Today’s Key Takeaways:Alaska’s Cook Inlet: Left out in the cold by lawmakers. Native groups hurt by Biden’s Alaska Mining Limits.
NEWS OF THE DAY:
With just under two weeks to go in the session, the legislature does not seem to be serious about adopting policy that will create a more favorable business climate for gas exploration, development, and production in the Cook Inlet. Providing more opportunities for gas storage may be the only bill that has a chance.
Introduces a significant adjustment to the royalty rates and payments structure for certain oil and gas production, by reducing the royalty payments to zero for qualified new gas and cutting the minimum fixed royalty share by 50% for qualified new oil.
The bill was heard in the House Finance Committee on 4/23 with invited testimony from Furie and BlueCrest. Both companies were very supportive of the bill, with many targeted questions coming from members of the House Finance committee. Bill is scheduled for a hearing on 5/1 in House Finance.
Bill proposes a targeted incentive that will increase the project economics for investing in another jack-up rig to be used in Cook Inlet to explore for and extract natural gas by providing a carry-forward tax credit equal to the costs associated with purchasing and transporting the rig to Alaska.
This is a title 43 Tax liability reduction credit, not cash credit. Equal to 100% of the cost for purchasing and transporting jack-up rig, limited to $75 million. Applies only to jack-up rigs for Cook Inlet; Includes language to ensure rigs are used in Cook Inlet for a minimum of three years.
Bill remains held in House Finance. No bill hearings on the calendar as of 4/29.
Bill proposes the establishment of a Cook Inlet Reserve-Based Lending Fund to support increased oil and gas production in Cook Inlet. Reserve-Based Lending is an asset-based financing mechanism in the oil and gas industry in which loans are
made based on either undeveloped or developed and producing oil and gas assets.
Bill was heard and held in the House Finance Committee on 4/19.
Bill seeks to decrease royalty rates on new wells for gas used by Alaskans to 0%. Bill also reduces the base royalty on wells currently producing to 5%. Extends incentives to “middle earth” and allows drilling and development costs to be deducted against royalty burdens.
Bill hearing on 4/16 in House Finance featured a bill presentation from Trevor Jepsen, staff to Rep. McKay. Certain members were skeptical that royalties can truly spur development more effectively than letting prices creep up in a free market scenario. Bill is still held in the House Finance Committee as of 4/29.
Bill provides for the RCA to have clear oversight authority over natural gas and LNG storage facilities, defines principles for the determination of just and reasonable rates, and introduces measures to protect sensitive financial information, mandating confidentiality for certain records.
Passed out of the House Labor & Commerce Committee on 4/17. The bill is now calendared for the House Floor today, 4/29.
And green energy priorities, too. He instead leaves critical resource extraction in foreign powers’ hands.
As a young geologist in 1979, I explored Red Dog, then an undrilled outcropping of zinc and lead mineralization in the western Brooks Range of Alaska. At the Ambler District 150 miles to the southeast, large deposits rich in copper, zinc and cobalt had already been discovered and drilled. Today, Red Dog is the world’s largest zinc mine and a powerful economic driver for Alaska and Native groups. Meanwhile, little has changed in the Ambler District, a legacy President Biden appears intent to continue by canceling plans to build an access road (“Biden Piles Sanctions on Alaska,” Review & Outlook, April 20).
Red Dog is scheduled to close in 2031 when its reserves are depleted. This reflects a larger trend, as Alaska’s Native groups face a fiscal cliff from declining oil, gas, and mineral production revenue. The Ambler District would be an important contributor to their economic prosperity.
Candidate Biden told us he would make critical metals a priority for his green initiative. Not to worry, he said, raw materials would be sourced from mines overseas and used to create high-paying, value-added manufacturing jobs in the U.S. This assumes the foreign countries producing these metals play along, a prospect that seems increasingly unlikely.
China controls the global supply chains of cobalt, rare earths, germanium, and gallium. Chile recently announced plans to nationalize its lithium industry. Indonesia has curbed unrefined nickel and copper exports to control their supply chains.
Today’s Key Takeaways: Sullivan to Biden “You are lawless and a liar.” Murkowski, Sullivan, and Peltola defend Donlin. Begich creates a Republican primary within ranked choice voting process by pledging to drop out if he loses to Dahlstrom in primary.
President Joe Biden “doesn’t have the authority” to restrict new oil and gas leasing on federal petroleum reserves in Alaska, Sen. Dan Sullivan (R-AK) said Sunday in response to the Democratic administration’s environmental protection plan.
“Leaders of the North Slope of Alaska were unanimous in opposition to this,” Sullivan said Sunday, adding that Biden was not being forthright about the wants of Alaska Native communities in regard to the new oil and gas leasing rule. Sullivan’s comments come days after the Biden administration finalized a rule on Friday to freeze new fossil fuel leases on nearly half of the National Petroleum Reserve in Alaska.
In a statement released Friday, Biden touted the restrictions, saying that he is “proud that my Administration is taking action to conserve more than 13 million acres in the Western Arctic and to honor the culture, history, and enduring wisdom of Alaska Natives who have lived on and stewarded these lands since time immemorial.”
The reserve is more than 23 million acres of public land and is also an underground emergency oil supply for the U.S. Navy that was designated in the 1920s. It’s also become the site of the ConocoPhillips-owned Willow project, an oil drilling venture that has angered some environmental advocates.
“As I say, [it’s] national security suicide,” Sullivan said on CBS News’s Face the Nation on Sunday, calling it “a lie” for the Biden administration to claim that the indigenous population of Alaska wanted the new anti-drilling rule.
“It is a lie. Go see what the indigenous people of Alaska from my part of the state said,” Sullivan said, adding, “It’s lawless, and he doesn’t have the authority to do it.”
Alaska’s congressional delegation, in documents filed in federal court late Tuesday, called the proposed Donlin mine one of the state’s “most important and necessary economic development projects.”
Alaska’s three-member, bipartisan congressional delegation is siding with boosters of the major proposed Donlin mine in an ongoing lawsuit filed by tribal governments that seeks to invalidate the Southwest Alaska project’s federal environmental approvals.
Republican U.S. Sens. Lisa Murkowski and Dan Sullivan and Democratic U.S. Rep. Mary Peltola, in documents filed in federal court late Tuesday, called the proposed Southwest Alaska mine one of the state’s “most important and necessary economic development projects.”
And they say that blocking the mine’s construction would stop one of the state’s largest Alaska Native-owned corporations, Calista, from “developing its natural resources in defiance of the commitment to economic self-determination” contained in the federal legislation that settled Indigenous land claims.
The lawmakers’ proposed friend-of-the-court brief aligns them with Calista, which owns the mineral rights in the location of the proposed mine and intervened in the lawsuit in defense of the environmental approvals — as did the company developing the project and Republican Alaska Gov. Mike Dunleavy’s administration.
Conservatives hoping to defeat Alaska Congresswoman Mary Peltola in November dread a replay of what happened in 2022, when Republican candidates Sarah Palin and Nick Begich III spent most of their campaign energy attacking each other, right up to the general election, and Republican voters were split between the two.
This year, the leading Republicans are Begich, again, and Lt. Gov. Nancy Dahlstrom. Begich has a plan to avoid a similar split.
“Should I finish behind Nancy Dahlstrom in the primary, I will step out of the race,” he said in a recent phone interview with Alaska Public Media. “And I would hope that others on the right side of the aisle would do the same.”
If other Republicans would make the same pledge to dropout, it could effectively create a Republican primary. That way, Begich said, GOP voters could line up behind a single candidate.
Another way Republicans could avoid a split would be to make use of ranked choice voting. But Begich said his way has more appeal to Republican voters.
“For those who are not a fan of ranked choice voting — and I consider myself one of those people — we can self-impose a primary among the Republicans, if we make that commitment,” Begich said.
Biden Admin: "We require you to make something you don't want to make – so the people we are forcing to buy something they don't want to buy – have something to buy that they don't want….."
Celebrating the industries that balance ecology and economy in Alaska
A big shout out on Earth Day to Alaska’s oil, gas, and mining industries for responsibly developing Alaska’s resources, providing the highest paying jobs in the state, AND providing the largest GDP growth for Alaska!
Half of National Petroleum Reserve-Alaska could be off-limits
Companies say plan would violate leases, kill investment
The US set aside 23 million acres of Alaska’s North Slope to serve as an emergency oil supply a century ago. Now, President Joe Biden is moving to block oil and gas development across roughly half of it.
The initiative, set to be finalized within days, marks one of the most sweeping efforts yet by Biden to limit oil and gas exploration on federal lands. It comes as he seeks to boost land conservation and fight climate change — and is campaigning for a second term on promises to do more of it.
The changes wouldn’t affect ConocoPhillips’s controversial 600-million-barrel Willow oil project in the National Petroleum Reserve-Alaska. But oil industry leaders say the plan is more expansive than initially anticipated and threatens to make it nearly impossible to build another megaproject in the region.
That’s spooking oil companies with holdings in the National Petroleum Reserve, which — along with the rest of Alaska’s North Slope — was viewed as a major growth engine for the industry before the shale boom. Interest has surged again in recent years, fed by mammoth discoveries. Tapping the region’s reservoirs could yield decades of production.
Company executives and Alaska lawmakers have increasingly raised alarm over the plan, saying it could thwart oil and gas development across much of the reserve, even on existing leases. The opposition has united a broad spectrum of foes, from Alaska Natives to lower-48 oil producers.
Santos Ltd., which leases more than a million acres within the reserve and is developing the nearby Pikka Unit joint venture with Repsol SA, said in a filing with the Bureau of Land Management that the proposal would infringe on its holdings, with impacts “as extensive as whole projects being denied.” ConocoPhillips, which has 156 leases in the reserve, warned the regulation would violate its contracts and “drive investment away from the NPR-A.” And Armstrong Oil & Gas Inc., whose leases there span 1.1 million gross acres, said the measure could block it from building the infrastructure needed to access those tracts.
The proposed rule would effectively nationalize the company’s leases, Chief Executive Officer Bill Armstrong told White House officials in a March 21 meeting, according to people familiar with the discussion. A company spokesman declined to comment on the matter.
Administration officials argue the changes are necessary to balance oil development with the protection of sensitive landscapes that provide habitat for polar bears, migratory birds and the 61,500-strong Teshekpuk caribou herd. “We must do everything within our control to meet the highest standards of care to protect this fragile ecosystem,” Interior Secretary Deb Haaland said in announcing the measure last year.
The regulation would limit future oil development in some 13 million acres (20,000 square miles) of designated “special areas” within the Indiana-sized reserve, including territory currently under lease. There’d be an outright prohibition on new leasing in 10.6 million acres.
The proposal would create a formal program for expanding protected areas at least once every five years — while making it difficult to undo those designations. And it would raise the bar for future development elsewhere in the reserve.
The Interior Department said in a preamble the regulation wouldn’t affect existing leases. But the proposed rule text doesn’t offer similar, explicit assurance. Instead, it proposes to give the government broad authority to limit or bar access to existing leases, “regardless of any existing authorization.” Oil leasing and infrastructure development would be presumed not to be permitted unless specific information clearly demonstrates the work can be done with “no or minimal adverse effects” on the habitat.
Environmentalists and some Alaska Natives have widely praised Biden for setting aside territory for conservation.
“These are resources that once they’re gone, they’re gone forever, and we can’t wait until they have disappeared to go and get them back,” said Rachael Hamby, policy director for the Center for Western Priorities. “We need to manage now to protect those resources and values for present and future generations.”
The Interior Department says the proposal would not have a significant effect on the nation’s energy supply. Still, the reserve could be a notable source of fuel, with the rock formations beneath it holding an estimated 8.7 billion barrels of recoverable oil, according to a 2017 assessment by the US Geological Survey. Enthusiasm for the region picked up after recent discoveries in the Nanushuk field, and the state of Alaska expects crude production from the reserve to climb from 15,800 barrels per day in fiscal 2023 to 139,600 barrels per day in fiscal 2033.
Opponents say the plan would shift the role of the reserve to conservation instead of oil development, contrary to congressional intent. “The current statute says that the primary purpose is to increase domestic oil supply as expeditiously as possible,” said Kara Moriarty, president of the Alaska Oil and Gas Association. “But the rule takes a completely different premise.”
This would be bad for America’s energy security. It would disrespect Alaska Natives on the North Slope, who were ignored in a sham public process. It would openly defy federal law while ignoring rising energy prices and growing global volatility. It would yet again sanction…
Today’s Key Takeaways: 1.3B barrels of recoverable oil and gas on the North Slope. Big reversal of anti-coal policy. Senate vote today to overturn Biden rule on highway emissions.
Pantheon Resources plc shared the results of the updated Independent Expert Report (“IER”) by Netherland Sewell & Associates, Inc. (“NSAI”). The update includes approximately 43,000 acres located on its 100% owned Kodiak oil and gas field on the North Slope of Alaska.
NSAI’s best estimates of Kodiak’s contingent recoverable resources sum to 1.2 Bbbl of marketable liquids (oil, condensate, and natural gas liquids) and 5.4 Tcfg. The new resource represents a 25% increase (963 MMbbl to 1.2 Bbbl) in recoverable marketable liquids compared to NSAI’s previous 2023 report.
The updated numbers include c. 43,000 of the c. 66,000 acres of the expanded acreage footprint following successful lease bids in December 20231, and a higher average recovery rate due to the better reservoir properties in the shallower, updip portion of the field secured by the new leases.
The Kodiak oil and gas field is a large basin floor fan accumulation with three well penetrations. Recent drilling activity and acreage acquisition strategy has focused on moving structurally higher into better reservoir rocks where porosity and permeability are substantially improved.
The potential improvement in reservoir quality in the newly acquired acreage underpins the c. 40% increase in the high estimate of recoverable resources to 2.8 Bbbl of marketable liquids and 11.75 Tcfg.
The 5.4 tcf of recoverable gas (Best Case) is important as additional support for a proposed agreement with Alaska Gasline Development Corp (“AGDC”) to bring gas to southcentral Alaska markets.
The Kodiak oil and gas field currently represents Pantheon’s largest project development candidate, currently defined by three well penetrations into the Basin Floor Fan structure, which extends more than 10 miles from the deepest part of the fan to the 2021 updip Theta West-1 appraisal well.
The additional recent successful lease bids secure the remainder of the accumulation to the northwest and adds a significant volume of recoverable oil and gas to the Kodiak field.
BMO dropped plans to curb lending to the coal industry last year to avoid accusations of energy boycotting from West Virginia, Bloomberg has reported, citing an update from West Virginian Treasurer Riley Moore.
The update came in the form of a list of financial institutions that restrict lending to the state’s major industry and are exposed as seeking to destroy the state’s vital energy industry, per Moore. The list is a result of a Republican law passed in 2022, which names financial firms that have “publicly stated they will refuse, terminate or limit doing business with coal, oil or natural gas companies without a reasonable business purpose.”
The list released this week includes majors such as BlackRock, Goldman Sachs, Morgan Stanley, Wells Fargo, and JP Morgan, but the name of Bank of Montreal’s U.S. subsidiary BMO was not mentioned by the West Virginian Treasurer, suggesting it had done a U-turn on its coal curb plans. HSBC, Citigroup, and Northern Trust were also named among the energy boycotters.
“We cannot allow institutions that seek to destroy our state’s critical energy industries and the economic activity they generate to also profit from handling the very taxpayer dollars they seek to diminish,” the West Virginian Treasury said in a statement.
The companies on the list were warned they would end up on it earlier this year. In response, a counselor for BMO wrote back to West Virginia’s Moore, saying, per Bloomberg, that “As a result of policy changes made in November 2023, we removed a Coal Statement from BMO’s websites as it did not fully reflect our current policies.”
“After receipt of your letter, we realized that a cached version of the statement remained on our websites and took it down. We have no plans to republish the Coal Statement,” Timothy Cox also wrote.
POLITICS:
THIS AFTERNOON’S VOTE: The Senate is set to vote on a disapproval resolution overturning a Transportation Department rule requiring states to measure and set goals for reducing carbon emissions from cars and trucks on the road – and at least one Democrat is on board with Republicans to pass the measure.
Republican Sens. Kevin Cramer and Shelley Moore Capito and Democratic Sen. Joe Manchin, along with GOP Reps. Rick Crawford and Sam Graves,introduced a bipartisan resolution under the Congressional Review Act to block the rule, arguing that the policy is an overreach from the Biden administration and would saddle states with “burdensome and unlawful requirements.”
“New York and North Dakota have very different transportation systems, needs, and capabilities, but under this one-size-fits-all mandate, they’re effectively treated the same,” Cramer, the ranking member of the Senate Environment and Public Works Subcommittee on Transportation and Infrastructure, said in a statement in February.
More about that rule: The rule, finalized by the Federal Highway Administration in November, establishes a method for the agency to measure and report greenhouse gas emissions from vehicles. It also requires state DOTs and local planning organizations to establish carbon targets and report on progress towards meeting those goals.
What the rule doesn’t do: The rule doesn’t mandate how low the targets should be – but rather that states have targets. Local authorities are provided the flexibility to set their own goals that are appropriate for their own communities’ climate change priorities, “as long as the targets aim to reduce emissions over time.” However, it’s ultimately up to the FWHA to assess if state DOTs have made significant progress toward achieving their targets.
In defense of the rule: In a blog post defending the rule, the Natural Resources Defense Council pushed back against claims made by Republicans, emphasizing the flexibility that states are given in implementing the policy, and asserting that the administration does have the authority to impose GHG emissions performance measures. The group also pushed back on the claim that the rule would undermine state economies, arguing that compliance costs associated with the policy are projected to be “minimal” considering that states have the tools they need to set targets and track progress.
Senate math: All 49 Republicans in the Senate cosponsored the resolution. Assuming that all Republicans vote to overturn the rule, along with Manchin, the measure would still be defeated at a tie vote – or can be defeated if Vice President Kamala Harris breaks the tie. But the measure can pass if at least one more Democrat votes with Republicans. Be on the lookout for more Democrats who cross the aisle to vote for the CRA.
The W.H. response: The White House has not issued a statement of administrative policy on the CRA, but it’s unlikely they would overturn their own policy.
A fight in the courts: A Texas judge struck down the climate rule last month, arguing it was not within the agency’s legal authority. In a separate case in which 21 GOP-led states sued the Federal Highway Administration and others, a federal judge in Kentucky ruled the policy was unlawful, but declined to vacate it.
From the Washington Examiner, Daily on Energy, April 10, 2024
