heat, and drilling operations technology that meet high U.S. Environmental Protection Agency standards.
Venting and flaring will not be allowed except for specific, non- routine situations, such as in testing and emergencies, he said.
Engineering strategies like this will lower the project’s emissions, Dingeman said, but covering the remaining gap to net zero will come through a forestry carbon offset agreement signed with a large Alaska Native corporation private landowner.
Alaska Native corporations own millions of acres of forest land and have several large carbon offset agreements in place with various industries.
The Native corporation holding the Pikka contract was not identified but Dingeman said the arrangement involves, as with similar deals, a forest management scheme which presumably limiting or prohibiting logging.
This would preserve the ability of forest acreage involved to absorb a volume of carbon dioxide that can be estimated with reasonable accuracy.
Alaska contractors are meanwhile gearing up for Pikka after a long period of low activity due most recently to the pandemic and before than an extended period of low oil prices.
Major site work including civil projects like roads and pads for phase one have been done but drilling of production wells, an iomprtant step, will begin this spring.
Dingeman said the contracts for the off-site fabrication of Pikka’s oil and gas processing facility and its seawater treatment plant were awarded at the Final Investment Decision, or FID, last fall along with contacts for a drilling rig and pipe materials.
By mid-November about 30 percent of the total project contracts, in value, had been let, Dingeman told the RDC. An important achievement for is that about 60 percent of the final engineering for Pikka was done at the time of the FID.
Usually about 30 percent is standard for engineering by the decision time for investment. Having more of the detailed design and engineering done typically increases a company’s confidence in the capital cost estimates. Most of the project spending will be done in 2023 through 2025.
About 400 million barrels of recoverable oil are now estimated to support the phase one production of 80,000 barrels per day. An eventual doubling of production, as is planned, requires 800 million barrels of recoverable oil resources.
Pikka has big implications for the state of Alaska and the regional economy. First phase production of 80,000 barrels per day will boost crude oil throughput in the Trans Alaska Pipeline System, or TAPS, by 15 percent, Dingeman said, which will have the effect of lowering tariffs for all North Slope oil moved through TAPS by an estimated $1 per barrel.
Pikka itself will generate substantial new production tax and royalty revenues to the state but the lower tariffs, or pipeline transportation costs, mean higher values for all oil on the North Slope, boosting royalty and tax payments to the state by all producers, not just Santos and Repsol.
The North Slope Borough, the regional municipality, has a big stake in Pikka, too. New facilities build would expand the industrial property tax base for the borough.
Alaska Native corporations benefit, too. While most of the leases for Pikka are owned by the state of Alaska there are some that are owned by Arctic Slope Regional Corp., or ASRC, the Alaska Native development corporation for northernmost region of Alaska.
Pikka is also seen by many as an “anchor” project that would build infrastructure to support development of nearby discoveries to the south. These include finds in the Quokka Unit adjacent to Pikka to the south and the Horseshoe Unit to the southwest where a find has been made that could ultimately be as important as Pikka.ConocoPhillips is also exploring the area south of Pikka with an exploration well this winter.
Today’s Key Takeaways: Granholm to Industry: “We are eager to work with you.” Biden may be ready to sign off on AK drilling project. Global gas crunch getting worse. Gates/Bezos backing Zambia copper mine. Schumer promises vote on Manchin permitting amendment.
Energy Secretary Jennifer Granholm extended an olive branch to the oil and gas industry, telling executives at a meeting in Washington that she recognizes fossil fuels will be around for a long time, even as the Biden administration works to transition away from them to cleaner alternatives.
“We are eager to work with you,” she said at the Wednesday meeting of the National Petroleum Council, an outside federal advisory group that includes executives from Exxon Mobil Corp. and Royal Dutch Shell Plc. “Moving too fast could have unintended consequences that hurt people, cause backlash.”
Her remarks come at the end of a year that’s seen a deterioration in the relationship between the industry and the White House. Biden has accused fossil fuel companies of price gouging and has weighed additional taxes on their profits as well as curbs on exports of refined oil products.
Granholm nodded to that friction Wednesday, beginning her remarks by acknowledging the “elephant in the room” and that the administration has “butted heads” with industry. Fossil fuel production will need to increase in the near future to meet growing demand, including a shortage of diesel in the Northeast US, she said.
When Joe Biden was a candidate to be his party’s nominee for President, he ran as one of the biggest foes of fossil fuels ever to make a credible run for the White House. He pledged to eliminate net carbon emissions by 2050, ween the country off dirty sources of energy and “end fossil fuel.”
He canceled the high-profile Keystone XL pipeline, took millions of acres of possible drilling off the table by scrapping leases to oil and gas companies, and banned imports of Russian oil. He even threatened oil firms with a windfall tax and likened them to war profiteers.
Environmental groups went gaga over his rhetoric and action alike, buoying his political alliances and giving climate change activists heart after years of broken promises.
And yet, a unique alignment of political and geological confluences may spur Biden in the coming days to do something that will leave those same green allies seeing red.
Biden’s administration is nearing a final decision on a potentially game-changing oil and gas project that has now been under consideration across five presidencies. The proposed Willow project in the northeast section of the National Petroleum Reserve-Alaska would produce 180,000 barrels of oil each day, create $10 billion in tax and royalty revenues, and create 2,000 construction jobs and 300 permanent ones. The massive project would require as many as five drilling sites, a processing facility, 50 miles of new roads, seven bridges, and an airstrip.
Local groups, including those representing Alaska Natives, as well as labor unions and the state’s congressional delegation, have all championed the project as a source of good union jobs and money for Alaska’s North Slope.
Chinese energy major CNOOC has forecast a seven percent increase in the country’s natural gas imports next year.
The energy giant is already looking for LNG cargoes for next year as the country continues to ease its Covid restrictions.
Pipeline imports from Central Asia are in decline while gas inventories in the north are already depleting at a faster rate than usual.
China’s natural gas imports are set for a 7-percent rise next year as the country reopens after Covid lockdowns, which could aggravate an already tight supply situation globally.
The 7-percent import increase forecast was made by state-owned energy major CNOOC, which said, as quoted by Bloomberg, that it was already looking for LNG cargoes for next year.
The report notes that gas inventories at ports in the northern part of the country are depleting at a faster rate than usual because the weather is colder, pushing consumption higher, and this will, too, have an effect on future demand for imports.
What’s more, pipeline supply of natural gas from Central Asia is in decline, which means China will need to rely more on LNG in its gas import mix to make up the difference. And this means more intense competition for a limited number of cargoes between Asia and Europe next year as well.
This year, Chinese gas demand has been trending lower for most of the year, with imports declining consistently over the first ten months of the year, per a report by Energy Intelligence. LNG imports were down by a sizeable 21.6 percent over the ten-month period, reflecting the effects of lockdowns and other restrictions under the country’s zero-Covid policy.
Yet now this policy is being reversed, mass mandatory testing is being dropped and analysts expect a rebound in economic activity before too long. This will drive higher demand for energy and contribute to higher prices due to the tight supply situation in both oil and gas.
This reversal of Beijing’s Covid policy surprised many, who expected tepid demand for energy to continue in one of the world’s largest consumers. If activity rebounds fast, securing sufficient gas supply for the next heating season will likely become a major problem for most importers.
KoBold Metals, a start-up backed by a coalition of billionaires including Bill Gates and Jeff Bezos, has committed $150 million to developing the Mingomba copper-cobalt mine in Zambia, said to be the world’s highest-grade undeveloped large deposit of the orange metal.
The start-up, which has Gates’ Breakthrough Energy Ventures and the world’s top miner BHP (ASX:BHP) as shareholders, will use its artificial intelligence tools to process drilling data and optimize exploration for copper and cobalt at Mingomba.
SENATE TO VOTE ON MANCHIN’S PERMITTING AMENDMENT, SCHUMER SAYS: Senate Majority Leader Chuck Schumer said he will force a vote on including Joe Manchin’s amended permitting reform bill in the annual must-pass National Defense Authorization Act (NDAA), seeking to honor the agreement made to secure the West Virginia senator’s support for the Inflation Reduction Act.
“As you know, Republicans blocked it in the House, even though permitting reform is something that they’ve always supported in the past,” he added. “So I hope they’ll help us [and] support it.”
