Today’s Key Takeaways: EPA revised WOTUS rule hits the streets. Major crude draw raises oil prices. Three countries began importing LNG this year – more will follow. Mining operations commence at Manh Choh. Support for wind energy in NJ plummets.
Waters rule immediately finalized without public comment
Rule jettisons wetlands ‘significant nexus’ standard
A new rule governing federally protected waters and wetlands was issued Tuesday by the EPA to align agency regulations with a US Supreme Court ruling that will allow unpermitted development in wetlands across the country.
The rule revises the Biden administration’s earlier waters of the US, or WOTUS, definition finalized in January, removing its legal basis, which was struck down by the Supreme Court in May in Sackett v. EPA.
The January WOTUS rule expanded federal Clean Water Act protections over wetlands and waterways. But the Supreme Court in Sackett limited the waters that can be protected under the act, potentially allowing construction and pollution in vast swaths of wetlands across the country.
The new post-Sackett rule revises the January definition to remove the “significant nexus” standard that was the basis of the earlier rule. It also says wetlands protected under the Clean Water Act must have a continuous surface connection to navigable waterways as required by the Sackett ruling.
The significant nexus test allowed streams and wetlands adjacent to larger water bodies to be protected under the Clean Water Act.
The new rule implements the court’s opinion that the Clean Water Act protects only waters and wetlands that are relatively permanent and have a continuous surface connection to navigable waterways, such as the Potomac or Mississippi rivers.
Sackett v. EPA effectively eliminated the federal government’s role in regulating many wetlands nationwide, leaving wetlands that aren’t directly connected to large rivers, streams, and coastlines either unregulated or regulated only by states.
Immediately Finalized
The EPA finalized the post-Sackett rule Tuesday without issuing a draft for public comment. The agency did so using the rarely-used “good cause” exception to notice-and-comment under the Administrative Procedure Act, which allows federal agencies to forgo public comment when officials think that a rule update is sufficiently urgent.
In this case, the Sackett ruling undermined the existing WOTUS regulation, leaving no legal regulation in place to govern wetlands and waterways.
Radhika Fox, chief of the EPA’s Office of Water, said in July that the agency will answer questions from the public only after the final rule takes effect.
Industry groups making up the Waters Advocacy Coalition, including the National Mining Association, American Petroleum Institute, American Farm Bureau Federation, and dozens of others, in July offered their comments to the EPA regardless.
The coalition urged the EPA to avoid finalizing a rule that attempts to satisfy the requirements of Sackett while also retaining aspects of the old rule that would more broadly protect waters and wetlands.
A WOTUS definition that “pushes the outer limits of the Agencies’ CWA authority” would be “legally vulnerable,” the groups wrote.
Crude oil prices moved higher today after the U.S. Energy Information Administration reported an inventory decline of 10.6 million barrels for the week to August 25.
The estimate compared with a draw of 6.1 million barrels for the previous week.
A day earlier, the American Petroleum had estimated inventories had shed a massive 11.5 million barrels in the week to August 25, which prompted a spike in oil prices.
Global liquefied natural gas (LNG) import capacity is set to expand by 16%, or 23 billion cubic feet per day (Bcf/d), by the end of 2024 compared with 2022. Our estimate is based on trade press and data by the International Group of Liquefied Natural Gas Importers (GIIGNL). In the first seven months of 2023, three countries—Germany, the Philippines, and Vietnam—began importing LNG for the first time. By the end of next year, we expect Antigua, Australia, Cyprus, and Nicaragua to start importing LNG. Several more countries are in advanced stages of developing LNG import capacity.
Over the past 10 years (2013–22), global LNG import capacity—called regasification capacity—has grown by 49% (45.8 Bcf/d) to reach 140.0 Bcf/d across 48 countries. By the end of 2024, we expect 55 countries to have LNG regasification terminals with a combined capacity of 163 Bcf/d. Globally, available regasification capacity exceeds LNG imports. Historically, up to 39% of global regasification capacity is used every year. Spare regasification capacity, most of which is in Japan, South Korea, and China, allows countries to meet occasional demand spikes, particularly in winter. Last year, global LNG trade used 37% of available regasification capacity, or 51.7 Bcf/d.
Contango ORE, Inc. (“Contango” or the “Company”) (NYSE American: CTGO) announced that mining operations have started at its 30% owned Manh Choh Mine (the “Project” or “Manh Choh”), located near Tok, Alaska, U.S.A. With all major contracts, bonding and permitting in place, the Project remains on track and on budget to bring Contango’s 30% interest in Manh Choh into production in the second half of 2024. Based on the Feasibility Study Technical Report Summary (“TRS”), the Manh Choh mine is expected to produce 225,000 gold equivalent ounces (“GEO”) per year over a 4.5-year mine life1. Contango’s share of production is expected to average 67,500 GEO per year. In addition, the Company has initiated a surface drilling program at its 100% owned Lucky Shot project.
Rick Van Nieuwenhuyse, President, and CEO said: “We are indeed excited to report that mining operations have commenced at Manh Choh, and that the construction phase has been achieved on budget and on schedule. The opening at the Manh Choh mine was officially celebrated with a ground-breaking ceremony on August 29th. In attendance were the Governor of Alaska, Michael Dunlevy, Tetlin Tribal Chief, Michael Sam, and Tribal Council members, as well as representatives from both Kinross and Contango. At this point, mining operations primarily consist of pre-stripping activities, with any ore encountered to be stockpiled for later transport by road haul trucks to the Fort Knox mill for processing. Meanwhile, mill modification activities continue at the Fort Knox mill with an emphasis on completing outdoor activities before winter arrives. The project continues to be on track to achieve commercial production in H2 2024.”
At the Lucky Shot project, the Company initiated a surface exploration drill program on the Coleman segment of the Lucky Shot vein. Figure 2 shows the drill pad that will be used to drill a series of 12 to 15 drill holes totaling approximately 3,000 meters (9,800 feet) in a fan pattern to in-fill and extend the Coleman Segment of the Lucky Shot vein. As previously reported on June 12, 2023, in the Technical Report Summary for the Lucky Shot project2, the Coleman Segment of the Lucky Shot vein contains an estimated 95,092 ounces of Indicated gold resource averaging 15.6 grams per metric tonne (“g/t”) (0.455 ounces per short ton (“oz/st”)) and an additional 23,642 ounces of Inferred gold resource averaging 9.9 g/t (0.289 oz/st). Figure 3 is an image of the planned drill pattern designed to in-fill and extend the mineralization down plunge and along strike of know mineralization.
Rick Van Nieuwenhuyse further commented: “We will complete as much surface drilling as we can safely accomplish from this single drill pad on top of Box Mountain before winter weather conditions shut us down. The program is designed to extend known mineralization on the Coleman Segment of the Lucky Shot vein, and upgrade resources to a measured category so that we can incorporate into a proper mine plan. Future drilling of approximately 12,000 meters (39,000 feet) from underground at Lucky Shot is expected to be undertaken in 2024 to augment resources on the Lucky Shot Segment of the vein. This program is expected to substantially expand the current resource on the Lucky Shot Segment with drill holes having approximately 15 to 20 meters (50 to 65 feet) of separation on each fan and each fan approximately 25 meters (82 feet) apart. Our objective over the next year is to complete the above-mentioned surface drill program followed by the underground drill program at Lucky Shot to identify 400,000 to 500,000 ounces of gold resource that we can then develop a mine plan around.”
POLITICS:
WIND ENERGY BACKING DECLINES IN NJ: Support for wind energy has plummeted in New Jersey, with many residents tying an uptick in whale beachings to wind farms and contending that it could hurt the state’s summer tourism economy.
In a new Monmouth University poll published today, just over half of New Jersey residents (54%) favor placing electricity-generating wind farms off the state’s coast, while 40% oppose this action. This is a change from just four years ago, when wind energy support stood at a much higher 76%, with just 15% opposing this action. And prior to that, support for offshore wind farms was at a high 80-84% from 2008 to 2011.
The decline in wind energy support has been largely partisan, with Republican support dropping 41% in the last four years and independent support dropping 25%. Democratic support has remained relatively stable over the years.
“There was a time when wind energy was not really a political issue. It consistently received widespread bipartisan support for more than a decade. That is no longer the case,” Patrick Murray, director of the independent Monmouth University Polling Institute, said in a statement.
Four in 10 residents think that wind farms could hurt the state’s summer tourism economy, with nearly half of the survey takers claiming that development of offshore wind is either definitely or probably contributing to whale strandings. Plus, there are few New Jerseyans that see wind energy development as a boon for the overall state economy, with only 22% saying that the industry would create a lot of jobs for the state.
There is little concrete evidence to show that wind farms are to blame for the recent uptick in whales washing along the shores of the U.S. Experts have been pointing to ship strikes as a more likely explanation for the occurrence. Read the poll here.
Today’s Key Takeaways: Alyeska Pipeline report embraces transparency, highlights “overall positive work.”Pantheon Resources hails ‘big deal’ as independent report suggests huge Alaska field. WSJ claims Asian buyers “uninterested” in AKLNG while Asian buyers are in Alaska checking out the project. U.S. immigrant labor force grew 9.5%.
An inaugural environmental, social and governance report issued by the operator of the Trans-Alaska Pipeline System summarizes what the company said was overall positive work “as caretaker, steward, and operator” of the 800-mile oil line and its Valdez marine terminal.
The 19-page report, released last week by Alyeska Pipeline Service Co., covers a wide variety of metrics from 2022, the system’s 45th year of operation. Subjects covered include greenhouse gas emissions from operating the system, which are trending down; notable repair and maintenance projects; freshwater use; Alaska Native hire and employee diversity; and worker injuries, which increased somewhat in 2021 and 2022 after falling substantially over the past two decades.
The report is planned as the first in a series of annual ESG reports, said Michelle Egan, Alyeska’s chief communications officer.
Alyeska has been issuing external and internal reports for years on specific aspects of its operations, and this ESG report is intended to combine that information, Egan said.
“Our view was we should pull this all into one publicly available report and we should follow a framework that people are familiar with,” she said.
“It is very rare to see certified resources of this size.”
Pantheon Resources PLC (AIM:PANR, OTCQX:PTHRF) said an independent report has estimated almost one billion barrels of oil at its Kodiak project, formerly known as Theta West, in Alaska.
Netherland, Sewell & Associates (NSAI) carried out the assessment with 2C or mean average contingent resources estimated at 962.5 million barrels, a low estimate of 437.8 million and 2.01 billion in a best-case scenario.
Jay Cheatham, Pantheon’s chief executive, said: “This really is a big deal. A credible third-party estimate of nearly one billion barrels of recoverable liquids for a company the size of Pantheon is an incredible achievement, validating our geological model.”
Pantheon said the estimates are also of material value as the fluids identified can be blended and underpin the development plans for the Kodiak project, which will involve the development of leases totaling some 126,000 acres.
Pantheon plans to drill the next Kodiak appraisal well in recently acquired leases some five miles northwest of Theta West-1.
Bob Rosenthal, Pantheon’s technical director, added: “For perspective, it is very rare to see certified resources of this size, particularly onshore and near to infrastructure.
“NSAI’s evaluation of Kodiak is a transformational milestone on the path to commercialization. I remind shareholders that this report on Kodiak only covers the Lower Basin Floor Fan, based on three wells and our proprietary 3-D seismic data set.”
David Hobbs, Pantheon’s executive chairman, noted that NSAI conducted an intensive review of the data, adding: “We remain on track to meet our strategic goal of delivering sustainable market recognition of $5 – $10 per barrel of recoverable resources.”
NSAI has now been commissioned to complete a similar report on the Alkaid horizon at the Ahpun project, with expected completion in the final quarter of this year.
The long-sought Alaska Liquified Natural Gas project got a boost when Russia invaded Ukraine.
The project would bring natural gas from the North Slope down an 800-mile pipeline to Nikiski, where it would be liquefied, then shipped to Japan and South Korea. Versions of the project have been discussed for decades, but a huge price tag means work hasn’t really moved forward.
Alaska officials promote the pipeline as a way for the U.S. Asian allies to end their dependence on Russian natural gas, and enthusiasm rose in 2022.
Last month, it took a hit; a July Wall Street Journal article reported that those potential buyers in Asia just aren’t interested in Alaska’s LNG, and think the project’s long timeline and lack of investment won’t work for them.
Prominent Alaska politicians have remained optimistic.
Earlier this month, during a visit to the Kenai Peninsula, U.S. Senator Lisa Murkowski said the project continues to remain an opportunity, but she recognized the obstacles.
“It is not a project without challenges, we acknowledge that. It is huge, it is significant. Not only from a cost perspective, but really from the volume of gas that would be made available,” she said. “So you’ve got to make sure that you’ve got that market there. There’s a lot of uncertainty right now in the energy markets.”
Murkowski said for 40 years, Alaska supplied LNG to Japan, which shows a history of a strong energy relationship. And she said Alaska continues to have a strategic advantage.
“We do it in a shorter route than anywhere else in the country, and we do it with no choke points,” she said. “So there are so many advantages that the Alaska LNG project holds.”
In May, Gov. Mike Dunleavy brought energy leaders together in Anchorage to discuss the project, where U.S. ambassador to Japan Rahm Emmanuel said the project could offer energy stability in Asia and create jobs in Alaska. Murkowski’s fellow Alaska Senator Dan Sullivan was also there, and said the state is well-positioned to provide natural gas internationally.
Immigrants are joining the U.S. workforce at much higher levels than normal.
They’re likely to account for roughly half a million new jobs over the next three quarters, per a new report from Goldman Sachs.
Why it matters: As the U.S. continues to struggle with a historically-tight labor market, immigrants are coming to the rescue of desperate employers — while also creating new jobs themselves.
By the numbers: Between the pre-pandemic month of January 2020 and July 2023, the immigrant labor force grew by 9.5%. That compares to a tiny 1.5% growth rate among the native-born.
Between the lines: The foreign-born labor force is growing for three main reasons.
Immigration: The rate at which the U.S. is giving out visas — both temporary work visas and permanent green cards — has risen by about 335,000 workers per year over the past 12 months, to a level near record highs. That’s partly because the government has successfully begun to clear the backlog of more than 500,000 visa applications that built up over the course of the pandemic.
Participation: More of those immigrants are working. The foreign-born labor force participation rate has jumped by 2.3 percentage points to 67% over the past two years. By contrast, the native-born rate has risen by a meagre 0.4 points, to 62.2%.
Demographics: The great retirement of the Boomer generation is taking place mainly among the native-born — most immigrant workers aren’t yet facing retirement. As a result, millions of new native-born workers need to enter the workforce every year just to keep the total native-born labor force constant, let alone growing.
What they’re saying: “The foreign-born labor force has made a disproportionate contribution to reducing the jobs-workers gap,” writes Goldman economist Tim Krupa.
In normal times, he calculates, the unemployment rate holds steady when employment grows at about 75,000 workers per month. Thanks to immigrants, however, the U.S. can currently absorb some 125,000 new jobs per month without driving unemployment even lower.
Today’s Key Takeaway: Just another roadblock to American energy production. Industry sues BOEM over Gulf of Mexico lease restrictions. Myth-busting Sierra Club, Center for Biological Diversity claims on stopping AKLNG. Nickel project in Alaska staked. A win for nuclear in California.
NEWS OF THE DAY:
RICE RICE BABY: The Biden administration’s new proposed restrictions on oil and gas companies operating in the Gulf of Mexico has sparked condemnation from industry officials, who view it as an unjustified and targeted blow to fossil fuel producers that threatens to restrict U.S. energy production.
How it happened: The proposed restrictions were borne out of a settlement agreement struck quietly last month between the National Marine Fisheries Service and a coalition of environmental groups led by the Sierra Club, which had sued the administration in 2020 over what it argued were inadequate protections for the Rice’s whale, an endangered species that habitates and traffics in the eastern Gulf of Mexico.
The Interior Department’s new proposal essentially extends existing vessel restrictions from the eastern Gulf to oil and gas producers operating offshore in the western Gulf as well — where nearly all of oil and gas activity exists and where “there’s little to no data that this whale actually transits or lives,” one official told the Washington Examiner.
After reaching a settlement with the groups, the Bureau of Ocean Energy Management, which was not party to the suit, went a step further — proposing new restrictions on oil and gas companies operating in a 11-million-acre zone in the Gulf of Mexico, including imposing speed requirements on oil and gas ships, expanding protected zones, and limiting the hours the vessels can operate.
The response: The proposed restrictions have sparked ire from industry groups, which argue they are unjustified by current data on Rice’s whale activity in the western Gulf and that they unfairly single out oil and gas producers despite the fact that the area is one of the most heavily trafficked commercial vessel waterways in the United States.
They’re also outraged by the quiet way in which the deal was struck. “It was really just a closed-door negotiation between the Biden administration and environmental groups,” one industry official told the Washington Examiner of the settlement and subsequent restrictions. “It bypasses career staff at Interior. It bypasses Congress and bypasses other stakeholders. It’s just a one-on-one agreement with people who don’t want domestic production.”
Next steps: Several officials with knowledge of the operations told the Washington Examiner they’re waiting to see whether Interior will include the new restrictions in Lease Sale 261, the second of two congressionally mandated lease sales included in the Inflation Reduction Act, which is slated to take place in September.
Already, Interior said this week it will reduce Lease Sale 261’s acreage by 10 million acres, as detailed in its Notice of Sale, and any acreage will be “incredibly difficult” to develop with such stipulations in place, an industry official with knowledge of the proposed requirements said.
“We’ve seen a dramatic fall in leasing, both offshore and onshore,” in recent years, the official said. “And so we’re again seeing new restrictions to access, which, again, eventually will likely continue to impact production.”
Why it matters: The Gulf of Mexico is a strategic energy asset that provides nearly 2 million barrels of oil per day, is home to most of the country’s refining and processing capacity — 47% for petroleum, 51% for gas — and is recognized as providing among the lowest carbon-intensive barrels in the world. Estimates suggest that the proposed restrictions could impact vessel traffic by as much as 50%.
But industry advocates say the proposed restrictions are the latest in a line of frustrating mixed messaging from the Biden administration, making it harder for them to produce even after the president urged them to ramp up activity following Russia’s invasion of Ukraine.
The Biden administration “continues to throw up roadblock after roadblock to American energy production,” Holly Hopkins, API’s vice president of upstream policy, said this week.
The state of Louisiana, Chevron USA Inc., and the American Petroleum Institute (API) have filed a legal challenge regarding the Department of the Interior Bureau of Ocean Energy Management’s (BOEM) Final Notice of Sale for Lease Sale 261 announced last week, complaining about “severe restrictions on oil and natural gas vessel traffic” and “significantly reduced acreage”, the API said in a statement.
According to the filing with the District Court for the Western District of Louisiana dated August 24, the “BOEM changed the rules and dramatically altered the terms of Lease Sale 261” in its Final Notice of Sale and Record of Decision. Specifically, the BOEM imposed a new lease stipulation “containing burdensome operating restrictions across a newly defined and vastly enlarged ‘expanded Rice’s Whale area’ that more than doubled the size of the former Rice’s whale area and extended it across the entire stretch of the Gulf”, the filing said. Furthermore, the BOEM “withdrew from Lease Sale 261 all the acreage falling within this expanded area”, the filing continued.
The filing states that the BOEM’s “last-minute changes are unlawful several times over” because the new stipulation and acreage withdrawal contravene “the letter and spirit of Congress’ command in the Inflation Reduction Act, which explicitly directed BOEM to conduct Lease Sale 261 in accordance with BOEM’s previously adopted Five-Year Plan for oil and gas leasing—not to introduce substantial new conditions and complications, let alone withdraw millions of acres, at the last minute”.
Further, the challenged provisions also “contravene the Outer Continental Shelf Lands Act’s procedural requirements and implementing regulations, which instruct BOEM to provide notice of the terms of the lease sale in the Proposed Notice of Sale, not radically change them in the Final Notice”, the filing alleges.
Also, the challenged provisions “contravene the Administrative Procedure Act, as they are a wholly arbitrary and capricious departure from BOEM’s prior position without adequate explanation for the change, and otherwise exceed BOEM’s statutory and regulatory authority”, according to the filing.
The recent ADN opinion piece by Andrea Feniger of the Sierra Club and Arleigh Hitchcock of the Fairbanks Climate Action group against the Alaska LNG project, as well as the recent associated lawsuit against the project by the Sierra Club and the Center for Biological Diversity, show a deep ignorance or intentional denial of energy reality.
Particularly without basis are the arguments that stopping the project will reduce carbon emissions worldwide. Stopping the project wouldn’t mean even one fewer drop of oil or one fewer molecule of natural gas being burned. It would just be produced somewhere else.
In fact, the world is awash in oil and gas, with the International Energy Agency estimating that known reserves represent another 49 years of gas and 57 years of oil remaining. And that is just known reserves. For at least the next two generations, reducing carbon will be a consumption issue, not a production issue.
And, in fact, the export of Alaska’s LNG to Asia would represent a substantial reduction in carbon emissions. Japan is still heavily reliant on coal and oil for its energy, especially after the reduction in nuclear energy following the Fukushima nuclear disaster. Natural gas produces 50% less carbon than coal and 25% less carbon than oil.
Resolution Minerals Ltd. Aug. 21 announced that it staked a 114-square-mile land package in an area of Alaska prospective for nickel with associated copper, cobalt, and platinum group metals.
Australia-based Resolution is best known in Alaska for its exploration of the 64North gold project near Northern Star Resources Ltd.’s Pogo mine. Over the past year, however, the company has also been acquiring and exploring projects that could offer future supplies of the metals needed for the clean energy transition.
Resolution’s new Allegra nickel-copper-cobalt-PGM project is part of that expanded focus.
“The Allegra nickel project is an exciting addition to RML’s portfolio of new energy metals projects,” said Resolution Minerals Managing Director Chris McFadden.
This project includes one block of claims that wraps around the south and east sides of Alaska Energy Metals Corp.’s Nikolai project and a separate block across the Richardson Highway to the southeast.
CALI JUDGE RULES TO KEEP DIABLO CANYON PLANT OPEN: A California judge dismissed an environmental group’s lawsuit that looked to block the state’s largest utility from seeking to extend the operating life of the nuclear Diablo Canyon Power Plant.
Friends of the Earth filed a lawsuit in the state Superior Court in April, hoping to derail a state-supported proposal that would keep the power plant running for another five years. The environmental group was part of a 2016 agreement with operator Pacific Gas and Electric to shutter the state’s nuclear power plant by 2025.
However, Gov. Gavin Newsom (D-CA) and the state legislature gave a way for PG&E to extend their operations for longer last year. The environmental group argued the 2016 deal to close the reactors was still valid and that the utility would break a binding contract if federal regulators extended the operating licenses.
In an 18-page ruling, Judge Ethan P. Schulman rejected the complaint, agreeing with PG&E that Friends of the Earth was asking that the court “impermissibly hinder or interfere” with state regulatory oversight of the power plant located midway between San Francisco and Los Angeles. More from Nancy here.
From the Washington Examiner, Daily on Energy
Germany’s energy policy is supposed to be a model for the world.
Today’s Key Takeaway: “The Department of Energy has posted a report that uses the National Energy Modeling System to show that President Biden’s signature laws will produce savings in electric bills for American consumers. However, the estimated savings are a drop in the bucket of the cost that taxpayers will have to pay to cover the provisions in the bills that incentivize “clean” energy.”
Summary: The Department of Energy has posted a report that uses the National Energy Modeling System to show that President Biden’s signature laws will produce savings in electric bills for American consumers. However, the estimated savings are a drop in the bucket of the cost that taxpayers will have to pay to cover the provisions in the bills that incentivize “clean” energy. While Biden is traveling the country, trying to make Americans believe that his economy is robust despite inflation and high gasoline and food prices, he is finding that Americans are unaware of the bills and their supposed successes. That’s because those successes do not exist, at least not yet! Biden realizes this and is having his regulators do more to push Americans into buying electric vehicles and in furthering his climate plan. Unfortunately for Americans, the Biden climate plan will be all grief and no joy as American energy will become unreliable, expensive, and dependent upon China.
Fast Facts:
The Department of Energy “customized” the Energy Information Administration’s National Energy Modeling System to project that America will save $38 billion on electricity by 2030.
The cost to taxpayers is estimated to be huge – up to $2.5 Trillion —about $63 for every $1 saved on electricity bills.
DOE’s analysis coincides with the 1-year anniversary of the Biden Administration’s “Inflation Reduction Act,” coincident with Biden’s push to pitch the climate law as an economic powerhouse.
Biden’s Department of Energy (DOE) has projected that President Biden’s infrastructure bill and his Inflation Reduction Act will save Americans up to $38 billion on electricity costs over the remainder of the decade, using a version of the Energy Information Administration’s (EIA) National Energy Modeling System (NEMS). Despite EIA being part of the DOE, EIA was not asked to perform the analysis using NEMS. That was likely due to the spurious assumptions used by the DOE, as explained below. AsThe Hill reported, “The report customized the National Energy Modeling System, which the Energy Information Administration uses in its Annual Energy Outlook, to model energy costs and national emissions in a scenario where the two laws were never implemented, based on the 2022 outlook report.” By “customizing” the model, the authors disclosed their view of our future energy picture based upon Biden’s goals rather than facts.
Further, the $38 billion does not even come close to covering the cost of the bills that will be paid by taxpayers. Goldman Sachs believes that the Inflation Reduction Act (IRA) will cost U.S. taxpayers $1.2 trillion—more than triplethe Congressional Budget Office’s (CBO) estimate of $391 billion for the climate provisions. The difference in cost mainly arises from lucrative tax credits in the IRA that are not capped, and the fact that the Biden Administration is loosely interpreting conditions for those credits, driving their costs up. The President’s infrastructure bill is costing taxpayers another $580 billion in new spending, with the total cost of that bill also at $1.2 trillion. Clearly, the savings in electric consumer bills that DOE estimates are not even close to being commensurate with the cost of the two pieces of legislation to taxpayers, even by the debunked CBO scores.
DOE’s Questionable Results
The DOE reports that between now and 2030, the two laws will allow for the deployment of up to 250 gigawatts of new wind energy and up to 475 gigawatts of new solar. These numbers are vastly higher than what EIA projects in its Annual Energy Outlook 2023, where it has accounted for these laws. The EIA projects that between 2022 and 2030, wind capacity is expected to increase by 156 gigawatts and solar capacity is expected to increase by 263 gigawatts. In other words, the DOE modelers would have had to change the model’s inputs and/or assumptions to get about 100 gigawatts of additional wind capacity and over 200 gigawatts of additional solar capacity by 2030 than the EIA has forecasted.
Further, development activity for wind energy has slowed with the year-over-year downtrend in installations now stretched for nine consecutive quarters. For full year 2022, wind installations dropped by 56 percent from 2021 and in 2023, wind installations are down from 2022 levels. The industry’s pipeline of projects that are expected to come online between 2023 and 2027 increases by just 5 percent to 81,265 megawatts of capacity, from the fourth quarter of 2022 when developers had a total of 77,220 megawatts of planned capacity.
To get those huge increases in renewable capacity, the DOE assumed a Biden administration proposal that would accelerate electricity demand by assuming that 65 percent of new car sales in 2030 would be electric. This assumption is not current regulation as the Environmental Protection Agency proposed a rule this past spring that two-thirds of new car sales would need to be electric by 2032, which was followed by the National Highway Traffic Safety Administration proposing new car efficiency standards this summer that would also reach that level, but neither proposal has been finalized as the comment and review periods on both are still ongoing. Further, automakers claim that the new rules are not attainable as there are technical issues with electric vehicles, and even if they could reach those numbers, the U.S. electric grid would not be able to handle millions of electric vehicles plugging into the grid at different times of day and in a multitude of locations.
The Reason for the Study
President Biden wants the American public to believe that the economy on his watch is robust, despite inflation of about 15 percent since he took office and higher prices for necessities, including food and gasoline. Biden is using the first anniversary of his signature Inflation Reduction Act to pitch the climate law as an economic powerhouse. However, the U.S. public remains largely unaware of its contents despite the legislation providing billions of dollars in tax credits to push consumers into buying electric vehicles and companies to produce renewable energy. Biden claims that the legislation already created 170,000 “clean” energy jobs and will create some 1.5 million jobs over the next decade. He makes those claims despite the fact that only one percent of fossil fuel employees have moved to “clean” energy jobs. Fossil fuel jobs pay better than the “clean” energy jobs, according to Biden’s Labor Department.
Further, according to Robert Bryce, under the Inflation Reduction Act which incentivizes the production of electric vehicles among other green technologies, each new “green” job at the GM’s battery plant (which the company is developing with Korea’s LG) in Spring Hill, Tennessee, will cost taxpayers $7.7 million and each new “green” job at the Ford plant (which Ford is partnering in with China’s CATL) in Marshall, Michigan, will cost taxpayers $3.4 million. Clearly, green jobs do not come cheap.
Also according to President Biden, the legislation has shifted production of critical components away from China and into the United States. But that is not true. China still dominates the battery supply chain for electric vehicles, processes most of the rare earth and other critical minerals needed for electric vehicles and renewable technologies, and supplies most of the solar panels the U.S. needs either directly or indirectly from other Southeast Asia countries. While Senator Manchin added provisions in the Inflation Reduction Act to industrialize the United States in critical minerals, Biden has done all he can to waylay that by revoking leases, delaying permits, and adding flora and fauna to the endangered species list. His actions conflict with his words.
Conclusion
The Department of Energy has posted a report that uses the National Energy Modeling System to show that President Biden’s signature laws will produce savings in electric bills for American consumers. However, the estimated savings are a drop in the bucket of the cost that taxpayers will have to pay to cover the provisions in the bills that incentivize “clean” energy. While Biden is traveling the country, trying to make Americans believe that his economy is robust despite inflation and high gasoline and food prices, he is finding that Americans are unaware of the bills and their supposed successes. That’s because those successes do not exist, at least not yet! Biden realizes this and is having his regulators do more to push Americans into buying electric vehicles and in furthering his climate plan. Unfortunately for Americans, the Biden climate plan will be all grief and no joy as American energy will become unreliable, expensive, and dependent upon China.
Today’s Key Takeaways: Vivek Ramaswamy “Human flourishing requires fossil fuels’ – closing statement at GOP debate. ConocoPhillips Alaska Nuna project online in 2025. Australian LNG strike averted. Replacing Russian uranium in New Mexico.
NEWS OF THE DAY:
CLIMATE “HOAX” GETS SHORT SHRIFT: The first Republican presidential debate took an unexpected turn late Wednesday night as the issue of climate change and energy became front and center early on. But not everyone’s answers were welcomed by the audience.
Biotechnology entrepreneur Vivek Ramasamygot booed on stage after he claimed that the “climate change agenda is a hoax.”
Debate hosts Bret Baier and Martha MacCallum asked the candidates if they believed in human-induced climate change and how they would quell fears amongst young conservative voters that the GOP doesn’t care about the issue.
Ramaswamy’s response: “Let us be honest as Republicans. I’m the only person on the stage who isn’t bought and paid for, so I can say this: The climate change agenda is a hoax. … The reality is the anti-carbon agenda is the wet blanket on our economy. And so the reality is, more people are dying of bad climate change policy than they are of actual climate change.”
The young entrepreneur’s denial of climate change got loud disapproval from the audience.
A number of the GOP candidates chimed into counter Ramasamy’s narrative.
Former U.S. Ambassador to the United Nations Nikki Haley asserted that Republicans do in fact “care about clean air, clean water … but there’s a right way to do it.” Haley proceeded to jab at President Joe Biden for his investments into electric vehicles, claiming that these investments will fund China’s market — and called for pressuring China and India to lower their emissions.
Sen. Tim Scott (R-SC) touted his “Made in America” plan as the way to move the needle on the environment.
Gov. Ron DeSantis (R-FL) took it as an opportunity to bash Biden and his response to the Maui wildfires. “Are you kidding me? As someone that’s handled disasters in Florida, you got to be activated. You got to be there, you got to be present, you got to be helping people.” However, when pressed if his answer meant that he believed in human-induced climate change, he didn’t answer.
The candidates at large: Several of the debaters took their swipes on the Biden administration’s energy policies, arguing for domestic production of oil and gas and the mining of critical minerals in the U.S. instead of relying on foreign adversaries such as China and Russia.
The significance: While it was to be expected that the candidates would take their turns jabbing at the current president for his energy policies, what was unforeseen was the issue of climate change being addressed early on in the debate. An issue that has rarely taken precedence within GOP campaigns took a national front seat at the fore of the debate — and was framed as an important issue to young Republican voters.
Several conservative environmental groups watching the debate took note.
Danielle Butcher Franz, CEO of the American Conservation Coalition, told the Washington Examiner it was a “remarkable thing to see climate featured so prominently at the first GOP debate.”
“It was even more remarkable to hear an audience full of GOP primary voters booing climate denial. Last night made it clear that climate skepticism is no longer acceptable in our leaders — the conservative climate movement is here to stay.”
“Republicans have been working on economically sustainable climate solutions for years and it’s great to see the beginning of those policy debates take shape with the Presidential candidates,” Luke Bolar, chief external affairs officer of ClearPath Action, said in a statement.
The Nuna onshore project, located in the Kupurak River Unit, North Slope, Alaska, is expected to commence production in 2025.
The Nuna project is an onshore oilfield development being undertaken by ConocoPhillips (Alaska) in the North Slope of Alaska, US.
ConocoPhillips Alaska entered an agreement with Caelus Natural Resources Alaska to fully acquire the Nuna prospect in June 2019. The purchase included 11 tracts spread over 21,000 acres and a gravel road with a drill site.
Funding for the development of the Nuna project was approved in June 2023. Construction work is expected to start in 2023 with pipeline and on-pad construction planned for 2024. The project is expected to produce 20,000 barrels of oil per day (bopd) at its peak.
The project will support further development and production of petroleum reserves within the Kuparuk River Unit.
Nuna project location and discovery details
The Nuna project is located to the east of the Colville River. The site is located within the Kuparuk River Unit (KRU) located approximately 64km (40 miles) west of Deadhorse, Alaska. The site lies about 8km (5 miles) southwest of the Oooguruk Field.
The prospect was discovered in 2012. The permit to develop the project was initially owned by Pioneer Natural Resources Alaska, which transferred it to Caelus Energy in September 2014.
Nuna project development details
Caleus completed the construction of the drill site 3T (DS-3T) gravel pad and an access road. Two wells were also drilled within the Torok Formation by Caelus, which were suspended in 2013. The project will support the production of oil from Moraine Reservoir within the Torok Formation.
The permit for the construction of two Class I Non-Hazardous Industrial waste injection wells
to be drilled and constructed at the Nuna project site was issued in April 2016. The Unit Plan of Operations for the development of the Nuna Project at DS-3T was submitted to the Oil and Gas Division of the Alaska Department of Natural Resources in November 2022.
Drilling activities are expected to commence in the fourth quarter of 2024 and will extend through 2027, while the first oil is anticipated in the second quarter of 2025. The DS-3T gravel work is set to commence in August 2023 and will include pipeline casing installations.
The single production module is expected to be delivered in the summer of 2024. Construction of pipelines will commence in November 2023, while pipeline hydrostatic testing will commence in August 2024.
Nuna project details
The Nuna project involves the development of 29 wells out of 50 permitted wells, on-pad infrastructure, and pipelines at DS-3T.
It will be tied back to the existing KRU processing facilities via 4.82km (3 miles) of new pipelines. Power will be supplied from the DS-3S drill site located 3.7km (2.3 miles) away, via a 34.5kV transmission line. The power line will be attached to the proposed pipelines via messenger cable.
The pipelines planned for connecting to the DS-3S infrastructure will consist of a 16-inch diameter oil pipeline, an eight-inch diameter water injection pipeline and an eight-inch diameter gas injection pipeline.
The pipelines are planned to be installed on 320 vertical support members and new horizontal support members.
Drill Site expansion details
The drilling of wells requires the expansion of the southeast side of the DS-3T gravel pad consisting of an existing 19.6-acre gravel pad, a 1.4km-long gravel access road and two wells earlier suspended in 2023.
The gravel pad is planned to be expanded by one acre, the 1.6km (2.9-mile) access road by two acres and the access road intersection close to DS 3T by 0.7 acres.
The DS-3T gravel pad is proposed to be expanded by adding 52,200 cubic yards of clean gravel onto 3.73 acres of tundra.
Kuparuk River Unit details
The Kuparuk oilfield was discovered in 1969 and is operated by ConocoPhillips with a 94.5% stake. Chevron and ExxonMobil hold 4.9% and 0.6% stakes respectively in the field. The field is located 64km west of Prudhoe Bay.
The field infrastructure includes three central production facilities and a seawater treatment plant. The field currently has more than 500 active wells. The average production from Kuparuk was 47 million barrels of oil equivalent per day in 2022.
Tarn, Tabasco, West Sak and Meltwater are the satellite fields tied back to the Kuparuk production facilities.
Contractors involved in the Nuna project.
Cruz Construction provided construction services including mobilisation and operation of the remote camp, development of the mine site, construction of the road, placing gravel for the road and pad improvement and associated facilities for the Nuna onshore oil project.
Woodside Energy (WDS.AX) on Thursday reached an in-principle agreement with unions at Australia’s largest liquefied natural gas (LNG) project, potentially averting a disruption to supplies from one of the world’s biggest exporters of the super-chilled fuel.
The agreement caused a sharp fall in Dutch and British wholesale gas prices on Thursday, with the benchmark Dutch September contract shedding 11.5%, after hitting a two week-low earlier.
In a remote, dusty corner of New Mexico, so near to the Texas border that if you wander too close your smartphone changes time zones, sits a pristine factory that is the best chance for the US to wean itself off an addiction that few knew it had: uranium enriched in Russia.
Outside the $5 billion Urenco plant in Eunice, cacti and lizards bask in the fierce sunlight, watched by heavily armed guards. Inside, the facility is spotless, with bright, polished machinery that looks brand new even though some of the equipment has been in service for years. Hundreds of centrifuges, each at least 20 feet tall, spin at supersonic speeds and generate an ear-piercing whine that reverberates across a cavernous hall, where they separate the uranium isotopes needed to make fuel for nuclear power plants. For security reasons, parts of the piping that connect the Eunice machines are shielded from curious visitors.
The plant supplies about one-third of US demand for enriched uranium and is in the process of boosting output by 15%. It’s the centerpiece of a transatlantic project to rejuvenate production of the fuel to feed the West’s fleet of nuclear reactors, a linchpin of energy security and efforts to reduce carbon emissions. Urenco Ltd. is the only commercial supplier of enriched uranium in North America. Currently, about half of the global supply comes from Russia, an uncomfortable reality for leaders in the US and Europe in the wake of Moscow’s invasion of Ukraine.
