Today’s Key Takeaways: Fat bear voting victim of vote tampering! Potential for North Slope Heavy Oil Production Revealed. LNG developers pushing Biden to speed up export permits. Greens Creek Mine exceeding expectations for silver and gold. Will fighting OPEC hurt clean energy?
NEWS OF THE DAY:
‘Fat Bear Week’ Has a New Champion After Voting Scandal
Allison Prang, The Wall Street Journal, October 12, 2022
Bear 747, or Bear Force One, is one of the largest brown bears in the world; this year’s contest garnered more than 1 million votes overall
Fat Bear Week has a new furry champ who is believed to be one of the biggest brown bears on the planet, but not after a voting scandal ensnarled the results.
The latest winner of the competition, in which people vote for their favorite fat bear located in the Katmai National Park and Preserve in Alaska, is a bear known as Bear Force One, or bear number 747. The winner of the competition, put on by Explore.org and the National Park Service, was announced Tuesday night.
Votes were tampered with during this year’s Fat Bear Week, however, forcing Explore.org to review the votes for a chunk of the competition and give a revised total for one of the voting days. Explore.org called the voting drama “A Fat Bear Week scandal for the ages.”
Fans were able to watch the bears via a 24/7 live cam from June to October, in which they snooze, catch fish and play. The bear known as 747 overtook fellow fan favorite and four-time Fat Bear Week champion, Otis, in this year’s competition.
Bear Force One weighs as much as 1,400 pounds.
“Did 747 “BEARFORCE ONE” even hibernate?” Explore.org, one of the competition’s facilitator’s, tweeted over the summer. “What a beauty!”
Explore.org says few brown bears ever grow as big as 747 and that he’s one of the largest brown bears on the planet.
“Most bears recognize they cannot compete with him physically and they yield space upon his approach,” Explore.org says.
He was first identified in 2004 and his right ear is known to flop, according to the site. He also won Fat Bear Week in 2020.
Fat Bear Week is run similar to March Madness with a bracket-based system. The whole week attracted more than 1 million votes for various bears.
In the finals, 747 got 68,105 votes, compared with the bear known as 901, who got 56,876 votes.
Over 2,000 brown bears live in Katmai, which also is known for having a plentiful salmon population. The park is roughly 300 miles southwest of Anchorage.
OIL:
New Research Shows Potential For North Slope Heavy Oil Production
Anthony Moore, KSRM, October 11, 2022
The Institute for Northern Engineering’s Petroleum Development Lab at the University of Alaska Fairbanks conducted new research that demonstrates the potential for commercial production of the estimated billions of barrels of heavy oil under existing oil fields on Alaska’s North Slope. UAF engineers and Hilcorp Alaska have successfully deployed an enhanced oil recovery method using a process known as polymer flooding to pull the thick, viscous oil to the surface at Milne Point. The latest results of the research were presented at a press conference at UAF Friday afternoon.
“This research was initially supported by the federal government, but then, once again, because of changing attitudes, the funding went away,” according to Governor Mike Dunleavy. “The state, therefore, stepped in and we’ve helped fund this technology and we’ll probably keep funding this technology because there’s a lot of frontiers with regard to oil recovery here in the state of Alaska and this is just but one.”
The process injects a mixture of polymer and seawater into the reservoir, increasing the production of heavy oil compared to traditional water injection. The research demonstrates the technology works on the North Slope, and the results are promising, according to the office of Governor Dunleavy. UAF researchers are encouraged by the progress they are making and believe higher production can be achieved over the next decade.
“We have been working on heavy oil for many, many years, but the real opportunity actually came our way back in 2018,” Dr. Abhijit Dandekar, Professor and Chair, Department of Petroleum Engineering, UAF College of Engineering and Mines. “We found a very good industry partner in Hilcorp, and the project was funded and now if I fast forward it to late 2022, that is basically our claim that heavy oil polymer works in the challenging Alaskan arctic environment.”
The Dunleavy Administration directed $5 million for the next phase of the research project in its FY23 state budget after the U.S. Department of Energy eliminated funding for all heavy oil research earlier this year.
Click here to view the entire press conference. Click here for more information.
GAS:
LNG developers push Biden to speed up export permits, seeking to take advantage of European market
James Osborne, Houston Chronicle, October 12, 2022
LNG developers along the Gulf Coast are rushing to sign long-term gas contracts in Europe, where natural gas prices are near record highs.
But the length of time it takes for the Department of Energy to grant export approval to Europe and nations with whom the United States does not have free trade agreements is putting those deals at risk, LNG companies say.
Right now people (in Europe) are interested, and we have this exceptional circumstance, but what happens a year from now,” said Katie Ehly, senior policy advisor at the trade group Center for LNG. “Waiting for approval costs money.”
More than 10 projects before the Department of Energy are awaiting a decision on export permits to non-free trade countries, like Germany and Italy, but have already been approved for export to countries with which the United States has free trade agreements, like Mexico and South Korea.
At least some projects are being “slow walked,” Elhy said. The holdup comes at a time the Biden administration is under increasing pressure to put a halt on expanding LNG exports by large industrial companies worried about rising domestic gas prices and environmentalists campaigning to reduce greenhouse gas emissions.
Among the projects awaiting approval for export to Europe and other non-free trade countries is the second phase of Sempra Energy’s Port Arthur LNG in East Texas, which filed an application in 2020 to export an additional 1.9 billion cubic feet per day.
Also awaiting approval is Venture Global’s Calcasieu Pass facility in Louisiana, which submitted an application last year to export an additional 4 billion cubic feet of gas per day.
“The world is in the midst of a global energy crisis, and the need for clean, affordable, and responsibly sourced energy has never been more clear,” Anne Bradbury, CEO of the oil and gas trade group American Exploration and Production Council, wrote in a recent op-ed. “Unfortunately, America’s natural gas industry faces headwinds in the form of unnecessary legal, regulatory, and political barriers that, if left unaddressed, could inhibit its expansion.”
The Department of Energy did not respond to a request for comment. But in recent months the Biden administration has moved to speed approvals, to match President Joe Biden’s pledge earlier this year to increase LNG exports to Europe, Elhy said.
“They have recognized the problem, and the backlog is getting smaller,” she said. “People have different opinions on how long this should take.”
The rush to get export permits approved comes as large industrial and petrochemical companies are making the case to the Biden administration that increased LNG exports are in part responsible for rising natural gas prices.
Henry Hub, the U.S. gas benchmark, averaged $6.71 per million British Thermal Units through the first nine months of the year, up more than 70 percent from last year.
At an event hosted by the Industrial Energy Consumers of America last month, economist Clark Williams-Derry argued that U.S. natural gas production was not keeping pace with the growth in the LNG industry, driving up prices for U.S. consumers.
“The more projects that are built, the worse that problem is going to get,” he said. “I think we’re seeing a dawning realization of the problem we’ve created for ourselves.”
At the same time, the Sierra Club and other environmental groups, which have file lawsuits to block LNG projects along the Gulf Coast, continue to lobby the Biden administration that increasing gas exports goes against the president’s commitment to address climate change.
“These LNG projects are on shaky ground, both legally and financially,” Emma Guevara, an organizer with the Sierra Club, said in a statement earlier this year. “The opposition to gas exports isn’t going anywhere.”
MINING:
Greens Creek boosts Hecla 2022 outlook
Shane Lasley, North of 60 Mining News, October 11, 202
Hecla increases silver and gold guidance for SE Alaska mine
With the Greens Creek Mine in Alaska exceeding expectations, along with continued strong output from the Lucky Friday silver mine in Idaho and Casa Berardi gold mine in Quebec, Hecla Mining Company has raised its outlook for the production of both silver and gold during 2022.
“Hecla reported another strong quarter of operational performance from all three mines as Greens Creek achieved record throughput for the quarter, Lucky Friday’s quarterly production continued to exceed 1 million ounces and the mine has already produced around 90% of last year’s annual production, and Casa Berardi delivered consistent production with the mill continuing the record throughput rates,” said Hecla Mining Company President and CEO Phillips Baker, Jr.
Hecla went into 2022 expecting to produce 12.9 to 13.5 million oz of silver and 165,000 to 175,000 oz of gold at all three mines this year. After evaluating where it stands at the end of the third quarter, the Idaho-based miner upped its 2022 guidance to 13.6 to 14.1 million oz of silver and 169,000 to 180,000 oz of gold.
“Our production growth makes Hecla the fastest growing established silver producer, further increasing our leadership as the largest silver producer in the U.S. with the potential to be Canada’s largest silver producer as well,” Baker continued.
The potential to be the largest silver producer in Canada came with Hecla’s acquisition of Alexco Resource Corp. and that company’s Keno Hill Silver District project in the Yukon.
Greens Creek outperforms
While production at Lucky Friday and Casa Berardi have been strong this year, Greens Creek is the one operation in Hecla’s portfolio that is outpacing the company’s guidance for 2022.
With the mill running at a record 2,500-metric-ton-per-day throughput average, Greens creek produced 2.5 million ounces of silver and 11,412 oz of gold during the third quarter. With another strong quarter, this underground operation near Alaska’s capital city of Juneau has produced 7 million oz of silver and 35,860 oz of gold through the first nine months of 2022, putting it on pace to come in above the 8.6 to 8.9 million oz of silver and 40,000 to 43,000 oz of gold.
After looking at where the operation sits going into the final stretch of 2022, Hecla has raised the 2022 production outlook for Greens Creek to 9.3 to 9.6 million oz of silver, about 8% higher than the original guidance, and 44,000 to 48,000 oz of gold, about 10% higher than estimates at the beginning of the year.
Considering that Greens Creek currently accounts for nearly 70% of Hecla’s silver production and 35% of the company’s gold production, this increased output is adding a nice boost the Idaho miner’s overall precious metals production for the year.
Zinc and lead grades at the Southeast Alaska operation, however, declined 13% and 19%, respectively, due to mine sequencing and heading availability.
These lower base metal feed grades resulted in the decision to defer a shipment of silver concentrates from Greens Creek until this month to ensure adequate concentrate volumes for cost-effective shipping.
Combined, Greens Creek and Lucky Friday produced 15,589 tons of zinc, down 5% from the 16,766 tons produced in the second quarter, and 11,601 tons of lead, a drop of roughly 13% from 13,331 tons produced in during the prior three-month period. While Hecla does not report these base metals per operation, Greens Creek tends to be more enriched with zinc and Lucky Friday is weighted more toward lead.
Lucky Friday streak
Hecla’s iconic Lucky Friday Mine in Idaho produced 1.1 million oz of silver during the third quarter, slightly less than 1.2 million oz produced during the previous quarter.
Decreased production was due to lower milled grades and mined tons as new equipment is commissioned and projects are prioritized for increasing future throughput.
The mill operated at an average throughput rate of 986 tons per day during the third quarter, which puts Lucky Friday on track for a record volume of ore processed during 2022.
Having produced 3.2 million oz of silver through the first nine months of this year, Hecla expects Lucky Friday to achieve its guidance of 4.3 to 4.6 million oz silver for 2022.
The achievement of this production forecast would mean three straight quarters of higher than 1 million oz of silver, which bodes well for even higher output during 2023.
Steady Casa Berardi gold
Hecla’s Casa Berardi Mine in Quebec produced 33,335 oz of gold during the third quarter, almost exactly matching the output during the second quarter.
The consistent gold output is despite a roughly 4% drop in mill throughput – 4,239 tpd during the third quarter compared to 4,413 in the second.
So far this year, Casa Berardi has produced 96,881 oz of gold, which is consistent with production through the first nine months of 2021. The Quebec mine remains on pace to 125,000 to 132,000 oz of gold this year.
2023 Keno Hill production
In addition to all its current mines running at or above expectations, Hecla is making progress on readying its new Keno Hill silver mine for production.
According to a calculation completed for Alexco prior to the Hecla acquisition, Keno Hill hosts 1.44 million metric tons of probable reserves averaging 804 grams per metric ton (37.19 million ounces) silver, 3.84% (122 million pounds) zinc, and 2.64% (84 million lb) lead in four deposits – Bellekeno, Lucky Queen, Flame & Moth, and Bermingham.
At the end of 2020, Alexco began to ramp up to commercial production at Keno Hill, but COVID-related staffing issues slowed the restart of operations in the historic district and in June of this year the company announced that it was shutting down the mill in order to focus on underground development and to ensure the availability of ore.
Hecla, which finalized its buyout of Alexco in September, is picking up where Alexco left off.
In its quarterly production report, Hecla said that 20% of total planned preproduction development is complete and the operation remains on track for the ramp up to commercial production next year.
“Over the coming months Hecla plans to invest in development, infrastructure, and equipment so there are adequate mining faces and good working conditions to bring Keno Hill to full and consistent production by the end of 2023,” Baker said in September.
Further details of the Alexco acquisition can be read at Hecla Mining finalizes Alexco acquisition in the September 7, 2022 edition of North of 60 Mining News.
POLITICS:
Congress wants to fight OPEC. It could hurt clean energy.
Benjamin Storrow, Sara Schonhardt, Climatewire, October 11, 2022
Passage of so-called NOPEC legislation could complicate diplomatic relations at a time when the U.S. is scouring the world for minerals needed to build electric vehicles, wind farms and solar panels.
The transition to clean energy always promised to be rocky. Mounting congressional support for a bill to defang OPEC could make it more so.
Support is building on Capitol Hill for legislation that would enable the Department of Justice to bring antitrust charges in federal court against the oil cartel. While questions linger over how it would be enforced, experts say passage of so-called NOPEC legislation would inject more volatility into global energy markets already experiencing sweeping change.
Whether it would alter the trajectory of the world’s shift to cleaner energy sources is a matter of debate. Some analysts said it could erode the United States’ ability to convince its oil reliant allies to green their economies. In addition, it could push up oil prices even more — creating economic headwinds at home.
That would increase political risks for leaders pursuing a shift to cleaner energy, as President Joe Biden observed earlier this year amid a rally in gas prices, said Mark Finley, a former CIA analyst who now tracks oil markets at Rice University.
“We can’t get the transition we need if we can’t continue to get energy to run the economy and provide jobs,” he said. “You won’t stay in office long enough to deal with climate change if you’re seen as failing at delivering secure affordable energy to run the economy today.”
Others cast the legislation as a sideshow in the move away from fossil fuels. Volatility long has been a feature of global oil markets. Any market gyrations generated by passage of NOPEC simply would represent a continuation of current trends, said Justin Guay, director of global climate policy at the Sunrise Project. He argued the only true way to limit America’s exposure to fluctuating oil prices is to reduce consumption of fossil fuels.
It “smacks of policy making from decades ago that has not caught up to the world today,” Guay said. “It’s hard to look at the legislation and believe that it is going to fix the long-term structural problem. If your problem is sky high gas prices, then the underlying problem is the reliance on oil in the first place.”
The U.S. and OPEC have been at loggerheads before. In 1973, the oil cartel famously cut off supplies to the United States over its support for Israel in a war against its Arab neighbors. More recently, in 2015, the Saudi led group tried the opposite approach, flooding global markets with crude in an attempt to crush U.S. shale producers.
The recent surge in support for a NOPEC bill, which has existed in various iterations for years, came after the cartel voted last week to slash production by 2 million barrels a day. OPEC said it was trying to get ahead of a potential recession, but many observers suspected political motives. The cartel announced the decision in the presence of Russian Deputy Prime Minister Alexander Novak in its first in-person gathering since the Covid-19 pandemic (Climatewire, Oct. 6.)
Either way, analysts said the move is likely to increase the price of oil. Global petroleum inventories are limited. The OPEC cut likely will make the market even tighter.
White House officials and Senate Majority Leader Chuck Schumer (D-N.Y.) floated the prospect of a NOPEC bill in response. The Senate Judiciary Committee passed a version of the bill with bipartisan support in May. How the United States would enforce an antitrust ruling against foreign governments is unclear, analysts said.
Even so, the symbolism alone could prompt a harsh reaction. In 2019, Saudi Arabia threatened to stop trading oil in the dollar if Congress passed a version of the legislation at the time.
The idea of curbing OPEC’s pricing powers has long enjoyed bipartisan support in Congress, even if the White House hasn’t always agreed. Similar ideas were opposed by former Presidents George W. Bush and Barack Obama, who were concerned about the moves’ economic and geopolitical ramifications, said Robert McNally, president of the Rapidan Energy Group and a former energy adviser in the Bush administration.
“While President Biden probably opposes the bill for the reasons his predecessors did, he’s groping for options to express displeasure with the OPEC+ cut and so signaled interest in it,” McNally said. “The White House knows OPEC+ producers deeply dislike the bill.”
He likened the bill’s passage to a “nuclear bomb,” saying it would cause countries like Saudi Arabia and Mexico to reevaluate their relationship to the United States. “If sovereigns started suing sovereigns around the world, it would have wide ranging impacts across many sectors,” he said.
The energy transition has added a new dynamic to an already complicated relationship. America’s reliance on OPEC has waned with the emergence of U.S. shale producers, who used horizontal drilling and fracking to unlock previously inaccessible troves of domestic oil. In 2021, the United States imported 350 million barrels from OPEC nations, down from nearly 2.2 billion in 2008, according to the U.S. Energy Information Administration.
But there is growing support in the United States to go further by cutting the country’s consumption of oil altogether. Congress recently passed $369 billion in clean energy tax credits meant to curb the use of fossil fuels, including oil.
“For a long time, OPEC and the west, however much they fought, had a lot of aligned interests in seeing a relatively stable market,” said Andrew Logan, an analyst at Ceres, a nonprofit focused on the energy transition. “But in a world where the big consuming nations don’t want to be big consuming nations 10 to 15 years down the road, that brings the tensions to the fore.”
The cartel still wields tremendous influence over prices, even as OPEC exports to the United States have fallen. Ten nations, including major producers like Russia and Mexico, joined the cartel’s original 13 members in 2016 to form OPEC Plus. Last year, the expanded group accounted for nearly half of the world’s oil production.
That gives the group outsized influence over climate and the energy transition.
Oil accounted for roughly a third of global emissions in 2021, according to the Global Carbon Project. The price of oil, meanwhile, is a prime factor in clean energy adoption — with higher prices speeding a shift to alternatives and lower prices stoking further oil consumption.
“It is a reflection of where we are in the transition,” Logan said. “We are still in a place where we are dependent on OPEC and they can hurt us. But the window for that is probably closing.”
OPEC’s moves are not without risks to the cartel. Higher oil prices can make alternative forms of energy more competitive, said Alden Meyer, a senior associate at E3G.
“As the prices of renewables come down, as the prices of batteries come down, as EV production scales up, at a certain point they destroy their own market,” he said.
Meyer warned the NOPEC bill has the potential to backfire on the United States and its clean energy goals. Passage of the legislation would complicate diplomatic relations with a number of countries at a time when the U.S. is scouring the world for the minerals needed to build electric vehicles, wind farms and solar panels.
“For the administration to be taking steps that complicate those goals could be counterproductive,” Meyer said.
OPEC’s members have approached the energy transition in different ways. Countries with higher costs of production have an incentive to produce more oil in the short-term, raising money to finance a transition to alternatives. Low-cost producing nations such as Saudi Arabia, the cartel’s leader, take the opposite approach. Saudi oil is cheap to produce and is likely to be the last crude displaced in a shrinking global market.
The kingdom has begun contemplating alternative sources of energy, even as it makes clear it expects oil to remain entrenched in the world economy for decades to come.
Riyadh recently dispatched the minister of industry and mineral resources, Bandar bin Ibrahim Alkhorayef, to the United States to promote its efforts to boost mining of critical minerals.
“Two or three years ago, nobody was talking about mining like today,” Alkhorayef told E&E News in an interview last month. “It’s clear that the resources of mining are more and more needed to satisfy the different net-zero targets.”
Saudi Arabia has pledged to zero out its emissions by 2060 through a combination of emissions cuts and carbon capture. But it intends to fund those efforts by continuing to pull value from its oil coffers as long as demand exists (Climatewire, July 13).
“We are determined to milk oil to the maximum, and that’s our right,” Alkhorayef said.
The challenge for the United States is that oil remains deeply entrenched in parts of the economy such as petrochemicals, asphalt, and jet fuel, said Deborah Gordon, a senior principal at RMI’s Climate Intelligence Program. NOPEC legislation could inject more volatility into oil markets and create intense competition for fuels that are critical to running economies around the world.
That could create headwinds for the energy transition, as deteriorating economic conditions can spark political upheaval, she said. People tend to focus on their basic needs first before thinking about issues such as climate change or the shift to cleaner energy.
“I’m a little in the camp of being careful of what you wish for it might come true,” Gordon said. “When you throw in volatility, a lot of other things suffer.”
Guay of the Sunrise Project said the United States would be well-served by focusing on measures that reduce demand. The clean energy tax credits contained in the Inflation Reduction Act will help reduce U.S. oil consumption over time. The transition will take time, but it is ultimately the best economic shield against OPEC moves in petroleum markets, he said.
“The price of oil is set at the margin,” Guay said. “If your concern is high prices, you don’t need to displace every barrel. You need to displace the most expensive barrel.”