Today’s Key Takeaways: AK federal judge sides with Biden over AIDEA. Weak China imports drop oil price. Japan buys stake in Australian LNG project. Governor Dunleavy visits Whistler gold-copper project. NY and CA face threats to clean energy future.
NEWS OF THE DAY:
Alaska state agency with oil leases in Arctic refuge loses legal bid to halt Biden moratorium
Alex DeMarban, Anchorage Daily News, August 7, 2023
A federal judge in Anchorage on Monday ruled against a state agency that holds oil leases in the Arctic National Wildlife Refuge, saying the Biden administration’s decision in 2021 to temporarily suspend an oil and gas lease program there was valid.
U.S. District Court Judge Sharon Gleason’s 74-page decision dismisses “all claims” brought by the Alaska Industrial Development and Export Authority. She says the federal government’s pause followed federal law as the Interior Department conducts an additional environmental review of the leasing program approved under former President Donald Trump.
OIL:
Oil Falls as Weak China Imports, Banking Fears Rattle Market
Julia Fanzares, Alex Langley, Yahoo!Finance, August 8, 2023
(Bloomberg) — Oil dropped amid an onslaught of bearish pressures, including weaker-than-expected data from China and fresh concern about the health of the US banking system.
West Texas Intermediate briefly slipped below $80 a barrel amid a risk-off tone for markets worldwide. China’s trade plunged in July as slowing global demand clouded the outlook for exports, while the nation’s oil imports slipped to a six-month low. The dollar climbed and stocks fell as a ratings downgrade for 10 small and midsize US lenders exacerbated worries of renewed banking tumult.
Oil had advanced to the highest since April early in Monday’s trading, but pessimism about the global economic outlook has stalled that rally. Crude’s big three monthly reports — those from the International Energy Agency, OPEC, and the Energy Information Administration — will offer further updates on the health of the market over the rest of this week.
The US crude benchmark has erased its year-to-date losses in recent weeks after the Organization of Petroleum Exporting Countries and its allies cut production. On Tuesday, cartel leader Saudi Arabia reaffirmed its commitment to voluntarily curbing supplies next month to balance oil markets.
Away from headline prices, Brent crude has weakened markedly versus other oil benchmarks in recent days. It’s now trading at a rare discount to Middle Eastern Dubai crude as OPEC+ output cuts lift the cost of heavier supplies, while its premium to WTI has also contracted to around the smallest since May.
GAS:
LNG Japan Buys 10% Stake In Australian Natural Gas Project
Irina Slav, OilPrice.Com, August 8, 2023
LNG Japan is set to buy a 10% interest in the Scarborough natural gas project operated by Australia’s Woodside Energy.
The Japanese company will pay some $880 million for the stake in total, including reimbursement for expenses Woodside has already made in relation to the Scarborough project, the Australian company said.
In addition to the minority stake, LNG Japan will also buy 12 LNG cargoes annually from the Scarborough project, each of 900,000 tons, beginning in 2026.
Japan is almost exclusively dependent on energy imports for its consumption and liquefied natural gas is one of the country’s chief forms of energy imports.
Over the first half of the year, Japan imported some 32.62 million tons of liquefied natural gas. This was a 13% decline on an annual basis but still made Japan the world’s second-largest importer of the super-chilled fuel, after China, which replaced it as the number-one LNG importer this year.
Japan is also the largest buyer of LNG from Australia because of its proximity, which makes the purchases more affordable.
The country was last month reported to consider proposing a global natural gas reserve similar to the oil reserve every member of the International Energy Agency is required to hold in case of an emergency.
For the IEA members, which include most developed economies including Japan and the United States, each country has an obligation to hold oil stocks equivalent to at least 90 days of net oil imports and to be ready to collectively respond to severe supply disruptions affecting the global oil market.
At the same time, however, Japan is working to reduce its dependence on LNG and imported energy as a whole to boost its supply security. To do this, the country has rethought its complicated relationship with nuclear and is bringing back reactors.
The Scarborough gas project, off the western coast of Australia, will have an annual capacity of 8 million tons of liquefied natural gas annually. The project is slated for completion in 2026.
MINING:
ANCHORAGE, Alaska, Aug. 8, 2023 /CNW/ – U.S. GoldMining Inc. (NASDAQ: USGO) (“U.S. GoldMining” or the “Company”) is pleased to provide details on Alaska State Governor Mike Dunleavy’s recent visit to the Company’s Whistler gold-copper project (“Whistler”) in Alaska, USA. The Company is also pleased to provide updates on recent significant advancements in Alaska State’s ‘Roads to Resources’ initiative which includes the proposed West Susitna Access Road(“WSAR”) to the Whistler project.
Highlights:
- Alaska State Governor Mike Dunleavy and Alaska Department of Transportation and Public Facilities (“DOT&PF”) Commissioner, Ryan Anderson, visited the Company’s Whistler Project on August 3, 2023, accompanied by U.S. GoldMining’s CEO, Tim Smith.
- Governor Dunleavy’s visit to Whistler comprised part of an overview tour of the WSAR, a proposed approximately 100 mile-long road corridor which will connect Whistler with existing highway, rail, power and port infrastructure, and a large and skilled workforce living in the tri-city municipalities of Anchorage, Palmer and Wasilla.
- On July 27, 2023, DOT&PF announced plans to include the first 15 miles of the WSAR, including a major bridge over the Susitna River, within the draft ‘2024-2027 Statewide Transportation Improvement Program’ with funding set aside for construction to begin in 2025, pending permitting.
- Subsequent to the DOT&PF announcement, on July 28, 2023, the Alaska Industrial Development and Export Authority (“AIDEA”) announced that it will continue working on a separate and additional portion of the WSAR, extending beyond the proposed DOT&PF road build to establish an industrial access corridor to several exploration and development projects in the West Susitna Mining District, including the Company’s Whistler project.
- On July 18, 2023, Matanuska-Susitna (“MatSu”) Borough Assembly recently approved a resolution to pursue federal or state funding to convert 18 miles of partially completed rail embankment into a paved road suitable for heavy haulage, which will link the DOT&PF planned portion of the WSAR with Port Mackenzie-existing port facilities and infrastructure.
POLITICS:
A TALE OF TWO COASTAL STATES: New York and California have set some of the nation’s most ambitious climate goals as they look to slash their carbon emissions by 40% and 48% by 2030, respectively, and bring more renewable sources online.
New York, for its part, is targeting 70% renewable generation by 2030, while California is aiming for 60%.
Yet the states both face major threats to success in those goals, according to regulators from both states. Here are some of the biggest takeaways from the latest reports.
Permitting and transmission woes continue: Neither California or New York can meet their clean energy goals without making significant improvements to their transmission and permitting processes.
New York Comptroller Thomas DiNapoli, who published a new analysis last week, outlined just how difficult this will be for the Empire State. California regulators also focused on this during a workshop last week.
According to New York Independent System Operator, meeting their 70% renewable generation by 2030 will require an increase of 78,073 GW hours—or a whopping 200% increase from 2022 production levels. (As a point of reference, New York added just 12.9 GW of total electricity generation— including both fossil fuel and renewables—in the last 20 years.)
Similar delays have plagued California: A 2023 report from the California Clean Air Task Force found that large-scale clean energy projects frequently require a decade or more per project before they are added to the grid, given the extensive coordination required between grid regulators and utilities. In fact, delayed projects took an average of three times as long as originally anticipated.
Without revisions to the state’s current planning and permitting processes, regulators said, it will be “tremendously difficult” for California to bring new generation online in time to meet its clean energy and climate goals.
California’s reliance on nascent technologies is a problem—as is its cap-and-trade system aimed at driving down emissions: California Air Resources Board officials admitted last week that they are facing significant hurdles in meeting their carbon emissions targets, citing problems with their reliance on still-emerging technologies such as carbon capture and green hydrogen, and criticisms over the state’s cap-and-trade system—a sort of emissions “trading system” that limits emissions from power plants, refineries, and factories while still allowing a degree of flexibility.
CARB deputy executive Rajinder Sahota noted that California’s green hydrogen technology would have to expand by 462 times its current levels to deliver on the state’s emissions reduction target. Failure to achieve that could push prices extraordinarily high under the cap-and-trade system.
“If those tools are not widely available by 2030 with a 48% target, then prices get very high in the program and that leads to leakage — production moving out of state to reduce emissions in state and comply with the program,” CARB’s Dave Clegern said.
In New York, regulators acknowledged a history of spotty incentives for developers that have led to further project delays. Both states say they are plagued by funding gaps, dated policies, and other regulations that do not allow them to bring projects online at the speed necessary.
The view from Washington: Both Republicans and Democrats have introduced legislation to speed up the approval of transmission projects through the NEPA process, though some progressives and environmental groups remain opposed.
Last month, the Federal Energy Regulatory Commission issued Order No. 2023, or the proposed rule that seeks to accelerate the connection of new energy projects to the power grid.
Described by FERC Chairman Willie Phillips as “historic,” the long-awaited proposalwould help address the backlog of energy projects, and would subject U.S. grid operators and utilities to deadlines and penalties if they fail to meet their obligations on time.
From the Washington Examiner, Daily on Energy