Today’s Key Takeaways: Will Biden choose union workers or climate activist job killers? March a big month for oil market. Ft. Wainright chooses natural gas-fired system to replace coal. Tesla looking to Chile for lithium supply. Biden plans to veto ESG investing bill.
NEWS OF THE DAY:
Biden administration offers climate activists a deal on Alaska’s Willow oil project
Timothy Puko, The Washington Post, March 1, 2023
White House officials suggested to environmental groups in recent days that they may pair approval for a controversial Arctic oil project with new conservation measures in Alaska but have failed to convince activists the idea is an acceptable compromise, according to three people involved or briefed on the calls.
The high-stakes talks involve what some officials see as one of the most consequential climate decisions of President Biden’s first term, a multibillion-dollar drilling project called Willow. The administration can announce a decision within days, and rejecting the project could lock the administration into a costly legal challenge and alienate key Alaska lawmakers in Congress.
The compromise measures under discussion would include a new ban on drilling in the Arctic Ocean off Alaska’s North Slope and more habitat protections for other parts of the state, said two of the people familiar with the talks, all of whom spoke on the condition of anonymity to discuss confidential communications. They added that administration officials are seriously considering shrinking the Arctic project to just two approved drilling pads, a size so small that officials for ConocoPhillips — the company that has spent nearly five years pursuing federal approval — have suggested it would cause them to back out.
OIL:
Oil – It’s Time To Get Serious
Seeking Alpha, March 1, 2023
Summary
- March is an important month for the oil market.
- There are many catalysts that should start to push oil prices meaningfully higher.
- Q2 oil market balances should flip back into a deficit, and if we are right, then physical oil market trading will reflect it.
We’ve survived 2/3 of Q1 so far, and March is going to be a pivotal month for the oil market going forward. Why is it so important?
China’s economic data is coming in and starting to surprise to the upside.
- U.S. oil demand is starting to improve following a material drop into year-end 2022.
- Saudi Aramco is expected to increase its official selling price to Asia on the back of higher demand and tighter physical oil market conditions.
- Russia reducing production by ~500k b/d.
- March physical oil trading will show us how mid-Q2 balances look.
GAS:
Army selects natural gas-fired heat system for Fort Wainwright
Tim Ellis, KUAC, March 1, 2023
The U.S. Army is proposing to replace Fort Wainwright’s coal-fired heat and power plant with natural-gas fired boilers installed around the post. The Army must replace the 65-year-old power plant because it’s becoming unreliable and prohibitively expensive to operate.
Army officials announced their proposed choice in a Final Environmental Impact Statement made public on Feb. 10. They considered building a $687 million replacement coal plant and a $363 million facility that would run on either diesel or natural gas. But they opted instead for the $117 million distributed natural gas-fired boilers alternative. A fourth alternative would have allowed the old plant to continue operating.
“The U.S. Army Garrison Alaska has identified that third alternative as the preferred alternative,” says Jennifer Meyer, chief of Fort Wainwright Directorate of Public Works’ operations and maintenance division. Meyer says the Army can’t yet say much about the natural-gas system or the timeframe in which it’ll be built. But she says it’ll likely take a while.
“Pretty much any Army construction projects takes several years, from start to finish,” she said in an interview Friday.
MINING:
Tesla lobbying to secure lithium from Chile — report
Cecelia Jamasmie, Mining.Com, March 2023
Tesla executives met last month with Chilean authorities, including the ministers of foreign affairs and mining, as well as representatives for the country’s development agency Corfo, as the electric cars maker redoubles efforts to secure supplies of battery metals, particularly lithium.
The hearings, local newspaper La Tercera reports, also included executives from Albemarle (NYSE: ALB), the world’s top lithium miner and the main competitor of Chile’s SQM (NYSE: SQM) in the Salar de Atacama salt flat, which contains the world’s highest known concentrations of lithium and potassium.
The official minutes of the meeting, disclosed by Corfo, show that Tesla is interested in knowing the agency’s development plans for the sector as well as the opportunities for collaboration with lithium producers such as Albemarle.
Talks come as the Chilean government is planning to take a page out of Mexico’s book and create a state-run lithium company, although authorities are open to let private companies in the sector through tenders.
While the administration has yet to release final details, it has said the proposed national lithium company will seek out minority partners to provide the technical knowledge the government lacks.
Private firms that win tenders may also be allowed to operate individual lithium projects under a minority stake.
The state-run miner’s first main asset would be Codelco’s lithium project at the Salar de Maricunga, a salt flat that hosts Chile’s second-largest reserves of the battery metal.
POLITICS:
The “woke” investing rule expected to force Biden’s first veto
Erin Doherty, Axios, March 2, 2023
President Biden is threatening to use the first veto of his term to block a bill targeting a rule on retirement investing that passed through Congress this week.
The big picture: The measure would overturn a Labor Department rule that allows retirement fund managers to take “environmental, social and governance,” or ESG, factors into account when picking investments.
- The Labor Department rule doesn’t force fiduciaries to do anything, but it allows them to consider ESG factors if doing so benefits the investor, Axios’ Nick Sobczyk notes.
Why it matters: Democratic Sens. Jon Tester (Mont.) and Joe Manchin (W.Va.), both facing re-election in 2024, bucked their own party and joined Republicans to pass the bill and send it to Biden’s desk.
- House Republicans passed the bill on Tuesday with support from one Democrat, Rep. Jared Golden of Maine.
ESG criteria have become a political touchpoint, with Republicans criticizing them as evidence of “woke” business practices.
- “We have these woke and weaponized bureaucrats at the Department of Labor and they came out with regulations to invest retirement money in far-left liberal causes,” Sen. John Barrasso (R-Wyo.) said after the vote.
Zoom out: Biden, who has signaled that he intends to veto the measure, said the government “would be interfering with the market” if the rule is revoked.
Between the lines: Republicans expected Biden’s veto but went forward with the resolution believing that courts could potentially use it to establish that Congress never intended the Labor Department to make such a rule, Sobczyk previously reported.
Go deeper… Biden’s potential ink-stained March