Today’s Key Takeaways: Pebble victim of rare veto. Oil prices have found a floor? FERC speeds up 3 natural gas proposals. “Every single metal on periodic table is extremely bullish.”
The U.S. Environmental Protection Agency on Tuesday effectively vetoed a proposed copper and gold mine in a remote region of southwest Alaska that is coveted by mining interests but that also supports the world’s largest sockeye salmon fishery.
The move by the agency, heralded by Alaska Native tribes and environmentalists who have long pushed for it, deals a potentially devastating blow to the proposed Pebble Mine and comes while an earlier rejection of a key federal permit for the project remains unresolved.
Pebble Limited Partnership CEO John Shively in a statement called the EPA’s action “unlawful” and political and said litigation was likely. Shively has cast the project as key to the Biden administration’s push to reach green energy goals and make the U.S. less dependent on foreign nations for such minerals.
The Pebble Limited Partnership, the developer behind Pebble Mine, is owned Canada-based Northern Dynasty Minerals Ltd.
Crude oil prices have found a floor and the only way they can go from here would be higher. That’s according to RBC commodity analysts Helima Croft and Michael Tran, as quoted by Bloomberg.
“We remain constructive on the fundamental framework, and in fact, we would not be the least bit surprised if the lows of the year end up being the US$72/bbl (per barrel) print that we saw three weeks ago on the second trading day of the year,” they said, adding that China’s reopening had not yet been fully priced in to the oil market.
This might sound a bit surprising given that China’s reopening is being cited as the biggest reason behind oil prices’ recent climb upwards and as the biggest tailwind for them going forward.
Yet with reports coming in about still high infection rates in the world’s largest importer of crude oil, it may well be the case that China’s reopening has not yet been priced in to the oil market.
“We don’t think that there’s much that’s being priced into the oil market as a function of China’s reopening yet and the reason why is because the consumer path towards normalization is still going to be quite bumpy,” Michael Tran told Bloomberg in an interview.
This path to normalization will likely be marked by an increase in imports, which are still about 1.5 to 1.7 million bpd below where they were pre-pandemic, according to Tran.
Not all of these volumes need to return for oil prices to spike, the analyst noted, however. “The key idea here is we don’t need to get all of that back for the market to rally significantly. If you start picking up a quarter million, half million, [or] one million barrels a day over the course of the next several months, you better bet that this is going to be an oil market that moves higher,” Tran told Bloomberg.
GAS:
FERC speeds up environmental reviews for 3 gas projects Miranda Wilson, Energywire, January 30, 2023
The Federal Energy Regulatory Commission plans to conduct environmental assessments in the coming months for proposals in Alabama, Texas and Pennsylvania.
Three natural gas proposals pending before the Federal Energy Regulatory Commission will be subject to a shorter environmental review process under acting Chair Willie Phillips, the agency said last week.
FERC will conduct environmental assessments in the coming months for gas pipeline projects proposed in Alabama, Texas and Pennsylvania, according to a series of public notices.
Under former Chair Richard Glick, who left the agency early this year, FERC staff had been scheduled to conduct environmental impact statements, which involve a longer and more detailed review process.
The projects in question are Texas Eastern Transmission LP’s Appalachia to Market II and Entriken HP Replacement Project as well as Transcontinental Gas Pipe Line Co. LLC’s Southeast Energy Connector Project and Texas to Louisiana Energy Pathway Project.
The projects are largely aimed at expanding the flow of gas through existing pipeline systems. Project sponsors and shippers have described the developments as necessary for ensuring reliable access to gas.
In the case of the Southeast Energy Connector Project, Transcontinental has said the pipeline would enable a power plant in Alabama to switch from burning coal to natural gas.
Also last week, FERC said it would prepare a supplemental environmental assessment for a liquefied natural gas expansion project on the Gulf Coast of Texas.
The environmental assessment for the Port Arthur LNG Expansion Project, which is being developed by Port Arthur LNG LLC, will focus on “impacts on air quality, environmental justice communities, and climate change,” according to a notice from the agency.
The project, which would increase the amount of natural gas exported from an existing terminal, has been opposed by local environmental advocates and community groups in the region.
In a comment sent to FERC in 2021, the Port Arthur Community Action Network said it had “deep concerns that FERC has not taken a hard enough or appropriate look” at the expansion proposal, particularly regarding visual impacts, air pollution and other concerns.
FERC did not say in the notices what prompted the change in environmental reviews.
But the shift comes as Republican lawmakers and the natural gas industry have complained that environmental impact statements at the agency had taken too long under Glick. Both Glick and Phillips are Democrats.
Phillips has expressed interest in ensuring that FERC’s decisions promote environmental justice, the notion that all communities deserve access to a clean and healthy environment. Earlier this month, he announced that FERC would hold a roundtable discussion in March on environmental justice and equity.
Another priority of his is to ensure a reliable, secure energy system, the acting FERC chair has said.
“Reliability remains job number one,” Phillips said during a commission meeting this month.
Gold prices could break an all-time high in 2023 and the outlook for “every single metal on the periodic table” is incredibly bullish, which could be very good for the junior exploration sector.
Those were some of the prognostications Monday at the Vancouver Resource Investment Conference, which followed on the heels of last week’s Association of Mineral Exploration (AME) Roundup conference, attended by close to 6,000 people from around the world.
EPA Decision Preemptively Blocking Pebble Mine Illustrates the Serious Obstacles For Mining in the U.S.
WASHINGTON, D.C. – The National Mining Association (NMA) issued the following statement on the U.S. Environmental Protection Agency (EPA) decision to prohibit mining at the proposed Pebble Mine and future proposals in the area, blocking any development actions across more than 300 square miles of Alaska land. “Given skyrocketing minerals demands and the fragility of our global supply chains, domestic mining has never been more important. But today’s announcement from EPA is in stark contrast to national and global realities. “The Biden-Harris administration’s electrification and energy priorities – all of which rely on access to considerable minerals and metals, including those the Pebble project would develop – cannot possibly be realized responsibly if U.S. government authorities continue on this adversarial path with domestic mining projects. With our technological and energy future on the line, these minerals and metals will come from somewhere. The question for government authorities and environmental groups is this: will we source them here at home, creating jobs through projects that will be held to the world’s highest environmental, labor and safety standards, or will they be sourced from geopolitical rivals and countries that rely on child labor and unsafe work conditions? Allowing the preemptive veto of any development project before the review process is completed would suggest the answer is the latter. We note as well that the comprehensive environmental impact statement completed by the Corps of Engineers indicated that the mine would have no population level impact on the Bristol Bay fishery. “This end-run of the proper permitting process creates significant regulatory uncertainty for the mining industry during a crisis point for minerals demand.”
There are few things funnier than @JoeBiden touting a car that costs more than the average family's annual salary, that is the most inefficient EV on the road and more inefficient than most gas cars, and best of all, ineligible for tax credit under his Administration's rules. https://t.co/MtJPUIRgpZ
Today’s Key Takeaways: Environmental movement willing to sacrifice whales for wind. Will oil prices climb if Fed stops hiking interest rates? Alaska triples proven reserves of natural gas. Biden blocks another U.S. source of copper, critical for EV batteries. Investigating financial assets managers for ESG policies.
Since the passage of the 1973 Endangered Species Act, environmentalists have fought for strict protections for endangered species. They have demanded that the government apply what is known as the “precautionary principle,” which states that if there is any risk that a human activity will make a species extinct, it should be illegal.
And yet here we are, on the 50th anniversary of the Endangered Species Act, watching the whole of the environmental movement — from the Audubon Society and the National Wildlife Federation to scientific groups like the Woods Hole Institute, New England Aquarium, and Mystic Aquarium — betray the precautionary principle by risking the extinction of the North Atlantic right whale.
The cause of this environmental betrayal is massive industrial wind energy projects off the East Coast of the U.S. The wind turbine blades are the length of a football field. Sitting atop giant poles they will reach three times higher than the Statue of Liberty. The towers will be directly inside critical ocean habitat for the North Atlantic right whale.
There are only 340 of the whales left, down from 348 just one year earlier. So many North Atlantic right whales are killed by man-made factors that there have been no documented cases of any of them dying of natural causes in decades. Their average life expectancy has declined from a century to 45 years. A single additional unnatural and unnecessary death could risk the loss of the entire species.
The National Oceanographic and Atmospheric Administration (NOAA) has given the wind industry 11 “incidental harassment authorizations,” or permits to harass hundreds of whales, including 169 critically endangered right whales.
The industry will bring more ships into the areas that could strike and kill whales. Submarine noise pollution from the wind farm’s construction and operation, and entanglements in equipment, also add to the risk. So too could air turbulence generated by the turbines harm or destroy zooplakton feeding grounds.
Defenders of the wind projects say they can reduce and mitigate the noise and ship traffic from the wind farm construction, but a senior scientist with the National Oceanographic and Atmospheric Administration (NOAA) contradicted that claim last spring when he wrote in a letter that “oceanographic impacts from installed and operating [wind] turbines cannot be mitigated for the 30-year lifespan of the project unless they are decommissioned.”
Scientists representing many of the same environmental groups supporting the industrial wind energy projects wrote in a 2021 letter that “the North Atlantic right whale population cannot withstand any additional stressors; any potential interruption of foraging behavior may lead to population-level effects and is of critical concern.”
Industrial wind projects “could have population-level effects on an already endangered and stressed species,” concluded the NOAA scientist, Sean Hayes. What are “population-level effects?” In a word: extinction.
What is going on? How is it that nearly every major conservation and environmental organization is actively championing industrial energy projects that could lead to the extinction of a whale species?
Traders believe the Federal Reserve could finally stop hiking interest rates this March as indicators suggest inflation is finally coming under control.
Oil prices climbed on Friday on positive economic data coming out of the U.S., and expectations are the hike this week will be lower than previous ones.
Other bullish factors for oil prices include rising Chinese demand and growing geopolitical risks in the Middle East following reports of drone attacks in Iran.
Traders expect the Federal Reserve to end its rate hikes in two months, which could push oil prices higher due to the generally inverse relationship between rates and oil prices.
According to a Reuters report, the Fed might end its rate-hike policy as soon as March, as economic indicators suggest inflation is slowing down and getting under control. What’s more, the Fed is set to announce another hike in benchmark rates this week but it may be lower than previous ones, at 25 basis points.
Oil prices climbed last week on the positive economic data coming out of the United States, although Treasury Secretary Janet Yellen has warned that a soft landing was far from certain and there was still a danger of recession.
Coupled with expectations for a rebound in oil demand in China, a lower rate hike and any other indication that the Fed may be preparing for a wind-down of its aggressive inflation control measures could lend additional upward potential to oil prices.
There has also been added support for prices from the reported drone attacks on targets in Iran, suggesting a possible escalation in Middle Eastern tensions. The reports pushed oil prices higher in morning trade in Asia today, although prices have since fallen back.
Some stability could come from the OPEC+ meeting this week as there are no expectations of any tweaks to the current policy of the extended cartel, with many members still unable to fulfill their production quotas even with their reduction last year.
China remains the biggest bullish factor for oil prices, however, especially after the government in Beijing said over the weekend it would aim to stimulate consumption as a means of boosting economic growth after the lockdowns.
Uncertainty remains, however. “We have Russia on the supply side and China on the demand side. Both can swing by more than 1 million barrels per day above or below expectation,” one investment manager told CNBC.
“China seems to have surprised the market in terms of how fast they are coming out of zero Covid while Russia has surprised in terms of resilience of export volume despite the sanctions,” Stefano Grasso said.
Proved reserves of natural gas in the United States grew to a new record of 625.4 trillion cubic feet (Tcf) in 2021, a 32% increase from 2020, according to our recently released Proved Reserves of Crude Oil and Natural Gas in the United States, Year-End 2021 report. U.S. proved reserves had previously decreased 4% in 2020 as a response to prices that fell with decreased consumption during the first year of the COVID-19 pandemic. At year-end 2021, however, five of the eight states with the most proved reserves of natural gas each reported new record volumes, driving the growth nationally.
Proved reserves are operator estimates of the volumes of oil and natural gas that geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions. Prices heavily affect estimates of proved reserves. The wholesale spot price for natural gas at the U.S. benchmark Henry Hub in Louisiana averaged $3.89 per million British thermal units in 2021, almost doubling from 2020, according to data from Refinitiv.
The US Interior Department on Thursday blocked mining in part of northeast Minnesota for 20 years, the latest blow to Antofagasta Plc’s Twin Metals copper and nickel mining project but a step officials said is needed to protect the state’s vast network of interconnected waterways.
Interior Secretary Deb Haaland signed an order on Thursday withdrawing 225,504 acres in the Superior National Forest from leasing to mining or geothermal companies through 2043.
In 2019, Chilean miner Antofagasta (LON:ANTO), through its subsidiary Twin Metals, carried out a feasibility study for the project, an underground copper-nickel mine and processing facility along the shores of Birch Lake and the South Kawishiwi River, which lie in the Rainy River watershed.
A coalition of businesses, environmental advocates and outdoor recreation groups in the state of Minnesota went to court challenging a Trump administration’s decision that opened the door to a copper, nickel and platinum project by a wilderness area.
In August 2022, Antofagasta Plc’s Twin Metals subsidiary sued the US government in a bid to revive the proposed Minnesota copper and nickel mine, which Biden administration officials had blocked over concerns it could pollute a major recreational waterway.
Twin Metals asked the US District Court in Washington to restore the leases, which were first granted in 1966 and have been passed between successor companies. No mining has taken place at the site.
The underground mine would, if built, be a major US source of copper and nickel, two metals crucial for the green energy transition. The only existing US nickel mine is set to close by 2025.
Consumers’ Research, bolstered by millions in donations and the Republican takeover of the House, targets Wall Street’s evaluation of climate risks
Bankrolled by mysterious donors, a little-known group named Consumers’ Research has emerged as a key player in the conservative crusade to prevent Wall Street from factoring climate change into its investment decisions.
On Dec. 1, the group joined 13 state attorneys general in calling for a federal regulatory agency to investigateVanguard, one of the world’s three biggest financial asset managers. Consumers’ Research accused Vanguard of “meddling with [the] energy industry to achieve progressive political goals at the expense of market efficiency.”
Within days, Vanguard announced it was quitting a coalition called the Net Zero Asset Managers Alliance and shelved its own modest pledges to cut the amount of greenhouse gas emissions linked to companies in which it invests. Leaders of Consumers’ Research were surprised — and elated.
“I knew we had found something important,” said Will Hild, who became executive director of the organization in March 2020, just as the pandemic hit. “But I didn’t know Vanguard would just capitulate.”
Vanguard didn’t put it that way. In a statement, it affirmed its commitment to “helping our investors navigate the risks that climate change can pose to their long-term returns,” despite leaving the business coalition.
Even so,Hild’s group and other opponents of “woke capitalism” are feeling emboldened now that Republicans control the House of Representatives. They see themselves as part of a political alliance that can scrutinize and possibly derail the environmental, social and governance — or ESG — goals of corporations and the Biden administration.
Some big Wall Street firms — most notably BlackRock, State Street, Vanguard and Fidelity Investments — have publicly embraced sustainable investing, partly because of investor demands and pressure on businesses to speed up climate measures.
Great op-ed this AM. Will be even more noteworthy if @EPA continues its anti-jobs crusade w/ a threatened @PebbleProject veto. If you want "green" energy, you NEED projects like Pebble and Twin Hills (MN)…unless you want China to be enriched. https://t.co/UqzculHyvZ
Today’s Key Takeaway: “To sustainably meet increased demand for minerals, the United States, regional partners, and mining companies should align incentives and reconcile the tension between the need to expand production with the environmental and social considerations of affected communities. It is therefore imperative to increase mining production, both at existing mines and in new mines, while ensuring that mining is socially licensed and generates inclusive economic gains for countries and communities.
The modern economy hinges on mining. From the inner workings of computers and chips to the batteries inside cars, to industrial power generation and distribution, metals and minerals extracted from the earth directly touch the lives of countless individuals. As the United States and international community look to spur a transition to clean energy and mitigate the effects of climate change, demand for these resources will skyrocket. A myriad of estimates all point to the need for a dramatic uptick in mining in the near to mid-term. The World Bank projects the need for a 500 percent increase in graphite, cobalt, and lithium production by 2050. In 2022, one estimate claimed that approximately 700 million metric tons of copper would be needed over the next 22 years to reach sustainable economic growth targets—roughly the equivalent to what has been mined over the past 5,000 years of human history. Still other projections find that more than 300 new mines extracting critical minerals will be needed by the year 2030 to prevent a crippling supply shortage.
These estimates are rooted in a sanguine assessment of the requirements of achieving ambitious environmental and climate goals. The landmark study from S&P Global on the future of copper cited above bases its projections on the Paris Climate Agreement and the goal of net zero emissions by 2050. These analyses underscore a key insight—that the transition to clean energy is inextricably linked to a renaissance in mining, and more broadly, a renewed focus on the entire mineral supply chain. Indeed, virtually every technology seen as critical to the green revolution, from electric vehicles (EVs) to solar and wind power, demand far greater inputs of minerals and metals than traditional carbon-intensive methods. In the United States, the average American is already estimated to consume around three million pounds of minerals, metals, and fuels over their lifetime, a number which will in all likelihood increase as the energy transition continues to accelerate.
Another common thread visible in recent studies of the mining industry is that the world remains largely unprepared to meet the dramatic uptick in demand for minerals. There is little sign that the supposed 300 new mines needed to meet clean energy needs for cobalt, graphite, lithium, copper, and vanadium will be anywhere close to operational by 2030. Indeed, only approximately 25 bona fide greenfield mineral discoveries are made each year, with only a fraction of these attracting enough interest and financing to become a new mine. Increasing mineral supply is further complicated by the long time horizons required to move from identification of a mineral deposit to extraction, as well as the significant negative externalities mines impose on nearby communities.
Today’s Key Takeaways: Rely on sound science re: Willow – not the sound of outside voices. Natural gas prices fall below $3. Trilogy Metals confirms high grade copper at Arctic site in Ambler Mining District. Tongass restrictions reinstated by Biden Administration.
In the northeast corner of Alaska’s National Petroleum Reserve, there’s a 600-million-barrel reserve of petroleum called the Willow project. The United States needs that oil and has had to wait too long to get it.
The lease was acquired in 1999, when Bill Clinton was president. The permitting process has continued on over two decades and through five presidential terms. Its final approval is now with the Biden administration’s Bureau of Land Management.
It has the ongoing support of Alaska’s bipartisan congressional delegation. The bureau estimates it will generate more than $10 billion in tax and royalty revenue, which, under current law, will be administered by the state of Alaska. Half the federal royalties will be used to support local native communities’ public health clinics, schools, public safety, transportation, and search and rescue capabilities.
The Willow project has the backing of native groups. This support was expressed directly to the bureau by Joe Nukapigak, president of the Kuukpik corporation. John Hopson Jr., an Inupiat whaling captain and local elected official, has called on the White House for support. Alaska Federation of Natives President Julie Kitka wrote that the project “has undergone stringent environmental permitting and a vigorous community engagement process” in a letter urging approval to President Biden’s interior secretary, Deb Haaland.
Alaska’s workers and unions are on board, too. Joey Merrick, president of the Alaska District Council of Laborers, called the project a job creator that will generate 2,000 construction jobs and 300 permanent positions. That’s a lot of jobs and paychecks in a small community. Mr. Merrick also noted the bureau’s estimate that 75% of Willow’s installation work, about 9 million man-hours, will come from union labor working for union wages.
Most of the opposition to the Willow project comes from the lower 48. The Alaska Wilderness League, which is based in Washington, D.C., and The Wilderness Society, the Sierra Club, the Defenders of Wildlife, Evergreen Action, and Friends of the Earth are the groups that rallied outside the White House, calling for the termination of the $8 billion NPR-A Willow project.
Relying on the sound of their voices rather than sound science, the protesters complained about the potential impact on the environment, and the caribou and their migratory habits. They didn’t have much to say about the jobs that won’t be created if the project isn’t allowed to move forward.
In Alaska, Voice of the Arctic Inupiat, which represents Inupiat groups on the North Slope — says the protests from green groups are a threat to their way of life. “Outside groups from nearly 4,000 miles away are actively co-opting our voices and promoting misinformation to the Biden administration in an effort to drown out the perspectives of the local communities and regional leadership who overwhelmingly support the Willow Project. Those actively working to stop the Willow Project threaten our Iñupiat culture that relies on and coexists with projects like Willow.”
The greens’ loudest complaint is that the project would produce as much carbon emissions as 66 new coal-fired power plants.
Setting aside the argument that, based on demand, an equal amount of oil will be consumed, whether from Willow or Venezuela, the opposition’s carbon emissions claims are full of soot. Using EPA calculations for the latest Chinese coal-fired power plant, all the oil produced by the Willow project will produce what comes out of about eight new coal plants in a single year.
If the anti-Willow protesters were truly concerned about carbon emissions, why not picket the Chinese? In 2021, China added more coal plants than the rest of the world combined. Their emissions will wipe out several years’ worth of carbon emission reductions here in the U.S.
Perhaps carbon emissions are the real target. To compare, China produces about twice as much of the world’s carbon dioxide — 23% — as the U.S. The U.S. reduced its carbon footprint to 2005 levels by 2020. Policies remain in place to continue that trend. America leads the world in carbon dioxide emission reduction, while China is on track to double its emissions in less than 20 years.
There is a certainty that energy costs will continue to rise. This hurts Americans’ bottom line. When demand is stable and more energy is available, costs decline. When less energy is available, the price rises.
Americans cite the price of energy as one of their biggest concerns. To reduce it, produce more of it. Once online, the Willow project will help do that. Equally important, it will benefit native Alaskans, union workers and the Alaskan economy. It is time for the Biden administration to move past the protest placards and give life to Alaska’s Willow project.
• Todd Tiahrt is a former member of Congress and ranking member of the Appropriations Subcommittee on Interior, Environment and Related Agencies.
US natural gas futures extended losses below $3 amid mild winter weather that helped spark the worst selloff among the country’s commodities.
Gas for February delivery lost as much as 9.7% to $2.77 per million British thermal units Thursday on the New York Mercantile Exchange. Prices have been at the lowest levels since April 2021 after dipping below $3 on Wednesday.
Doomsday fears that suppliers wouldn’t be able to meet wintertime demand have been erased by a confluence of factors, leading gas prices to plunge more than 70% after hitting a 14-year high of $10.03 in August. The key reason for the fall: The US and Europe managed to refill their buffer inventories ahead of winter, and relatively balmy seasonal temperatures in the Northern Hemisphere have so far damped demand for heating.
The latest revisions to the weather forecast were “absolutely brutal”, indicating that a looming cold shot in the US won’t last much and leading traders to bet on mostly mild February temperatures, said Gary Cunningham, director of market research at risk management firm Tradition Energy.
The premium typically commanded for gas delivered in March rather than April — essentially a bet on how tight supplies will be at winter’s end — has reversed to a discount.
“That alone tells you that traders have given up on winter,” Cunningham said. “The bears are ruling the market and the bulls have been chased into the shadows.”
The amount of gas stored in salt caverns and depleted aquifers fell by less than usual for a second straight week after an unprecedented increase earlier this month, and is now almost 5% above the average for the past five years, the Energy Information Administration said Thursday.
Also weighing on prices, the longer-than-expected shutdown of a Texas liquefaction terminal has constrained US gas exports and thus boosted domestic supplies. On Monday, Freeport LNG, the terminal operator, requested permission to resume some operations at the facility, but the Federal Energy Regulatory Commission hasn’t yet responded.
Natural gas had been one of the most bullish commodity stories in recent years. Prices hit the August high amid a global supply crunch that was aggravated last year by Russia’s invasion of Ukraine.
Trilogy Metals Inc. Jan. 25 reported that consistent high-grade intercepts from its 2022 infill drill program at Arctic confirm the continuity of high-grade copper-zinc-lead-gold-silver mineralization within this volcanogenic massive sulfide deposit within the famed Ambler Mining District in Northwest Alaska.
“As expected, the 2022 infill drill program continues to yield high grades of copper, zinc and precious metals, demonstrating the continuity of the high-grade zones of these metals at Arctic,” said Trilogy Metals president and CEO Tony Giardini.
Arctic is the most advanced deposit within the Upper Kobuk Mineral Projects, a 448,217-acre land package that includes Arctic and more than a dozen similar VMS targets on state lands, plus the world-class Bornite copper-cobalt deposit and similar carbonate-hosted prospects on land owned by the Northwest Alaska Native regional corporation, NANA Corp.
A 2020 feasibility study for developing a mine at Arctic details a financially robust operation that would produce 1.9 billion pounds of copper, 2.3 billion lb of zinc, 388 million lb of lead, 386,000 ounces of gold, and 40.6 million oz of silver over an initial 12-year mine life.
POLITICS:
TONGASS ROAD-BUILDING AND LOGGING RESTRICTIONS REINSTATED: The U.S. Forest Service said yesterday it is reinstating restrictions on road-building and logging in the Tongass National Forest in Alaska, an effort to settle a two-decade long dispute over America’s largest temperate rainforest, after its Clinton-era protections were rolled back during the Trump administration.
Tongass is roughly the size of West Virginia, and has a unique ecosystem made up of rainforests, fjords, and coastal islands, as well as ancient, towering trees that store more than 8 percent of the carbon accumulated by the rest of the country.
In addition to prohibiting road construction, the Forest Service rule would restore protections making it illegal for logging companies to remove timber in the roughly 9.3 million acre forest.
“As our nation’s largest national forest and the largest intact temperate rainforest in the world, the Tongass National Forest is key to conserving biodiversity and addressing the climate crisis,” Agriculture Secretary Tom Vilsack said in a statement yesterday.
Alaska’s governor, Mike Dunleavy (R), objected to the decision, writing on Twitter yesterday that “Alaskans deserve access to the resources that the Tongass provides — jobs, renewable energy resources and tourism, not a government plan that treats human beings within a working forest like an invasive species.”
From the Washington Examiner, Daily on Energy
The USDA Forest Service finalized its repeal of the Tongass National Forest’s exemption from the 2001 Roadless Rule. This decision ignores requests from the State of Alaska, & data/analysis from the last administration, to revert from the 2020 exemption & reinstate the 2001 rule. pic.twitter.com/Yo4C8QSskk
Today’s Key Takeaways: Oilfield service sectors big beneficiaries of market upheaval. Fundamentals strong for $90+ oil. Exxon stops gas flaring in Permian. AK ranks high for best mining jurisdictions for investment. Is EV car mania slowing?
The “Big Three” international oilfield services groups last year registered their most profitable 12 months since the heyday of the US shale boom as high energy prices in the wake of Russia’s invasion of Ukraine spurred global drilling activity.
Halliburton, Baker Hughes and SLB reported aggregate net income of $4.4bn in 2022, the highest combined figure since 2014, as the war in Ukraine exacerbated fears over fuel shortages and triggered a rush to boost oil and gas production.
Olivier Le Peuch, chief executive of SLB — previously known as Schlumberger — described 2022 as a “pivotal” year for the energy industry, which he said had entered the “early phase of a structural upcycle”. “Durability is here to stay — and we are talking about years,” he said. Oilfield services groups — which provide personnel and equipment to do the grunt work of the oil and gas industry, drilling wells and pumping oil — have been among the biggest beneficiaries of the market upheaval that followed the outbreak of war in Ukraine.
The sector’s biggest players in recent days announced strong fourth-quarter results, with Halliburton reporting on Tuesday, capping off a banner 2022.
Surging energy prices over the past year have pushed up drilling and production activity and triggered a rush to secure the equipment and personnel provided by services groups.
Tight supply has allowed them to raise prices. Meanwhile, intensive cost-cutting regimes implemented during the Covid-19 pandemic have bolstered margins.
“Rising profitability paired with constrained capital expenditures is allowing these companies to generate strong free cash flows,” said Jim Rollyson, head of oilfield services equity research at Raymond James.
Fundamentals are not yet strong enough to sustain prices above $100 per barrel, but they are strong enough to sustain a prolonged period of trading above $90 per barrel.
That’s what analysts at Standard Chartered believe, according to a new report sent to Rigzone by the company, which noted that a “sharp decline” in the first two trading days of the year has been followed by a “steady correction” upwards.
“This has seen the rally that started on 5 January extend beyond $10 per barrel on 23 January, taking Brent intra-day above its $88.63 per barrel Q4-2022 average for the first time this year,” the analysts stated in the report.
“The rally has been a steady grind upwards; in the past 12 trading days there have been 10 days of higher intra-day highs and 11 days of higher intra-day lows,” the analysts added.
In the report, the analysts noted that the rally has been supported by more positive speculative sentiment.
“Our crude oil money-manager positioning index increased by 23.2 week on week to -39.6 in the latest data, the largest week on week improvement since the price lows of April 2020,” the analysts said in the report.
“We think trader consensus during this month has become less concerned about OECD recession and more convinced of the prospect of significant demand growth, from China and India in particular. With the market currently fairly balanced and greatly improved sentiment, we think the rally can continue its grind higher,” the analysts added in the report.
One of the biggest oil producers taking part in the most prolific U.S. shale play has decided to stop routine gas flaring in the Permian and plans to push for all other shale well operators to do the same.
In an interview with Reuters, Exxon officials said they would insist on tougher flaring regulations in a bid to achieve a phase-out of the practice.
“It levels the playing field,” the chief environmental scientist of the supermajor, Matt Kolesar, told Reuters. “We need strong regulations so it doesn’t matter who owns the facility.”
Flaring has come into the spotlight of environmental concerns in the past few years as it is associated with the release of significant amounts of methane, which is a more potent but shorter-lived greenhouse compound than carbon dioxide.
What’s more, reducing flaring increases the amount of natural gas an operator produces, and in today’s gas market, this is not a benefit to be overlooked.
According to Exxon, an end to flaring is a worthy goal to pursue—worthier than making oil companies pay for the emissions generated through the use of their products—the so-called Scope 3 emissions. Reducing methane emissions is by far the most cost-effective means of reducing overall emissions in the industry, Kolesar told Reuters.
To do this, the supermajor plans to deploy satellites to track emissions in the Permian. It has also made a minor investment in directing associate gas from oil production operations in the Permian to a pipeline, which is the optimal way of dealing with methane emissions.
Exxon plans to spend some $17 billion on reducing its emissions by 2027. The money will be used for ending flaring and carbon capture and storage, among other things. Environmentalists are not happy with this sort of plan because they do not envisage a reduction in oil and gas production.
Electric car manufacturers in Europe are slowing down production because battery cars have proven too expensive for the middle class and the supply of lithium for their batteries is too uncertain. Production in Europe this year is expected to be 12 million cars—a million less than previous estimates. Tesla, for example, is cutting prices to boost demand. Of more than 900 auto executives surveyed internationally, 76 percent believe that inflation and high-interest rates will slow sales and that EV adoption will take longer. In the United States, that figure was 84 percent. The median expectation for EV sales by 2030 dropped to 35 percent in the United States, from 65 percent a year earlier. Longer-term impediments cited by the executives include the availability of raw materials for batteries, as well as stricter rules around federal incentives for buying electric vehicles. Also, consumers see touted fuel savings not materializing. Britain’s Daily Mail reports: Electric vehicles can be more expensive to fill up on the open road than their petrol and diesel equivalents as the cost of utilities continue to spiral.
Britain
It is now expected that the UK will produce 280,000 fully electric cars and vans in 2025, down from a previous estimate of 360,000. That forecast means only a quarter of car output will be electric within the next two years, lower than prior forecasts of more than a third. Declining production threatens to wreck a key government plan to cut greenhouse gas emissions by banning sales of new petrol and diesel cars by 2030. A recovery in EV sales by 2030 is ‘uncertain’ due to ongoing supply chain issues, particularly of lithium needed for electric car batteries, as well as political tensions across the globe.
BMW announced in October that it would stop production of the electric Mini at its plant in Oxford, England and transfer that operation to China. Jaguar, owned by India’s Tata Motors, has not produced further details on plans to become fully electric by 2025.
UK consumers are also concerned about operating costs with the average cost of charging an electric car increasing by 58 percent since last May. Also, UK councils are planning double-digit increases in parking fees. Charges will increase by around 10 percent from April in various areas. An all-day ticket in Dudley will shoot up by 43 percent to £5 and fees will rise by 29 percent at the most popular sites in Cornwall, to £2.20 an hour. Local authorities have defended the increases because they are under financial pressure, but others worry that higher parking fees will hurt town businesses.
