Today’s Key Takeaways: Willow project supports Biden energy goals. 2023 hiring boom in oil and gas? Cheap gas a drawback for electric cars. Red Dog generates cash for Teck, NANA. Spending cap bills advance in Alaska legislature.
NEWS OF THE DAY:
Alaska Project Supports President Biden’s Energy Goals
Dan Eberhart, Forbes, March 1, 2023
When President Joe Biden first took office, climate change policies were his immediate focus, with an adamancy that fossil fuel use was quickly coming to an end. A flurry of executive orders included instructions to the Department of the Interior to pause new leases on federal lands, doing nothing to change demand in a market that would soon be low on supply.
Fast forward to President Biden’s recent 2023 State of the Union address, and a different song was sung. Going off script in a move that likely gave the White House staff heartburn, he acknowledged that Americans will still rely on oil and gas for at least the next decade. He then called on U.S. oil companies to increase investment in the exploration and production of domestic resources.
With that in mind, one would think that ConocoPhillips planned Willow development on Alaska’s North Slope would be a dream come true. In January 2017, ConocoPhillips, Alaska’s largest oil producer, announced a discovery in the northeast portion of the National Petroleum Reserve – Alaska (NPR-A). Willow, as the discovery was named, was an exploration success story the company readily touted in a state dependent on oil and gas revenue to power its economy
The largest project in size and scale to be developed on the North Slope in more than 20 years, the potential multibillion-dollar development will produce up to 180,000 barrels of oil per day at its peak, creating thousands of mostly union construction jobs and hundreds of permanent jobs. It is also estimated to generate billions in new revenue for the federal government, the State of Alaska, and communities in and around NPR-A.
Willow complies with every NPR-A mitigation and best practice put in place by the Obama administration, meets all environmental mandates, was developed with extensive public involvement, and has the support of the state’s entire congressional delegation and Alaska Native groups.
Will There Be a Hiring Boom in Oil and Gas in 2023?
Andreas Exarheas, Rigzone, March 1, 2023
According to Gladney B. Darroh, the founder and president of Houston based Piper-Morgan Search, there will not be a hiring boom in the oil and gas sector in 2023.
“There will continue to be market-sensitive, even paced hiring for new grads and experienced hires,” Darroh told Rigzone.
“For new grads it is because they are replenishing a company’s pipeline for talent and talent development as existing employees move up the career ladder or age out,” Darroh added.
“For experienced hires it is because they offer specific play/regional talent to fill a void created by a departure from the company, or to staff a role in a brand new area of interest of the company for which there is no existing talent, or hired into a newly created position with a start-up,” Darroh continued.
The Piper-Morgan Search founder told Rigzone that, “from a macro point of view, world politics, sectional strife in the mid-East and Africa, and iterations in the U.S. and other global economies create the kind of uncertainty that typically tamps down hiring”.
When asked if the oil and gas industry was poised for a hiring boom this year, Chad Spencer, the CEO of Houston headquartered Hazeltine Executive Search Partners, a member of the Sanford Rose Associates Network, said, “despite some recent positive developments in the sector, there are several factors that suggest a hiring boom may not be in the cards for the industry this year”.
One key factor is the shift toward more disciplined spending by oil and gas companies, according to Spencer.
Gas is cheaper this year — but that has drawbacks for electric cars
Alex Fitzpatrick, Axios, March 1, 2023
U.S. drivers spent an average of about $3.40 for every gallon of gas in February, per GasBuddy data. That’s down 6% year over year, but up 2% from January.
The big picture: Cheaper gas is good news for American consumers, especially commuters.
Yes, but: Lower prices may disincentivize drivers from switching to more efficient cars, going electric, or embracing public transit — all of which can have big environmental benefits.
Why it matters: More than three-quarters of American commuters drive to and from work, meaning they’re particularly sensitive to the ebbs and flows of prices at the pump — especially as other basic goods also get more expensive.
Red Dog generates cash for Teck, NANA
Shane Lasley, North of 60 Mining News, February 24, 2023
Strong zinc price, production drive increased profit for Teck; NANA gets extra boost from royalty rise.
Due to a combination of strong zinc prices and production, the Red Dog Mine in Northwest Alaska generated strong profits for Teck Resources Ltd. and revenues for NANA Corp. during 2022.
Red Dog produced 553,100 metric tons (1.22 billion pounds) of zinc during 2022, a nearly 10% increase over the 503,400 metric tons (1.11 billion lb) produced during 2021. The Northwest Alaska operation also produced 79,500 metric tons (173.5 million lb) of lead, along with appreciable amounts of silver and germanium, though the amounts of the latter two metals are not reported by Teck.
The higher 2022 zinc output was the result of higher-grade ore, which averaged 16% zinc last year compared to 14.3% in 2021.
The realized price per pound of zinc sold by Teck during 2022 was US$1.52; this is roughly 9% higher than the US$1.39/lb zinc price realized by the company in 2021.
As a result, Red Dog generated C$2.11 billion (roughly US$1.56 billion) in revenue for Teck during 2022, a 40% increase over the C$1.57 billion (US$1.16 billion) in revenues during 2021. After backing out costs, this comes to C$862 million (roughly US$638.5 million) in gross profit for Teck, a 27% increase over the C$678 million (roughly US$502.2 million) in 2021.
NANA, which owns the land that hosts the world-class Red Dog deposits and receives a 40% net proceeds royalty from the metals produced there, realized an even larger percentage increase in revenue from the zinc mine on its lands in Northwest Alaska.
During 2022, NANA received C$461 million (roughly US$341.5 million) in royalties from Teck, a nearly 43% increase over the C$323 million (roughly US$239.3 million) in 2021 royalties from Red Dog production.
Legislators advance policy to limit Alaska’s spending, despite lingering concerns
Iris Samuels, Anchorage Daily News, February 28, 2023
A pair of bills that would establish a new limit on state spending were advanced by the House Judiciary committee Monday, but many obstacles await the proposal as it advances through the Legislature.
The policy would create a tighter cap for spending on state capital projects and services, replacing the limit that currently exists in the state constitution. Unlike the existing cap, which is tied to state population and inflation, the new cap would tie spending to the state’s gross domestic product, a metric that is not currently used by any state to limit spending.
The proposal passed its first legislative hurdle — with many more to come — after years of lawmakers pushing for a new cap on state spending, under the premise that the existing cap allows the state to spend more money than it has at its disposal in any given year.