Today’s Key Takeaways: Billion Barrel Announcement for Alaska! Russian oil production forecast up; OPEC demand forecast down. Investors believe in Pebble. What you need to know about the LNG industry. Alaskans get creative to explain Ranked Choice Voting.
NEWS OF THE DAY:
88 Energy Makes 1 Billion Barrel Oil Announcement
Andreas Exarheas, Rigzone, August 11, 2022
88 Energy Limited has reported a maiden, independently certified prospective resource estimate of 1.03 billion barrels of oil – on a gross mean, unrisked basis – for the Project Icewine East development, which the business holds a 75 percent net working interest in.
According to the company, significant prospective resources have been estimated across all the recently mapped Shelf Margin Delta (SMD), Slope Fan System (SFS), Basin Floor Fan (BFF) and Kuparuk (KUP) play fairways on the Icewine East acreage.
The maiden independent prospective resource report was completed by Lee Keeling and Associates, Inc (LKA). The initial total prospective resource follows a period of review of an extensive data suite that included seismic data, well logs from Icewine-1 and nearby wells adjacent to the Icewine East acreage, recent petrophysical analysis and mapping, 88 Energy highlighted. LKA is an independent U.S. based expert petroleum geoscience and engineering consulting firm which has significant and recent experience in providing resource estimates globally, as well as more specifically in Alaska.
“This maiden, independently certified 1.03 billion barrels of oil resource estimate is a great result for 88E and its shareholders,” 88 Energy Managing Director Ashley Gilbert said in a company statement.
“Resources of this magnitude present our shareholders with significant upside potential and opportunity, which is why we continue to focus on our Alaskan portfolio and believe significant value exists in our Icewine East acreage,” Gilbert added in the statement.
“Importantly, it is worth noting that the Icewine East acreage has been significantly de-risked by the recent Pantheon drilling and flow tests on their adjacent acreage, as well as data from the Icewine-1 well logs, and more recently the leased Franklin Bluffs 3D data set. This work substantially increases our confidence in unlocking the potential of the Icewine East acreage and is by far, the most compelling data suite the company has analyzed ahead of drilling any well,” Gilbert continued.
The managing director went on to note that full interpretation of the recently licensed FB3D data is ongoing, including AVO analysis, to define “sweet spots” for each play and determine optimal future exploration and appraisal drilling locations, the first of which Gilbert said is planned for 2023.
Back in June, 88 Energy announced that a licensing agreement had been signed with SAExploration, Inc. for use of its Franklin Bluffs 3D seismic survey data (FB3D), which 88 Energy noted covers a “significant area over the Project Icewine East leases”. In May, 88 Energy revealed that a third-party evaluation of the Icewine East mapping was complete.
88 Energy’s Icewine project is one of several the company has on the Alaska North Slope. Others include the Peregrine, Umiat, and Yukon projects, all of which 88 Energy has a 100 percent interest in.
OIL:
From the Washington Examiner, Daily on Energy:
IEA INCREASES RUSSIAN CRUDE FORECAST FOR 2022: The International Energy Agency increased its Russian oil production forecast today by an additional 500,000 barrels per day (bpd) for the second half of 2022, and by 800,000 bpd for 2023— an adjustment that comes as the IEA acknowledged that Western sanctions have had a “limited impact” on Russia’s global crude exports.
“The outlook for world oil supply has been revised upward, with more limited declines in Russian supply than previously forecast,” the Paris-based agency said in its monthly Oil Market Report.
While Russian crude exports to the U.S., Europe, Japan, and Korea have fallen by nearly 2.2 million bpd since the start of the war, Moscow has rerouted much of its flow to India, China, Turkey, and other consumers, the report said—offsetting most of its previously anticipated losses.
In addition, natural gas and electricity prices have “soared to new records, incentivising gas-to-oil switching in some countries,” the IEA added. Read the full report here.
…MEANWHILE, OPEC LOWERS DEMAND FORECAST: OPEC reduced its 2022 growth forecast for global oil demand by 3.2% today, breaking with the IEA’s assessment as the oil cartel cited economic impacts from the war in Ukraine, high inflation, and lingering effects of the COVID-19 pandemic.
In its monthly report, OPEC predicted oil demand to rise by 3.1 million bpd for the remainder of 2022; a decrease of 260,000 bpd from its previous forecast.
“Global oil market fundamentals continued their strong recovery to pre-COVID-19 levels for most of the first half of 2022, albeit signs of slowing growth in the world economy and oil demand have emerged,” OPEC said in its report.
“This is, however, still solid growth, when compared with pre-pandemic growth levels,” it added. “Therefore, it is obvious that significant downside risk prevails.”
OPEC also increased its output by 162,000 bpd in July, up to 28.84 million bpd—less than it had originally pledged.
GAS:
What You Need to Know: Europe, Russia, and U.S. LNG Exports
Center for Liquified Natural Gas, August 2022
1. How is the U.S. LNG industry helping Europe?
• U.S. LNG hitting peak capacity all year. The U.S. LNG industry is maximizing the use of our existing LNGexport facilities, typically operating at peak available capacity of 10-12 billion cubic feet per day (Bcf/d) this year.
• Over 70% of U.S. LNG shipments went to Europe in the first half of 2022. U.S. LNG exporters’ uniquely flexible long-term contracts allowed their excess LNG to be rerouted to fill demand in Europe.
2. Will exports to Europe mean higher natural gas prices here in the United States?
• No. There are many reasons for the higher price of all energy sources right now and, while exports are a contributing factor, they most certainly are not the sole driving force.
• Greater regulatory certainty and removal of unnecessary delays surrounding infrastructure permitting and development is the best remedy for higher prices. It is a time-tested fact that if you increase supply, it will place downward pressure on price.
3. How do U.S. LNG exports fit into the energy transition?
• More LNG to Europe will prevent the restarting of old coal plants and other emissions-heavy energy sources and support the growth of renewables all while ensuring people have access to clean heat and power, which are all essential to the energy transition.
• U.S. LNG producers and exporters adhere to stringent environmental regulations. They are also investing billions of dollars in the development of innovative technologies that can decrease emissions further and help us reach our shared ambition of a low carbon future by 2050.
MINING:
Despite setbacks, Pebble Mine gets new investment of $9.4 million
Katherine Moncure, KDLG, August 11, 2022
In late July, Northern Dynasty Minerals received $9.4 million from a new, unnamed investor. Coming after a series of significant setbacks for the proposed Pebble Mine, this would seem like unusual time for a big investment.
In May, the EPA issued a proposed determination to prohibit the discharge of mining materials in the waters around the Pebble deposit — a decision that would effectively kill the project if it stands — and the Army Corps of Engineers denied Pebble’s permit in 2020. Pebble and Gov. Dunleavy are fighting to have that permit denial reversed.
Then, in July, a fire swept through the Pebble Mine supply camp. Odds seem slim that the mine breaks ground in the foreseeable future.
Despite all this, the new investor signed an agreement for even greater potential investment over a two-year period — up to $47 million in total, according to Mike Westerlund, vice president of investor relations for Northern Dynasty Minerals.
Westerlund said the investor is a private asset management company and that Northern Dynasty won’t provide the investor’s name because of the treatment previous partners have faced.
“We found in the past that many of the ENGO [Environmental Non-Governmental Organization] community will use this information to wage public campaigns against our investors, which doesn’t seem fair to me or reasonable even, but they try to pressure them and they try to block them, etc., and make life unpleasant for them. So we’re just choosing not to release their name at this time,” he said.
Westerlund explained that Northern Dynasty wanted to raise funds without issuing equity because their stock prices are low.
On July 27, the day Mining Journal announced the new investment, Northern Dynasty’s stock jumped $0.05, to $0.32 per share.
But this is just a fraction of the company’s peak price of more than $20 on Feb. 17, 2011. Westerlund said the new investment will help “move the permitting forward.”
He added that the investor is aware of the history of public opposition against the mine and the EPA’s proposed determination released in May. They’re motivated to put money into the project anyway.
“So the investor believes in the long-term value of gold and silver, that they see gold and silver being very valuable metals in the future,” Westerlund said.
Westerlund said that with each $9.4 million the new investor commits, it will receive 5% of silver and 6% of gold produced over the lifetime of the mine.
Bob Loeffler is a research professor of public policy at the University of Alaska Anchorage Institute of Social and Economic Research. His work includes studies on land and resource issues. He said the investor may believe the reward is high enough to warrant a risky investment.
“I don’t know who the investor is,” Loeffler said. “But clearly some investor thinks the odds are non-zero. So, it’s a risk/reward. And the investor must believe that the reward is high enough.”
Loeffler worked for the Alaska Department of Natural Resources for over two decades. His job at UAA is funded in part by the Council of Alaska Producers, a mining trade association. Loeffler said his professional obligation is to the university, not the industry.
He said Pebble seems to be preparing for a long, expensive battle over permitting because keeping the Pebble Mine project alive is critical for the existence of Northern Dynasty itself.
“Northern Dynasty has only one asset, and that’s the Pebble Project. It’s not like, you know, General Motors, which can say, well, this particular car isn’t selling, concentrate on other cars. Or even a large mining company, which might say, this particular prospect is becoming expensive. I’ll concentrate on my other prospects. As far as I know, their only asset is the Pebble prospect. So, they don’t have any alternatives,” he reflected.
The EPA’s Proposed determination to nix the mine is not final. The agency held public hearings in Dillingham, Newhalen and online in June. The written comment period is open until September 6. Comments can be submitted online at regulations.gov.
POLITICS:
Groups Get Creative to Help Alaska Voters With Ranked Voting
Becky Bohrer, Associated Press, August 11, 2022
Drag performers shimmied up and down a walkway between café tables, as enthusiastic patrons took photos, waved cash, and filled out ballots ranking the shows.
The mock election, fueled by performances that brought the din of an Anchorage, Alaska, café to a roar, was aimed at teaching voters about the state’s new ranked choice voting system.
The first ranked voting election under a suite of elections changes approved by Alaska voters in 2020 will be the Aug. 16 special U.S. House election featuring Republicans Sarah Palin and Nick Begich and Democrat Mary Peltola.
Organizations have gotten creative in trying to help voters understand how to cast their ballot, as the mock election featuring drag performers shows.
Under ranked voting, ballots are counted in rounds. A candidate can win outright with more than 50% of the vote in the first round. If no one hits that threshold, the candidate with the fewest votes is eliminated. Voters who chose that candidate as their top pick have their votes count for their next choice. Rounds continue until two candidates remain, and whoever has the most votes wins.
Leaders of some of the efforts see their work as critical to getting voters comfortable with ranked voting, whether they like the system or not, and to help avoid large numbers of ballots being thrown out because they are incorrectly cast.
“In the spirit of democracy, you need to at least understand how this works,” said Bernadette Wilson, state director of Americans for Prosperity-Alaska. The group opposed the 2020 ballot initiative but “we lost,” she said. The new system is “the law of the land, and we have an election coming up.”
While Americans for Prosperity Action-Alaska has endorsed Begich, Wilson has avoided using the actual candidates as examples in videos she’s posted on Facebook explaining the system, opting instead to demonstrate with colorful sticky notes on a whiteboard. She also did a presentation and Q&A at an Anchorage theater, an event sponsored by an education wing of the group, Americans for Prosperity Foundation.
A commenter on one of Wilson’s posts said: “I am glad she understands. Clear as mud to me.”
Wilson said she wonders how many people risk incorrectly filling out their ballot and having it rejected because “they read a comment on Facebook somewhere” or got bad information from a friend.
Maine uses ranked voting in state-level primaries and in general elections for federal offices. But Alaska’s unique system combines open primaries with ranked vote general elections. The top four finishers in each primary race, regardless of party affiliation, advance to the general election.
Supporters see ranked choice as a way to give voters more choice and to have candidates seek support from beyond their traditional bases.
Three candidates are in the House special election after elections officials and courts determined that independent Al Gross, who finished third in the special primary, withdrew from the race too late for fifth-place finisher Republican Tara Sweeney to make the ballot in his place.
The winner will serve the remainder of the late Rep. Don Young’s term, which ends early next year. Young died in March.
The special election will be on one side of the ballot. The other side will feature regular primary races, in which voters select one candidate per race.
Palin at a recent forum called ranked voting “convoluted” and complicated and said it should be changed. Former President Donald Trump, who has endorsed Palin, at a rally in Anchorage last month called ranked choice a “rigged deal.”
Palin’s campaign did not respond to questions from The Associated Press about whether the campaign is trying to help voters understand the system or encouraging them to rank a certain way. Neither did Peltola’s. Peltola, at the forum, said she was hopeful about the new system.
Begich said his job is to make sure voters mark him first. Begich, who said he would like to see Alaska return to its old system, said he’s focused on campaigning and leaving education around the process to others.
The Alaska Division of Elections, which oversees elections, has produced ads, videos, fliers, and online explainers. But a candidate for governor, Democrat Les Gara, said one of its mailers risks confusing people because it uses a mock state Senate race as a ranked choice example when no state legislative races will be ranked in August. A division spokesperson did not respond to the criticism.
Some of the outreach efforts are political. For example, the National Republican Congressional Committee in a video encourages voters to “leave the Democrat blank” and only rank the Republicans in the House special election.
The Alaska Democratic Party is urging voters to “rank the candidate(s) that most closely align with their values.”
The Alaska Center Education Fund, a nonpartisan arm of the progressive-leaning The Alaska Center, helped sponsor the recent “Drag out the Vote” event in Anchorage. Kyla Kosednar, the fund’s advocacy director, said the fund’s work is focused this year on young and first-time voters.
“We try to add those fun elements into these voting events so that folks are more likely to take time out of their busy summer schedule and come learn about ranked choice voting,” Kosednar said.
Kosednar said Young’s death accelerated the timeline for educating voters. She said some people don’t realize an election is happening or are unfamiliar with the new system. She said practicing help.
“Once people do practice it they’re like, ‘Oh, this makes total sense,'” she said.
Sarah Erkmann Ward, who owns a communications agency in Anchorage, has a contract with Alaskans for Better Elections and is doing outreach to help conservatives understand the system, she said. Alaskans for Better Elections backed the new elections system and has been working with a variety of groups in efforts to help voters understand it.
Ward said she hasn’t seen any ranked voting skeptics leave her presentations an advocate.
“It’s more of a realization that, ‘OK, this is not as hard as I thought, still not wild about the idea but I know how to vote.’ And that’s really the goal here, just to get people comfortable with how you vote.”