Today’s Key Takeaways: Governor Dunleavy wants more development projects – so do we! Escalation of ship attacks raises oil prices. Renewable natural gas from cow manure. Producers want silver listed as critical mineral in US and Canada.
The state’s motto is “North to the Future,” not “No to the Future,” governor emphasizes
In his sixth annual State of the State address, Alaska Gov. Mike Dunleavy promoted development projects, called on state lawmakers to advance his legislative priorities and said the state is in danger of falling behind others in economic growth.
“Too many in this state have gotten very good at saying ‘no.’ … No to mining. No to oil and gas. No to harvesting timber. No to renewables. No to growing more food. No to trucks on roads. No to roads, period. Unless we change this attitude, North to the Future will become ‘No’ to the Future,” the governor said.
During the 50-minute speech, the governor asked legislators to pass bills related to education, agriculture, home ownership, and the supply of natural gas for Southcentral Alaska.
“We’re in competition for people, and that’s why we’re proposing policies this year to make Alaska the best place to live, have a family, and do business,” Dunleavy said.
Oil Set for First Monthly Gain Since September on Red Sea Unrest
President Biden says he’s decided on US response to attack
Crude inventories rose 1.23 million barrels last week: EIA
Oil headed for its first monthly gain since September as an escalation of attacks on ships in the Red Sea spurred a diversion of tanker traffic and raised fears about a wider conflict in the Middle East.
Futures are on track to climb more than 7% in January, with the increase in geopolitical tension countering demand concerns. After a drone assault that killed American troops in Jordan over the weekend, President Joe Biden said he has made a decision on how to respond, without elaborating. The US added that Iran was responsible for providing the weaponry used in the strike but Tehran has denied involvement in the deadly attack and vowed to retaliate against any US strike on its soil or assets abroad.
While many asked questions about right-of-ways and potential natural gas hook-up to local communities down the road, some groups aired worries about how a project to convert livestock waste might super-charge a divide between small or medium-sized farmers and the state’s largest dairies.
“Is this going to improve the stench that we get on this dairy?” asked Elaine Mittenness, a neighboring farmer. “Right now, it’s impossible to have your windows open.”
Illinois-based Amp Americas is building processing facilities for what the industry calls renewable natural gas at four western Minnesota farms: Meadow Star Dairy, East Dublin Dairy, Swenoda Dairy and Louriston Dairy. Morris, Minn.-based Riverview, the largest dairy in the state, owns all of them.
Amp Americas captures methane from livestock waste and converts it for use as natural gas. From there, Dooley’s, a small company based in Willmar, plans to transport the gas to the massive Alliance Pipeline system that runs from British Columbia to Chicago. Dooley’s would build about 28 miles of pipe through three counties: Chippewa, Kandiyohi and Swift. The pipeline itself would cost about $13.9 million, mostly in construction and labor costs.
Top producers of silver are pushing for the inclusion of the metal on the list of critical minerals in Canada and the US.
In a letter sent on Wednesday to the Canadian Minister of Energy and Natural Resources, Jonathan Wilkinson, CEOs of 19 miners, including top producers like Coeur Mining, Hecla Mining, and First Majestic Silver, say that considering silver a critical mineral would position the country to be a supplier of choice for strategic allies.
In December 2023, Natural Resources Canada opened a public commentary period for proposed updates to Canada’s Critical Minerals list and methodology. One of the criteria used is that the mineral must be necessary for the national transition into a “low carbon and digital economy.”
“Silver is identified as the best electrical conductor, the best metallic thermal conductor, and the best reflective material. These qualities make silver an essential and irreplaceable component for many industrial and technological applications,” the letter reads.
The demand for technologies such as solar power has led to increasing industrial demand for silver.
In 2023, global silver demand was estimated to be 1,167 million ounces (Moz), of which 576.4Moz (50%) was industrial use. Photovoltaics demanded 161.1 Moz in 2023, or 14% of the global silver demand.
Natural gas has eliminated more carbon emissions than all other energy sources combined, but now, our allies will have to choose between Chinese coal or Russian gas to keep the lights on.
Today’s Key Takeaways: Senate to AKLNG: Show me the money! A look at Alaska’s natural gas system. Hedge fund recommends more investments in fossil fuels, move away from renewables. Alaska’s next gold producer. “Dirty-fossil-fuels” stigma keeping young people from high-paying jobs.
For decades, elected leaders have dreamed about building a natural gas pipeline akin to ConocoPhillips’ 800-mile-long trans-Alaska oil pipeline.
A 800-mile gas pipeline would run south to the Kenai Peninsula, where a LNG plant would liquefy the gas before loading onto tankers bound for Asia.
Currently, the project is trying to find investors or partners to provide the $150 million that AGDC needs to finish the engineering and design work required before a final investment decision (FID) can be made.
Last year, the Biden administration issued the green light for ConocoPhillips’ (NYSE:COP) $8 billion Willow project in Alaska, ending the company’s long wait much to the consternation and chagrin of environmentalists. ConocoPhillips is the largest crude producer in Alaska and also the largest owner of exploration leases, with extensive holdings in Prudhoe and the National Petroleum Reserve-Alaska (NPR-A).
Whereas the Willow project has frequently garnered the lion’s share of attention and media coverage, another, even bigger, Alaskan energy project has been flying under the radar: the $43B state-led Alaska LNG project. Skeptics have been quick to point out that 2023 was yet another dry year for the ambitious project with no major deals or investments announced by the Alaska Gasline Development Corp., or AGDC. Things came to a head on Monday after Alaska Republican Gov. Mike Dunleavy’s administration presented the Senate Finance Committee with a $4.5 million budget request for the project, only to be met with pushback and sharp questions by three members of the committee.
“In my eight years of being a legislator, I don’t think they’ve inked one investment. And so is this a good use of those funds? Or do we need a change in leadership over there?” posed Wasilla Republican Sen. David Wilson.
For decades, elected leaders have dreamed about building a natural gas pipeline akin to ConocoPhillips’ 800-mile long trans-Alaska oil pipeline, that could export gas to markets outside of the state, provide cheaper heating fuel for Alaska residents and generate thousands of construction jobs.
Hedge fund Bluebell Capital Partners called on bp Plc to bolster investments into oil and gas and cut spending on renewable energy, saying the company’s shift away from fossil fuels is misguided and weighing on the share price.
bp should spend $1.5 billion a year more through 2030 on oil and gas production and halt any further investment in renewables and power, the London-based investment firm said in an October letter to Chairman Helge Lund that was seen by Bloomberg. It reiterated its demands in another letter on Jan. 26.
I interviewed the president of Enstar, which runs urban Alaska’s gas utility, about problems with a storage facility and how they connect to long-term energy challenges facing the region.
If you’re reading this, chances are good you’re inside today, because with an intense cold snap in Southcentral Alaska, it’s a little too chilly to be sitting on a park bench scrolling Northern Journal with your phone.
And if you’re inside, and you’re warm, you are almost certainly in a space that’s heated with natural gas sold by Enstar. That’s the utility that delivers the fuel to more than 150,000 customers in Anchorage, the Mat-Su, and the Kenai Peninsula, and transports it for electric utilities in the region, which depend on gas to generate the vast majority of their power.
As it turns out, Enstar is seeing record demand during the cold snap — at a time when it’s also experiencing some equipment failures that stress its ability to deliver the gas needed by its customers. So far, Enstar and other utilities have been able to manage the problems without asking consumers to change their behaviors, like by lowering their thermostats. But that could change fast, and the cold weather is expected to run for at least several more days.
To hear more about this, I interviewed John Sims, Enstar’s chief executive, last night. Sims has been an increasingly vocal presence in the ongoing public discussion about Alaska’s dependence on natural gas, and how, amid decreasing production from the Cook Inlet basin near Anchorage, the state can continue to meet demand for home heating and electricity generation. Enstar, which is owned by Canadian pension funds through parent company TriSummit Utilities, is exploring the possibility of importing liquefied natural gas from outside Alaska, as well as resurrecting a dormant but pricy proposal to pipe natural gas to the Anchorage area from the North Slope.
The first high-grade gold ore from the Manh Choh Mine in Alaska fed into the Kinross Alaska mill at the Fort Knox Mine near Fairbanks is elevating Contango Ore Inc. from a unique Alaska focused mineral exploration company to the newest gold producer in the state.
“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,” Contango ORE President and CEO Rick Van Nieuwenhuyse said during the August groundbreaking ceremony at Alaska’s newest metal mine.
Being developed under a joint venture between Kinross Gold Corp. (70%) and Contango (30%), Manh Choh is expected to produce roughly 1 million gold-equivalent oz, which includes the value of both the gold and silver, over an initial 4.5 years of mining slated to begin around mid-year.
“Dirty Jobs” host Mike Rowe said a message came down over the decades to young people that a four-year degree was the path to success and trades were the dead-end career choice.
Some of the respondents on the latest “Dallas Fed Energy Survey” remarked on the labor shortages in the industry. “Labor is hard to find. Dirty-fossil-fuels stigma drives younger talent away,” one respondent said.
Alaska’s most populous corridor can generate most of its electricity through renewable energy, but would require significant upfront capital investment, a University of Alaska Fairbanks team said in a new report.
What’s in the report:
$10B in capital approximately
+10% to the ratepayer approximately
What’s not in the report:
Low cost, low carbon, energy future for low-income people
Biden halts new LNG export project approvals, impacting economic and environmental review. –DOE will be holding a review during the pause to assess LNG export impacts to Europe and Asia. -Review process includes months-long analysis and public comment period. -Biden emphasizes examining LNG exports’ effects on energy costs, security, and environment. -Concerns in Europe and Asia over reliable U.S. LNG supply amidst Russian gas reduction. Read More:CNBC, Washington Post, UPI, Reuters
Northern Star Resources Ltd. Oct. 19 reported that its Pogo Mine produced 66,655 ounces of gold during the final three months of calendar year 2023, which lifted the Alaska operation’s output for the year to 259,573 ounces.
“The Pogo team are enduring negative 40-degree days in Alaska but have maintained strong momentum in operational improvements with quarterly gold sales of 66,000 ounces and an all-in-sustaining costs of US$1,367 an ” Northern Star Resources Managing Director Stuart Tonkin said of the company’s only operation outside of Australia.
Aside from the first three months of 2023, which was impacted by a six-week shutdown of the mill for repairs, the mill at Pogo ran near or above its nameplate capacity last year
A bipartisan coalition of Alaska lawmakers is defending the Biden administration’s approval of ConocoPhillips’ Willow project in the state’s National Petroleum Reserve.
In a friend of the court brief Friday, members of the state’s congressional delegation and the state Legislature told the 9th U.S. Circuit Court of Appeals that the $8 billion project is key for Alaska’s economy and for the nation as a whole.
“Alaska would not exist and cannot thrive without the responsible development of its resources,” the lawmakers told the 9th Circuit.
The Biden Administration pause on LNG is not elegant policy. The politics seem to be risky.
Today’s Key Takeaways: 50 years ago today, permit signed for TAPS! Global demand to drive oil prices higher. New US LNG capacity to drive up prices in 2024. Murkowski, Manchin grill administration on mining investments. AK shift to renewables requires billions in investment.
NEWS OF THE DAY:
On this day in history, 50 years ago, 1974: Secretary of the Interior Rogers Morton signed the permit for a 789-mile, $5 billion pipeline to tap the rich oil fields of Alaska’s North Slope. The goal is to have Alaska oil reach markets in the lower 48 by 1977.
Global oil demand remains pretty solid and could surprise to the upside this year, tightening market balances and potentially leading to higher prices, Claudio Galimberti, head of global oil macro research at Rystad Energy, told Bloomberg in an interview this week.
So far into 2024, oil prices have remained stuck in a narrow trading range of around $75 to $80 per barrel Brent. That’s mostly because market players perceive global oil demand is currently weak.
However, demand continues to grow steadily, which would lead to a tight market this year and push oil prices higher, according to Galimberti.
US gas market anticipates new LNG capacity in 2025, driving up future prices.Golden Pass LNG’s delayed 18.1 million mt/year facility impacts 2024 gas curve. December 2024 Henry Hub forwards average at $3.69/MMBtu; summer 2024 strip at $2.45/MMBtu. Expected LNG capacity increase in 2024 is about 8.4 million mt/year. 2025 to see significant LNG capacity growth, potentially adding 18 million mt/year. Market sentiment for 2024 dampened, but strong expectations for 2025 due to LNG expansion. Mentions:Golden Pass LNG, Mizuho Securities, Pickering Energy Partners, Source:S&P Global From LNG Global Newsletter, January 24, 2024
Sens. Murkowski, Manchin contend administration is misinterpreting Congress intent when it comes to funding domestic mining projects.
While the U.S. Department of Energy is investing billions of taxpayer dollars into establishing robust battery material processing and battery manufacturing capacity in the United States, the federal agency has done little to support domestic mines that would feed critical minerals into domestic electric vehicle supply chains.
Sen. Lisa Murkowski, R-Alaska, believes DOE is putting the domestic battery materials processing cart before the battery minerals horse as part of a White House strategy that is resulting in the minerals for America’s clean energy future being mined anywhere but China – or the U.S.
“You’ve got an administration that is approaching how we deal with this with one hand deliberately tied behind our back – and we are talking about the critical minerals that go into this,” Murkowski said while questioning Department of Energy Deputy Secretary David Turk during a Jan. 11 Senate Energy and Natural Resources Committee hearing on EV supply chains.
While Turk reiterated DOE’s commitment to strengthen the reliability and resilience of America’s EV supply chains, he indicated the department’s hands were also tied when it comes to supporting domestic battery materials mining projects such as Graphite One Inc.’s Graphite Creek project in western Alaska.
“We are trying to be as creative as possible with the tools and the authorities that we have got,” Turk said in response to Murkowski’s statement that potential future mining projects such as Graphite Creek are not eligible for DOE’s battery supply chain loan program.
Alaska’s most populous corridor can generate most of its electricity through renewable energy, but would require significant upfront capital investment, a University of Alaska Fairbanks team said in a new report.
The report, issued by UAF’s Alaska Center for Energy and Power, found that by 2050 non-fossil energy can supply anywhere from 70% to 96% of the power needed to produce electricity along the Railbelt. The region comprises communities from Fairbanks in the Interior to Seward on the Kenai Peninsula, the corridor along the Alaska Railroad line that hold the vast majority of the state’s population.
The report compared four scenarios for power generation, from a continuation of the current heavy reliance on natural gas to varying blends of solar, wind, hydro, tidal and nuclear energy.
Today’s Key Takeaways: How do we keep our young people in Alaska? Exxon moves to block activists intent on harming company. Natural gas forecast. Investment down, interest up for AK’s mining industry. AK utilities say “no” to removing Eklutna Dam.
For an 11th consecutive year, more people moved out of Alaska than moved into the state.
As the Alaska Legislature convenes in Juneau, the state population is on the minds of lawmakers.
For the 11th consecutive year, more people moved out of Alaska than moved into it, according to new estimates published this week by the Alaska Department of Labor.
Though new births over the past year counterbalanced the losses, the state’s population growth was a meager 0.04%, demographers estimate. The state’s new estimated population, 736,812, is below what it was in 2012.
While the trend has been building for more than a decade, the number of lawmakers calling for swift and major action has grown, and a variety of proposals are now circulating in the Capitol.
“It’s just interesting this year how, regardless of whether it’s cost of living, energy costs, schools, everybody’s bringing up that population loss,” said Rep. Will Stapp, R-Fairbanks.
But why now, after 11 years of losses?
“I think it’s been finally recognized,” said Senate Majority Leader Cathy Giessel, R-Anchorage. “You know the old analogy: ‘How do you boil a frog?’ You turn up the heat slowly. And then finally, the frog realizes, ‘Oh, no, I’m cooked.’ I think that’s kind of what’s happened.”
Exxon Mobil Corp. filed a lawsuit against US and Dutch climate activist investors in an effort to remove what it describes as their “extreme agenda” from the ballot at its annual shareholder meetings, and force a stricter interpretation of SEC rule-making.
The Texas oil giant is seeking a declaratory judgment from the US District Court in Fort Worth to exclude from its annual meeting this year a proposal from Follow This and Arjuna Capital LLC to accelerate greenhouse-gas emission cuts. Exxon argues that a judgment in its favor would tighten the Securities and Exchange Commission’s interpretation of the rules around what proposals get on proxy ballots across corporate America.
Follow This and Arjuna Capital have “become shareholders solely to campaign for change through shareholder proposals that are calculated to diminish the company’s existing business,” Exxon said in the complaint. They “are aided in their efforts by a flawed shareholder proposal and proxy voting process that does not serve investors’ interests and has become ripe for abuse.”
With Donlin Gold reentering the feasibility study stage, Ambler Metals waiting on the reevaluation of the permit needed for a road to the Ambler Mining District, and an overall lack of investment capital, mineral exploration spending in Alaska dropped during 2023.
While the overall sector was down, there continued to be some bright spots – most notably, a growing interest in Alaska’s critical minerals potential.
In July, the U.S. Department of Defense awarded Graphite One Inc. $37.5 million to help complete a feasibility study for an advanced graphite material supply chain that will begin at the Graphite Creek project about 35 miles north of Nome, Alaska.
“This Department of Defense grant underscores our confidence in our strategy to build a 100% U.S.-based advanced graphite supply chain – from mining to refining to recycling,” said Graphite One CEO Anthony Huston. “The World Bank Group reports that the production of minerals, including graphite, could increase by nearly 500% by 2050, to meet the growing demand for clean energy technologies.”
While graphite is the single largest ingredient in the lithium batteries for electric vehicles and renewable energy storage, it is not the only critical energy metal in high demand or being sought in Alaska.
At least two new exploration companies – Alaska Energy Metals Inc. and KoBold Metals scoured promising projects in Alaska’s Wrangellia Terrane for deposits enriched with nickel, cobalt, copper, and other metals critical to the energy transition.
“Alaska Energy Metals is positioning itself to supply domestic markets with a source of critical and strategic metals,” Alaska Energy Metals President and CEO Greg Beischer said upon the early 2023 launch of AEM.
While energy transition minerals are gaining traction in Alaska, the more traditional metals gold, silver, and zinc continue to be the most sought out across the 49th State.
The Alaska Native village of Eklutna and Anchorage Assembly leaders are calling for the removal of the Eklutna River hydropower dam that provides cheap power in Southcentral Alaska, as electric utilities propose ways to reduce the dam’s environmental harms.
The supporters of removing the dam say it would fully restore the river, and would not happen until replacement sources of renewable energy can be created.
The idea comes as the owners of the nearly 70-year-old dam — the Chugach and Matanuska electric associations and the Anchorage Hydropower Utility — undertake a historic, legally required effort to mitigate its impacts.
But a representative for the utilities’ effort says that a free-flowing Eklutna River could damage critical infrastructure, including the buried water pipe that delivers most of Anchorage’s drinking water. It runs near and sometimes beneath much of the riverbed.READ MORE
