by wp_sysadmin | Jul 31, 2023 | Home, News
Today’s Key Takeaways: Oil prices post biggest monthly gains in a year. 88 Energy boosts reservoir estimates to 180 million barrels. Power issues slow down Red Dog output. First new nuclear plant in 30 years begins commercial operation in Georgia.
NEWS OF THE DAY:
OIL ON TRACK TO SEE BIGGEST MONTHLY GAIN IN MORE THAN A YEAR: Oil prices are set to post their biggest monthly gains in more than a year today, amid expectations that Saudi Arabia will extend its 1 million bpd voluntary supply cuts through September, tightening supplies and outpacing expected demand growth.
Brent crude futures rose above $85 per barrel this morning, while U.S.-based West Texas Intermediate climbed by a dollar to around $81.50 per barrel. Both have seen five straight weeks of gains and are on track to close out July with the largest single-month gain since January 2022 (when Russia was preparing to invade Ukraine), according to Reuters.
“Oil prices are up 18% since mid-June as record high demand and Saudi supply cuts have brought back deficits, and as the market has abandoned its growth pessimism,” Goldman Sachs analysts said in a note yesterday, which they attributed to lower supply from OPEC members, including Saudi Arabia, which extended its voluntary production cuts this summer.
“We still expect the extra 1 million bpd Saudi cut to last through September, and to be halved from October,” they added.
From the Washington Examiner, Daily on Energy
OIL:
88 Energy adds new reservoirs for Alaskan oil search
Andrew Duffy, The West Australian, July 31, 2023
Perth-based 88 Energy has bolstered its 100 per cent-owned Peregrine oil project in Alaska, adding two new reservoir intervals to its Harrier prospect, with 180.1 million barrels of oil as a best-case estimate.
Basin modeling has also revealed that Harrier sits in an area of improved reservoir quality and will be tested by the company with the drill-bit as a priority.
The Peregrine project is onshore on Alaska’s North Slope and encompasses about 126,000 contiguous acres, some 170km west of the Trans Alaska pipeline system. 88 Energy has identified three oil prospects in the area – Merlin, Harrier and Harrier Deep – and has revealed updated prospective oil resources for the former pair, based off well results at Merlin-2 and further 2D seismic interpretation.
READ MORE
MINING:
Power system issues slow Red Dog output
Shane Lasley, North of 60 Mining News, July 28, 2023
Teck still expects more than 1.2B lb of zinc from mine in 2023
Teck Resources Ltd. July 26 reported that power system issues at Red Dog impacted second-quarter production at this world-class zinc mine in Northwest Alaska.
Over the three months ending June 30, Red Dog produced 133,700 metric tons (294.8 million pounds) of zinc, which is 7% lower than the 143,800 metric tons (317 million lb) produced during the same period of 2022.
Teck attributes the drop in zinc output primarily to lower zinc grades, which were expected as part of the mine sequencing. A five-day shutdown of the mill due to power system availability, however, was unplanned and also impacted the operation’s second-quarter zinc production.
Higher lead grades more than offset the shutdown. During the second quarter, Red Dog produced 23,500 metric tons (51.8 million lb) of lead, which is 12% higher than the 21,000 metric tons (46.3 million lb) produced during the same period in 2022.
While Red Dog’s second-quarter zinc output was down compared to a year ago, it is up significantly from the first quarter, which was impacted by severe snowstorms. As a result, Red Dog produced 126,200 metric tons (278.2 million pounds) of zinc and 23,100 metric tons (50.9 million lb) of lead during the first three months of this year.
READ MORE
POLITICS:
The first US nuclear reactor built from scratch in decades enters commercial operation in Georgia
Jeff Amy,Yahoo!Finance, July 31, 2023
A new reactor at a nuclear power plant in Georgia has entered commercial operation, becoming the first new American reactor built from scratch in decades.
Georgia Power Co. announced Monday that Unit 3 at Plant Vogtle, southeast of Augusta, has completed testing and is now sending power to the grid reliably.
At its full output of 1,100 megawatts of electricity, Unit 3 can power 500,000 homes and businesses. Utilities in Georgia, Florida and Alabama are receiving the electricity.
Nuclear power now makes up about 25% of the generation of Georgia Power, the largest unit of Atlanta-based Southern Co.
A fourth reactor is also nearing completion at the site, where two earlier reactors have been generating electricity for decades. The Nuclear Regulatory Commission on Friday said radioactive fuel could be loaded into Unit 4, a step expected to take place before the end of September. Unit 4 is scheduled to enter commercial operation by March.
The third and fourth reactors were originally supposed to cost $14 billion, but are now on track to cost their owners $31 billion. That doesn’t include $3.7 billion that original contractor Westinghouse paid to the owners to walk away from the project. That brings total spending to almost $35 billion.
The third reactor was supposed to start generating power in 2016 when construction began in 2009.
Vogtle is important because government officials and some utilities are again looking to nuclear power to alleviate climate change by generating electricity without burning natural gas, coal and oil.
“This project shows just how new nuclear can and will play a critical role in achieving a clean energy future for the United States,” Southern Co. CEO Chris Womack said in a statement. “Bringing this unit safely into service is a credit to the hard work and dedication of our teams at Southern Company and the thousands of additional workers who have helped build that future at this site.”
In Georgia, almost every electric customer will pay for Vogtle. Georgia Power currently owns 45.7% of the reactors. Smaller shares are owned by Oglethorpe Power Corp., which provides electricity to member-owned cooperatives, the Municipal Electric Authority of Georgia and the city of Dalton. Oglethorpe and MEAG plan to sell power to cooperatives and municipal utilities across Georgia, as well in Jacksonville, Florida, and parts of Alabama and the Florida Panhandle.
Georgia Power’s 2.7 million customers are already paying part of the financing cost and elected public service commissioners have approved a monthly rate increase of $3.78 a month for residential customers as soon as the third unit begins generating power. That could hit bills in August, two months after residential customers saw a $16-a-month increase to pay for higher fuel costs.
Commissioners will decide later who pays for the remainder of the costs of Vogtle, including the fourth reactor.
by wp_sysadmin | Jul 28, 2023 | Home, News
Today’s Key Takeaway: “As progressive environmentalism prioritizes the procedural over the substantive, it undermines the development of battery minerals. And because the president has simultaneously squeezed fossil energy—he risks courting energy insecurity.”
Self-Defeating Environmentalism
Jordan McGillis, City Journal, July 26, 2023
As governments in the developed world try to coax their economies away from fossil fuels, commodities that enable alternative energy sources have become more vital. One such commodity, nickel, has seen record prices, spectacular crashes, and warehouse intrigue in recent months.
Nickel is a key to the “energy transition”: along with lithium, cobalt, and graphite, it facilitates the battery production that will theoretically support electric grids and transportation without coal, oil, or natural gas. Yet the very advocates of that transition have pursued policies that make it harder to acquire or process the metal.
According to a study on critical minerals from the International Energy Agency, energy-sector demand for nickel has jumped 40 percent in five years. Global exploration for nickel increased 45 percent in 2022 alone. Amid the scramble, the U.S. Geological Survey (USGS) included nickel in its critical mineral list for the first time last year.
Is the U.S. ready for a world in which nickel matters? As part of the Infrastructure Investment and Jobs Act, the Department of Energy allocated $3 billion to fund domestic production of materials needed for the battery supply chain. In 2022, President Biden issued an order pursuant to Section 303 of the Defense Production Act “to secure the supply” of “lithium, nickel, cobalt, graphite, and manganese for large-capacity batteries.” The U.S., the administration stated, depends for the minerals on “unreliable foreign sources”—principally China.
Yet President Biden has proved averse to the digging and processing of raw materials that his energy vision would entail. The administration quashed a domestic mining project that would have produced nickel ore from one of the largest fields ever discovered. Though the Army Corps of Engineers granted the project a crucial clean-water permit in 2019, the NewRange mine in Minnesota fell afoul of the preferences of a tribal group.
Then, at the behest of the EPA, the Corps revoked its previous approval this year on the grounds that the project “does not ensure compliance with water quality requirements of the Fond du Lac Band of Lake Superior Chippewa.”
The decision exemplifies an incoherent energy agenda. Biden’s executive order on energy security stipulated that all energy projects must satisfy “strong environmental, sustainability, safety, labor, Tribal consultation, and impacted community engagement standards.” Such vague standards open the door for a parade of complaints, rendering resource development prohibitively expensive and time-consuming. NewRange is reported to have spent $200 million solely in its doomed effort to obtain the requisite permits.
As progressive environmentalism prioritizes the procedural over the substantive, it undermines the development of battery minerals. And because the president has simultaneously squeezed fossil energy—for example, by tightening Corporate Average Fuel Economy requirements and power-sector emissions limits—he risks courting energy insecurity.
Meantime, China has sought to expand its critical-mineral empire. Its latest target is the ocean floor, a mining arena set for pioneering exploration in the coming years. According to USGS estimates, a portion of the Pacific Ocean southeast of Hawaii called the Clarion–Clipperton Zone alone holds three times as much nickel as do all of the world’s land-based reserves.
As for the Biden administration’s seabed-mining policy, envoy John Kerry said last year that his colleagues were “very wary of procedures that could disturb the ocean floor.”President Biden is doing everything in his power to electrify America—except, that is, approving the necessary mining expansions.
As the International Energy Agency warns, global demand for nickel and other critical battery minerals will more than double by 2030.
Progressives nod to the importance of resource development, but their policies endanger the secure supply of minerals needed for the battery-centric economy they seek.
by wp_sysadmin | Jul 27, 2023 | Home, News
Today’s Key Takeaways: Alaska asks SCOTUS to correct EPA land grab. Another report sounds alarm over critical mineral supply. Senate democrats frustrated over lack of permitting reform.
NEWS OF THE DAY:
Alaska Takes 404(c) Fight Directly to Supreme Court
July 26, 2023 (Anchorage, AK) – When the U.S. Environmental Protection Agency, (EPA), barred the U.S. Army Corps of Engineers, (Corps), from issuing any permit under Section 404 of the Clean Water Act for 309-square-miles of State land in Southwest Alaska, it effectively confiscated State property and created a de facto national park. Today Alaska Attorney General Treg Taylor filed a brief, calling on the U.S. Supreme Court to order the EPA to correct its wrongdoing.
Section 404 of the Clean Water Act requires the Corps to issue a permit before any dredged or fill material can be discharged into waters of the United States. In January 2023, the EPA issued its final determination, known as a 404(c) veto, that not only specifically prohibited permitting the Pebble Mine according to a 2020 mining plan, but also restricted any future permit to construct or operate a mine in a 309-square-mile area surrounding the Pebble deposit. The EPA action usurps the State’s ability and responsibility to protect its own natural resources.
“An original action, where a case is heard directly by the Supreme Court instead of first progressing through the lower courts, is an extraordinary ask, but it’s appropriate given the extraordinary decision being challenged,” said Attorney General Treg Taylor.
“No other State in the union depends so greatly on its lands for its prosperity,” the brief contends. “Unlike most States, Alaska is constitutionally required to protect its natural resources. The State must provide for the “conservation of all natural resources belonging to the State, including land and waters, for the maximum benefit of its people.”” Nonetheless, EPA made its final determination under Section 404(c) of the Clean Water Act before the State processes could work through the Pebble Project.
“Our constitution is clear: Alaska is responsible for utilizing, developing, and conserving all of the State’s natural resources for the maximum benefit of its people,” said Alaska Governor Mike Dunleavy. “Bureaucrats in Washington D.C. are exercising unbridled and unlawful power to choke off any further discussion on this important decision affecting so many Alaskans.”
“The preemptive veto is alarming,” said Attorney General Taylor. “If EPA can rely on undefined terms and subjective standards instead of sound science to bypass the regular State and federal permitting processes here, it can do it anywhere, from large mining projects such as this, down to a family building their dream home. It’s an indefensible and unprecedented power grab that the U.S. Supreme Court should find unlawful.”
“Alaska has some of the most robust environmental permitting requirements in the world ensuring development of critical natural resources occurs side-by-side with protection of human health and the environment,” said Commissioner of the Alaska Department of Environmental Conservation Jason Brune. “Congress intended Alaska to have primary responsibility over land and resource management decisions under the Clean Water Act’s framework of cooperative federalism. EPA robbed us of this opportunity.”
Like the State’s environmental permitting processes, “Alaska’s Title 16 permitting process is designed to ensure conservation of fish and fish habitat. But these statutory protections were flouted by EPA before Alaska’s expert habitat and fish biologists had the opportunity to weigh in,” according to Alaska Department of Fish & Game Commissioner Doug Vincent-Lang. “The State’s career experts should be allowed to do their job without having Washington bureaucrats swooping in to prohibit an action before we even received a permit application.”
“The Alaska Statehood Compact and Cook Inlet Land Exchange were meant to ensure the State of Alaska would have the opportunity to responsibly develop its resources under its robust permitting regime,” said Commissioner of the Alaska Department of Natural Resources John Boyle. “EPA cannot unilaterally ignore these monumental Congressional actions.”
“The State seeks a declaration that the EPA’s veto is unlawful and an order setting it aside and enjoining its enforcement,” the brief requests. “Alternatively, the State seeks damages for a breach of contract and just compensation for a taking.”
Read the brief to support a bill of complaint here.
MINING:
New Report Sounds Alarm Over Critical Mineral Supply
Irwin’s Slav, OilPrice.Com, July 27, 2023
The future supply of several metals and minerals that are critical for the success of the energy transition is uncertain, threatening that success, GlobalData has said in a new report.
According to that report, the transition depends on the sustainable supply of these metals and minerals, including lithium, copper, cobalt, nickel, and rare earths.
However, most of these are not distributed evenly across the globe. Some of them are concentrated in challenging jurisdictions, such as the Democratic Republic of the Congo. Finally, China controls most of the supply chains for these minerals.
READ MORE
POLITICS:
FRUSTRATED SENATE DEMOCRATS LOOK TO REGULATORS FOR PERMITTING RELIEF
TimTarpley, Energy Workforce and Technology Council, July 27, 2023
Despite talks continuing on permitting reform, some Democratic members in the Senate are growing frustrated and looking for other options. This week, Sen, Joe Manchin (D-WV) and the Senate Energy and Natural Resources Committee held a hearing to examine opportunities to reform the process for permitting transmission lines, pipelines and energy production on federal lands.
The majority of witnesses agreed the biggest hurdle to expanding transmission and shoring up the power grid is delays in permitting and litigation surrounding projects. Additionally, most members on the Committee were interested in pursuing permitting reform, understanding the dire need especially for transmission, but seemed open to more discussions on federal land and water leasing that is necessary for oil and gas projects along with wind and solar.
Discussions also continue in the House but given the fact that the House has already passed a large permitting reform package, it appears most likely that further action will have to start in the Senate.
Of note is that Senate Majority Leader Chuck Schumer (D-NY) is calling on the Federal Energy Regulatory Commission to “strengthen” and finalize a series of major rules that could help speed the deployment of clean energy transmission lines. Schumer focused on several proposed rules and inquiries issued in the past year and a half that have collectively generated extensive interest from clean energy developers, environmental groups, grid planners and state officials. The letter also laid out details that Schumer said should be changed once the commission finalizes the rules.
This all comes in context of action in January when the commission laid out a proposed plan to issue permits for certain transmission projects that the Department of Energy considers to be nationally significant and that have been denied a state permit. Leader Schumer would like this plan to be formalized as soon as possible. The letter also asked the commission to continue working on another proposed rule geared toward reducing delays for new energy projects trying to connect to the power grid which they are scheduled to consider today.
Sen. Martin Heinrich (D-NM), a Senate leader on energy issues, released the text of a letter he plans to release highlighting similar thoughts. He wrote, “To achieve our national clean energy goals we will need to expand grid capacity by 60% by 2030 and triple our capacity by 2050.”
These kinds of public statements by Senate Democratic leaders are relevant for two reasons. First, it shows that they may be losing confidence in the potential for a bipartisan deal to be reached in the short term. Second, and more relevant for our purposes, this shows that they see a potential to get the transmission issues fixed through the regulatory process and not legislatively. One of the things that gave me and many watchers of this issue hope that a bipartisan deal could be reached is that permitting reform is needed by all constituencies on both sides of the aisle. Renewable energy needs reform just as much, if not more, than traditional fossil fuel energy. With everybody is in the same boat, this opens up the potential for a deal.
However, the “bad” news is that if Senate Democrats are able to take their main need in permitting reform (transmission) off the table, it will make them less likely to support a larger compromise package. All hope is not lost however, there is no guarantee that regulatory actions can fix all of the major issues that the Democrats are concerned about. Additionally, in Washington it’s hard to bet which body can move slower, Congress or the regulators. All of this comes in the context of election season being just around the corner. Past history suggests that once we get into October the clock stops in many respects. The coming weeks will be important to watch.
by wp_sysadmin | Jul 26, 2023 | Home, News
Today’s Key Takeaways: Buffet bets on fossil fuels. Economic pain in AK with new taxes? First-ever Pentagon RFP for gallium.
NEWS OF THE DAY:
BUFFETT BETTING ON FOSSIL FUELS: Famed investor Warren Buffett has been upping his investments in fossil fuels this year, Bloomberg notes, including by increasing Berkshire Hathaway’s stake in the Cove Point LNG Terminal in Maryland and buying more of Occidental Petroleum Corp.
Buffett successfully invested in oil and gas producers during the depths of the pandemic and said earlier this year that “We do not think it’s un-American to be producing oil.”
From the Washington Examiner, Daily on Energy
OIL:
New taxes on oil, gas could cause economic pain in Alaska, across America
Dennis Hull, Santa Ynez, July 26, 2023
As the Biden administration escalates its crusade against American energy, perhaps no state has more to lose than Alaska, where the oil industry and its tax dollars are responsible for up to a third of the state’s economic output and a quarter of its jobs.
But some lawmakers in Juneau are considering taking a page out of Biden’s playbook with a suite of harmful new taxes. Unless Republican Gov. Mike Dunleavy and common-sense Republican and Democratic legislators intervene, these tax hikes will drive away production and investment with consequences that will reverberate nationwide.
With Alaska facing a budget deficit of $700 million earlier this year, tax increases have dominated the policy conversation in Juneau. Ideas have included a 40 percent tax hike on oil and gas production companies by nearly halving the per-barrel tax credit. Other targeted taxes would penalize smaller and medium-size energy companies in the state.
But Alaska’s budget already depends overwhelmingly on oil and gas industry revenue. Eighty percent of the state budget has long relied on oil taxes. Since the state already leans so heavily on the energy industry, any unexpected price volatility can quickly cause a headache. If the price of a barrel of crude oil falls by just $1, the state loses $70 million in tax revenue, and vice versa.
READ MORE
MINING:
Pentagon seeks supply of chip mineral gallium after China curbs exports
Bloomberg News/Mining.Com, July 26, 2023
The Pentagon plans to issue a first-time contract to US or Canadian companies by year-end to recover gallium, a mineral used in semiconductors and military radar systems, after China curbed exports this month.
China announced the restrictions on gallium and another mineral, germanium, in a move seen as part of the country’s tit-for-tat trade war on technology with the US and Europe. The two metals are crucial to the semiconductor, telecommunications and renewable energy industries. The curbs prompted US Treasury Secretary Janet Yellen to voice her concern during a recent visit to Beijing.
The Pentagon, which has reserves of germanium but not gallium, plans to use its authority under the Defense Production Act for “prioritizing awards” by Dec. 31, “focusing on recovery of gallium from existing waste streams of other products,” spokesman Jeff Jurgensen said in a statement. DPA funds bankroll investments in key sectors of domestic US industry for targeted national security purposes, such as the stockpiles of personal protective equipment that were used during the coronavirus pandemic.
“Recovery, not mining, is the fastest way to make the materials more available in the US,” the Pentagon said. DPA funds previously “have not been awarded for minerals recycling projects.”
Gallium and germanium are typically extracted during mining operations for other materials. But it’s expensive to process and refine them so they have often been treated as waste by western companies, while China came to dominate the supply.
Defense Department officials declined to say how much money would be placed on contract or how many companies might be tapped.
by wp_sysadmin | Jul 25, 2023 | Home, News
3 things to know about Biden’s oil regs
Heather Richards, ENERGYWIRE, July 24, 2023
The Bureau of Land Management revamp of federal oil and gas development would put the Biden administration’s stamp on the program.
The Biden administration’s proposed revamp of the federal oil and gas program caught plenty of notice from Republican lawmakers and industry for how it would dramatically increase the cost of drilling on public lands.
But even the draft regulation’s more obscure elements could make waves for drillers — and federal coffers.
Oil industry observers are still wading through the more than 300-page rule package published by the Bureau of Land Management on Thursday, but all agree that the administration’s new regime for public lands would have drillers paying more. That includes higher royalties and — for the first time since the 1950s and ’60s — hiking up required bonding, the money secured ahead of drilling to cover cleanup costs when wells are abandoned.
“The big takeaway that many have seen from the proposed rules is that, if enacted, exploring for oil and gas on federal lands will be more expensive,” said Eric Money, an attorney with Hall Estill specializing in oil and gas law.
Some of these changes were mandated under the Democrats’ climate law, last year’s Inflation Reduction Act, such as a 16.67 royalty rate that lasts until 2032. And the Biden administration was expected to act on bonding changes after it failed to get them in the final version of the Inflation Reduction Act due to deals with pro-oil lawmakers.
But the proposed rulemaking would also make changes praised by conservationists: setting down priorities for where drilling rights should be allowed and potentially killing permit renewals to drill wells.
“Overall, it’s tidying the standards,” said Shannon Anderson, a lawyer for the Powder River Basin Resource Council in Wyoming.
This is part of the administration’s strategy to leave its thumbprint of reform on the nation’s leasing program — one aspect of President Joe Biden’s climate and clean energy legacy.
All this tracks with the White House’s larger policy platform that’s focused on advancing renewables like offshore wind and solar, while viewing some oil and gas development as necessary on federal lands until the country is in a position to depend on cleaner forms of energy. The proposed reforms also mirror a report published by Interior in Biden’s first year in office that concluded the nation’s oil and gas leasing program was shortchanging the government and taxpayer out of revenue.
Kathleen Sgamma, president of the Western Energy Alliance, said the administration has mischaracterized the oil program as needing dire fiscal reforms, and sees the draft rules released last week as an attempt to shrink drilling on federal land.
“Oil and natural gas companies provide nearly $30 for every dollar BLM spends administering the onshore program, a return the government achieves nowhere else,” she said. “The rule will further ensure industry consolidation and participation by only the largest companies as small businesses are driven out.”
The big-ticket items like bonding — the BLM is proposing to raise a single lease’s bond from today’s $10,000 minimum to $150,000 — are sure to spark debate for weeks to come as the Biden administration weighs what it will keep, and what may be left behind, in a final rule. But here are three significant, but more under the radar, proposed changes to the federal oil and gas program.
To lease or not to lease
One of Interior’s areas of focus under the Biden administration has been to rein in where oil and gas drillers should be allowed to pick up new drilling rights, and the draft rules are no exception.
The proposal would order BLM officials to prioritize areas for lease that have a high potential for oil and gas — that means relying on estimates of where the best development location are, and giving preference to those areas when companies ask for acres to be sold at auction.
This provision is a nod to the frustration conservation groups have long voiced that oil and gas leases are bought by speculators — granting companies long-term development rights — in areas that should instead be valued for recreation, wildlife habitat conservation or tourism.
“Public lands belong in public hands, not tied up in costly and unproductive fossil fuel speculation,” said Rep. Susie Lee, a Nevada Democrat who praised the rules last week.
Speaking to reporters Friday, Russell Kuhlman, the executive director of the Nevada Wildlife Federation, said just about 3 percent of his state’s leased public lands have produced oil in the last two decades. His position is that this gives oil and gas drillers access and priority on lands that should instead elevate recreation and conservation.
“With these new rulings, the BLM is going to have a little more authority to say, ‘You know, these lands that have no potential for oil and gas can be used for other things,’” he said.
This is not, however, an approach that oil and gas industries agree with.
Drillers argue that exploration, often in low-potential areas, has led to some of the industry’s largest discoveries. Additionally, areas that are low potential now might be drilled in the future with different technology or expertise.
“The Powder River Basin, the Bakken used to be considered low potential, because we hadn’t cracked the code on how to develop that geology,” said Sgamma, referring to large oil and gas plays in Wyoming and North Dakota.
“The beauty of the federal system is that BLM administers it, protects the land, regulates it, but it’s up to the operator to take the risk,” Sgamma said. “BLM is not the best arbiter of where the oil and natural gas is.”
