Today’s Key Takeaways: Federal government beats Alaska’s land use suit. A question for the President on Oil & Gas. Russia’s role in the overall global energy economy is immense. It’s the largest natural gas exporter, and the second-largest crude oil exporter after Saudi Arabia.
Soaring fuel prices have caused a majority of Americans to drive less and reduce spending.
NEWS OF THE DAY:
Why it’s so hard to quit Russian energy
Ben Geman, Axios, March 15, 2022
Russia’s invasion of Ukraine is spurring European Union and U.S. moves to cut imports from Kremlin-backed energy suppliers.
Why it matters: The efforts are especially urgent in Europe, which unlike the U.S. is extraordinarily reliant on Russian oil, gas, and coal.
Driving the news: The EU on Tuesday approved a new round of sanctions, which bans investment in Russian energy.
- The White House last week announced a ban on Russian energy, but as of last November, Russia provided just 7% of U.S. combined crude and petroleum product imports.
- By contrast, Europe’s dependence on Russia is a strategic and economic vulnerability and provides large revenues for Vladimir Putin’s regime.
- Aggressive moves to break that link might also speed movement to climate-friendly energy sources like wind and solar.
The big picture: Russia’s role in the overall global energy economy is immense. It’s the largest natural gas exporter, and the second-largest crude oil exporter after Saudi Arabia.
By the numbers: Last year, roughly 40% of EU consumption of natural gas — a vital source of heat, power and industrial energy — came from gas imported from Russia.
- About a quarter of European oil and petroleum products came from Russia before the invasion. Europe soaks up about 60% of Russia’s export of those commodities.
- And Russia provides 46% of Europe’s coal imports, according to European Commission data.
The European Commission last week unveiled broad plans to make Europe independent of Russian fossil fuels “well before 2020.”
- The plan calls for diversifying suppliers of pipelined and liquefied natural gas from countries including Azerbaijan, Algeria, the U.S., and Qatar.
- It also includes faster permitting for renewables projects, greater energy efficiency, development of hydrogen projects, use of home heat pumps and more.
- It starts with having enough gas on hand for next winter, something that was not the case this year. A key component of this plan is filling natural gas storage facilities to 90% capacity by Oct. 1.
- The EU plan also includes importing more natural gas from friendly nations, such as the U.S., and cutting demand through energy efficiency initiatives and other steps. In total, officials say they could cut the demand for Russian gas by two thirds by the end of 2022.
Reality check: Russia’s share of U.S.crude and petroleum product imports isn’t trivial, but it’s small enough to makethe U.S. ban more of a symbolic strike at Putin’s regime and revenues.
- Plus, it was already starting to happen anyway.
- “Most of my member companies had already self-imposed a boycott of Russian crude,” Mike Sommers, CEO of the American Petroleum Institute, said in an interview.
- “This announcement was already factored into most refiners’ situation as they’re looking for crude around the world,” Sommers added. He cited preliminary federal data showing U.S. imports of Russian crude dropped to nothing in late February.
What we’re watching: The European moves to break up with Russian energy are far more complex, especially right now.
- “Putin is a very keen student of energy markets and he probably recognized, launching this, that it was a time when oil markets were tight, gas markets were tight and coal markets were tight, so there isn’t a lot of spare capacity,” Pulitzer-winning energy historian and analyst Dan Yergin said in an interview.
OIL:
ConocoPhillips cuts oil production at its Alpine field due to gas leak
Tim Bradner, The Frontiersman, March 15, 2022
ConocoPhillips has cut oil production at its CD-1 drill site in the Alpine oil field after a gas leak was detected at the site, which is on the North Slope.
The leak was discovered a week ago and the facility partly-evaculated. The company has not said, as of Monday, that the leak has been stopped or the source identified,
“At this point, we are still assessing production impacts from Alpine, and we have essential personnel at CD1 to safely monitor and assess the conditions of the well pad,” company spokesperson Michael Walter said in an email.
Alpine was producing 46,851 barrels on March 13, down from over 50,000 barrels per day on a week earlier, according to production data posted by the Alaska Department of Revenue.
In an earlier statement the company said it is doing air monitoring to detect gas at the production facility as well as the nearby Inupiat village of Nuiqsut, which is eight miles away. ConocoPhillips also reported earlier that some of its personnel at CD1 were moved out of the facility as a precaution.
The company said that air monitoring had detected no presence of gas away from the production pad.
CD1 is one of several drill sites producing in the Alpine field, as well as two sites in the National Petroleum Reserve-Alaska, but CD1 is a critical facility in the because it is where crude oil from five production pads come together to be transported to a main pipeline to the nearby Kuparuk River field and Pump Station One at the Trans Alaska Pipeline, which is in the Prudhoe Bay field.
There was concern earlier that because all production from the field goes through CD1 the 50,000 b/d produced at Alpine would be shut in, said a state official familiar with the situation.
ConocoPhillips has obviously devised a plan to keep most of rhe field production flowing, the official said, who asked not to be identified.
Grace Salazar, special assistant at the Alaska Oil and Gas Conservation Commission, said her agency has begun an investigation into the gas leak and its cause.
Because the AOGCC is a quasi-judicial regulatory agency it cannot comment on an incident under active investigation, Salazar said.
GAS:
Gas Prices Force Americans to Drive Less, Cut Spending
Rasmussen Reports, March 15, 2022
Soaring fuel prices have caused a majority of Americans to drive less and reduce spending in other areas of their household budgets.
The latest Rasmussen Reports national telephone and online survey finds that 81% of American Adults say rising gasoline prices are a serious problem for their personal budget, including 56% who say higher gas prices are a Very Serious problem. Only 18% don’t consider the rising cost of gasoline a serious problem for their budget. (To see survey question wording, click here.)
Fifty-nine percent (59%) are driving less because of rising gasoline prices, while 39% haven’t cut back on driving.
Sixty-one percent (61%) say the rising price of gasoline has caused them to reduce spending on other purchases or activities, while 35% have not reduced other spending.
The survey of 1,000 U.S. American Adults was conducted on March 9-10, 2022, by Rasmussen Reports. The margin of sampling error is +/- 3 percentage points with a 95% level of confidence. Field work for all Rasmussen Reports surveys is conducted by Pulse Opinion Research, LLC. See methodology.
The average price of a gallon of gasoline, which was $2.20 in November 2020, rose to $3.50 by November 2021, according to the U.S. Energy Information Administration. Russia’s invasion of Ukraine has caused the price to spike even higher, reaching a national average of $4.41 per gallon this week.
More Republicans (68%) than Democrats (47%) or those not affiliated with either major party (55%) say rising gas prices are a Very Serious problem for their personal budget. Republicans are also most likely to say they are driving less and cutting spending on other purchases or activities because of rising gasoline prices.
More Black Adults (63%) than whites (57%) or other minorities (51%) say rising gas prices are a Very Serious problem for their budget. Fifty-eight percent (58%) of whites, 55% of Black Adults and 63% of other minorities are driving less because of rising gasoline prices, while 59% of whites, 61% of Black Adults and 67% of other minorities say rising gas prices have caused them to reduce spending on other purchases or activities.
Fifty-eight percent (60%) of Americans ages 40-64 say rising gas prices are a Very Serious problem for their budget, compared to 55% of those under 40 and 50% of those 65 and older. Americans under 40 are more likely than their elders to say they are driving less and cutting spending on other purchases or activities because of rising gasoline prices.
The spike in fuel prices has a disparate economic impact. While a majority of Americans with annual incomes under $50,000 say rising gas prices are a Very Serious problem for their personal budget, only 28% of those with incomes above $200,000 say the same. And more than 70% of Americans with incomes below $50,000, but just 40% of those with incomes over $200,000, say rising gas prices have caused them to reduce spending on other purchases or activities.
Americans with children at home are feeling the gas-price crunch more than their childless peers, with 67% of those with children reporting they have reduced spending on other purchases or activities, compared to 58% of those without children at home.
More private sector workers (59%) than government employees (48%) say rising gas prices are a Very Serious problem for their personal budget.
Among Americans who say rising gasoline prices are a Very Serious problem for their personal budget, 75% are driving less. Among those who are driving less, 84% have also reduced spending on other purchases or activities because of higher gas prices.
With gas prices soaring, energy policy is likely to be a major issue in the midterm election campaign, and voters strongly favor a policy of promoting domestic petroleum production.
Russia’s invasion of Ukraine will have a negative impact on the U.S. economy, most Americans believe.
MINING:
Federal Govt. Beats Alaska’s Land Use Suit
An Alaska federal judge has granted the U.S. government’s motion to toss a state suit accusing it of illegally delaying the reopening of public lands to mining and mineral exploration, saying a recent Bureau of Land Management deadline extension doesn’t mark the end of the BLM’s decision-making process.
POLITICS:
A Question for President Biden on Oil and Gas
Editorial Board, The Wall Street Journal, March 14, 2022
Here’s something to ask him at his next press event.
Every so often President Biden makes himself available to the press to ask a question—when he’s not walking to or from a helicopter—and we have a suggestion for the next opportunity:
“Mr. President, will you do everything in your regulatory power to make it easier for American companies to produce more oil and gas to make the U.S. and its allies in Europe and elsewhere less dependent on Russian energy?”
The question is straightforward, and the goal is to elicit a straight answer that gets to the heart of the current geopolitical moment. Oil and gas prices are soaring amid fears of reduced global supply. The Ukraine invasion has shocked Western Europe into recognizing that its reliance on Russian supplies has made it vulnerable to Vladimir Putin’s blackmail.
In the U.S., consumers are increasingly dismayed by rising gasoline prices, which are weighing on pocketbooks and could result in a Democratic Party wipeout in November. Mr. Biden has dispatched officials to cajole the Saudis to pump more oil, but they won’t take the President’s call. The mob bosses of Venezuela and Iran will have to be bribed with U.S. sanction concessions to be able to sell more. Why not do everything possible to expand American energy production instead? The question will give the President a choice. If he says yes, we can hold him to that policy standard. But if Mr. Biden says no, we’ll know he’s siding with his climate emissary John Kerry and the progressive left against the urgent economic and strategic interests of the United States. The voters can judge accordingly.