AK Oil Updates. Santos LNG Price Surge. Forest Service Killing US Copper Projects.

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Shell asks Alaska regulators for more time to find partners for North Slope prospect
Elwood Brehmer, Alaska Journal of Commerce, October 20, 2021

Shell Offshore is asking Alaska regulators for more time to find partners to explore a remote North Slope prospect.

In Oct. 6 filings recently posted to the division’s website, attorneys representing the subsidiary of Royal Dutch Shell asked Division of Oil and Gas officials for an extra year to secure a new operator for exploring the oil giant’s West Harrison Bay Unit.

Oil and Gas officials last December approved formation of the West Harrison Bay Unit in state waters of the Beaufort Sea, north of ConocoPhillips’ $6 billion Willow oil project, as well as a multi-year exploration plan for the area. The exploration plan at the time called for Shell to bring in partners to spread out the costs and risks of drilling the area. That included finding a company willing to take on the operator role for the West Harrison Bay Unit by the end of 2021. Shell is proposing that deadline be pushed back to Dec. 31, 2022.

According to the proposed amended exploration plan, Shell’s attempts to finalize commercial arrangements with other industry players continue to be hampered by the pandemic. That is despite Alaska North Slope oil prices in the $80-per-barrel range, which have recovered from an early 2020 collapse to now exceed pre-pandemic prices.

Shell currently holds 100% of West Harrison Bay.

“COVID-19 makes marketing the (West Harrison Bay) project more challenging as all meetings and negotiations have to be held virtually, and because the timing of execution of the project is uncertain

due to logistical restrictions to operations, including surveying; and, until very recently, the low oil price suppresses the cashflow available to prospective investors for new projects and management appetite for new, higher risk exploration projects,” the second West Harrison Bay exploration plan states.

Shell’s focus in the area is on the Nanushuk sands formation — the relatively shallow, conventionally produced oil-bearing geologic formation that is the primary source for the large Pikka and Willow developments, as well as a host of smaller North Slope prospects identified in recent years.

Leaders of Oil Search Alaska, the company that has led exploration and development work at Pikka since 2018, have also acknowledged challenges they have had securing funding to construct the $3 billion first phase of the oil project.

If Shell can put together a team for West Harrison Bay, the game plan is for the operator to drill an initial exploration well — and possibly a sidetrack — into the Nanushuk formation during the 2023-24 winter drilling season. A second well and potential sidetrack would be drilled in the 2024-25 season, according to Shell’s filings, after which time an additional exploration or development plan would be submitted to the division depending on the outcome of the drilling.

The company is also asking state oil and gas officials to remove an expectation in the first exploration plan filed last year for the wells to penetrate the deeper Torok sands, which Shell claims would add unnecessary time and expense to the work and could jeopardize the timing of the overall program.

The Torok zone was the primary target for Caelus Energy’s similarly situated Smith Bay prospect, discovered in 2016 to the west of Shell’s acreage. Caelus leaders said at the time the Smith Bay prospect could hold upwards of 6 billion barrels of oil, but appraisal drilling at Smith Bay was not conducted largely due to funding and logistical challenges associated with the isolated prospect.


ConocoPhillips and Biden administration won’t appeal court ruling blocking permit for major North Slope oil project
Elwood Brehmer, Alaska Journal of Commerce, October 2o, , 2021

With the deadline to appeal an August court decision come and gone, it appears federal approval for ConocoPhillips’ massive Willow oil project on the North Slope will be subject to at least a partial do-over, all but ensuring the development will be delayed multiple years.

Environmental and Alaska Native groups successfully sued the Bureau of Land Management over the agency’s approval of the environmental review for the major oil development, which took place under the Trump administration. On Wednesday, those groups thanked BLM officials under President Joe Biden for not appealing the August court ruling invalidating the permit.

But they also acknowledged that the Houston-based oil major has given every indication it will not drop the 100,000-barrels-per-day-plus oil prospect.

“The Biden administration’s decision not to appeal comes as good news. It also comes as the same old news, because we know that ConocoPhillips will continue to pursue this harmful extraction project on Iñupiat lands,” Sovereign Iñupiat for a Living Arctic Executive Director Siqiñiq Maupin said in a statement. “We know the real impacts on our bodies and communities. We know that fossil fuel industrialization is an attack on our health and food security. What oil corporations seeking to exploit our homelands need to know is that Indigenous groups around the country are united. We will, alongside our climate and human rights allies everywhere, continue to protect the lands and waters our ancestors protected for us.”

Tuesday was the deadline for attorneys for the Justice Department and ConocoPhillips to appeal an August order from Alaska District Court Judge Sharon Gleason, throwing out BLM Alaska’s October 2020 approval of the Willow Master Plan environmental impact statement.

Gleason ruled that BLM officials erred in, among other things, not sufficiently justifying their rationale for not estimating the project’s likely contribution to foreign greenhouse emissions.

That was in part due to a 2020 9th Circuit decision that vacated the environmental review for another North Slope oil project approved by the Trump administration. In that instance, the court ruled that the Bureau of Ocean Energy Management’s approval for Hilcorp Energy’s offshore Liberty project was “counterintuitive,” in that the agency concluded that not developing the oil would result in greater foreign greenhouse gas emissions.

At $6 billion to reach first oil and up to $8 billion to fully develop, oil industry advocates see Willow as an infrastructure hub on the western North Slope that could spur other oil projects in the otherwise mostly undeveloped National Petroleum Reserve-Alaska.

ConocoPhillips had targeted the winter of 2025-2026 for first oil production from Willow, and estimated the project would generate up to 2,000 construction jobs over several years of development.

A spokeswoman for ConocoPhillips Alaska did not respond to questions in time for this story.

Bridget Psarianos, a lead attorney for SILA and the coalition of environmental groups, said she was not caught off guard that Interior Department officials and ConocoPhillips, which intervened in the suit, did not appeal.

“I think given the similarities with our case and the Liberty decision, which the 9th Circuit pointed to when we won our injunction back in February, we would’ve been a little surprised if they would’ve taken an appeal to the 9th Circuit,” Psarianos said.

In February, the 9th Circuit ordered fieldwork stopped at Willow largely before it started. ConocoPhillips had planned to open a gravel pit and begin laying gravel for roads and pads last winter before the ruling. The appeals court then sent the case back to Gleason, who then issued her broader August ruling invalidating the environmental review.

Interior spokeswoman Melissa Schwartz declined to comment on the decision not to appeal Gleason’s ruling, but said BLM officials are determining their path forward in regards to Willow’s federal permits.

BLM’s initial environmental review and approval for Willow took slightly more than two years. It’s unclear how long a supplemental review or entirely new review would take, but it would likely be a multi-year process based on similar situations in the past.

Longtime Alaska oil industry attorney and analyst Brad Keithley said he believes the agency and company may have taken the more expeditious route to keep moving Willow forward by not appealing. That’s particularly true if the Biden administration still backs the project, he added.

“If (the Biden administration) wants to make this work, I think they can pull together the supplemental EIS in the short-term. If they view this as an opportunity to shut down development in the Arctic or set a precedent that’s going to apply to other projects — ANWR and elsewhere — then I think that’s what is going to lengthen it out,” Keithley said.

In May, attorneys for BLM filed court briefs backing the approval of Willow, which drew the ire of the same groups now commending the administration for withholding an appeal.

Psarianos said her clients want BLM to improve the public involvement process, which was disrupted by the onset of the pandemic, for any future Willow review and take a much more holistic look at the project’s potential consequences.

“I think they really need to take a step back, gather baseline information and engage with the communities most impacted by the project,” Psarianos said.


Australia’s Santos posts record quarterly revenue on LNG price surge
Savyata Mishra, Reuters, October 20, 2021

Australia’s Santos Ltd STO.AX on Thursday posted a record quarterly revenue that beat consensus estimates as a global energy crunchlifted prices of liquefied natural gas (LNG).

The country’s second-largest independent gas producer, which is working on a takeover of Oil Search Ltd OSH.AX, also slightly raised the lower end of its annual production outlook.

It now expects to produce between 88 and 91 million barrels of oil equivalent (mmboe) in 2021, higher than its previous forecast of between 87 and 91 mmboe.

Santos, like other energy firms globally, has benefited from record high LNG prices on increased demand for crude oil, the potential for a cold winter and disruptions to supply channels.

The Adelaide-based company reported sales revenue of $1.14 billion for the quarter, higher than $797 million last year and beating the consensus estimate of $1.07 billion.

Santos in early September sealed an agreement to buy Oil Search to create a global top 20 oil and gas company.

“I’m very happy with how the merger is progressing, and particularly acknowledge the positive comments from PNG (Papua New Guinea) Prime Minister Hon. James Marape,” Chief Executive Officer Kevin Gallagher said in a statement.

Santos said its average realised LNG price rose to $10.4 per metric million British thermal unit (mmBtu)in the three months to September, from $7.52/mmBtu in the previous quarter.


US plan would block Minnesota copper-nickel mine
Reuters, October 20, 2021

The U.S. Forest Service on Wednesday proposed a 20-year ban on mining in Minnesota’s Boundary Waters region, a step that would block Antofagasta Plc’s Twin Metals copper and nickel mine project.

The announcement reversed a decision by former President Donald Trump and set off a review of how mining could affect the popular outdoor recreational area. It freezes issuance of new mining leases or permits in the region for two yearsTop of FormBottom of Form

The proposed underground mine would become a major U.S. supplier of copper for electric vehicles (EVs), which use twice as much of the red metal as those with internal combustion engines.

Environmentalists have long feared mining would destroy the Boundary Waters Canoe Area Wilderness, a 1 million acre (405,000 hectare) preserve on the U.S.-Canada border.

The Forest Service move is the latest example of President Joe Biden’s plan to look abroad for metal supplies and focus on domestic processing into battery parts. The strategy, which Reuters reported earlier this year, was a move by Biden to shore up support with environmentalists and counter to his private commitment to miners during the 2020 presidential campaign to allow more domestic mining.

Twin Metals, controlled by Chile’s Antofagasta, said it was “deeply disappointed” by the decision and remains committed to developing the mine.

“We are working to determine the best path forward,” said Twin Metals spokesperson Kathy Graul.

The company’s engineers said in a recent interview they had devised a plan to refrain from mining within 400 feet of the surface, avoid ground subsidence and use renewable energy.

The Campaign To Save The Boundary Waters, an environmental group opposed to the project, cheered the decision and said the ban should be made permanent.

“The Boundary Waters is a paradise of woods and water. You don’t allow America’s most toxic industry next to America’s most popular Wilderness,” said Becky Rom, the campaign’s national chair.

Complex history

Wednesday’s move effectively resumes a process started by former President Barack Obama’s administration to block mining in the region. Trump had put that process on hold.

The U.S. Forest Service, part of the Agriculture Department, controls the surface land at the site. The U.S. Bureau of Land Management, part of the Interior Department, controls the underground copper deposit and must approve plans to extract minerals.

Biden’s administration can block mining in the region for up to 20 years. Only an act of Congress can permanently block it, and that step was proposed in a bill introduced this year by U.S. Representative Betty McCollum, a Minnesota Democrat who represents a district about 230 miles (370 km) south of the mine site. The fate of the bill remains unclear.

McCollum called Wednesday’s decision “a welcome return to the science-based decision making that should govern the management of our public lands.”

U.S. Representative Pete Stauber, a Minnesota Republican whose district includes the mine site, said the decision was based on politics, not science, weakens national security and helps China, the world’s largest copper consumer.

“I am furious that my constituents in northern Minnesota won’t have the opportunity to mine these minerals with these good paying jobs,” said Stauber.

(By Ernest Scheyder; Editing by David Gregorio)


Alaska joins 19-state effort opposing higher natural gas and oil costs
KTVA Staff, October 20, 2021

State of Alaska Attorney General, Treg Taylor, has asked Congress to reject proposed legislation that would increase fees on energy producers and potentially lead to higher heating bills for Alaska consumers this winter.

Alaska joined a 19-state coalition in a letter sent to two U.S. Senate committees opposing the proposed legislation.

Congress is considering imposing additional fees on the oil and gas industry. In the Senate, the Methane Emissions Reduction Act proposes to charge oil and gas producers $1,800 per ton of methane emissions beginning in 2023.

The attorneys general cite data from industry experts showing this proposal could impose a cost of $14.4 billion and affect as many as 155,000 jobs.

“In an uncertain economy with increased prices everywhere, this is no time to add another burden to our energy producers and consumers,” Taylor said. “With inflation at a 30-year-high, Congress should be seeking other solutions.”

Instead of imposing additional fees on oil and gas producers, the attorneys general called upon leaders for the Senate’s Committee on Environment and Public Works and Committee on Energy and Natural Resources to focus on affordable energy solutions.

Alaska joined the coalition with attorneys general from 18 other states on Thursday, October 14, 2021.

To read the letter in entirety visit https://bit.ly/3mRizqF


Net-zero emissions fight breaks out before COP26
Andrew Freeman, Axios, October 21, 2021

Here’s a sign of how tough it’ll be to win new emissions-cutting moves at COP26: Big developing nations are refusing to commit to net-zero emissions by 2050.

Driving the news: That’s spelled out in a new statement from countries including China, the biggest greenhouse gas emitter by far, as well as India and Indonesia.

Why it matters: Scientific reports have shown that such a target is necessary for reaching the 1.5°C or 2°C Paris targets. Agreeing to net-zero emissions by midcentury is a central goal of the U.S. and U.K., which is hosting the talks.

The big picture: Developing countries see calls for net-zero commitments by all nations by 2050 to be moving the goalposts for climate action.

Between the lines: The ministerial statement criticizes developed countries for repeatedly breaking their emissions reduction and financial aid commitments.

  • China, India and other signatories say industrialized countries need to rapidly decarbonize by 2030 while giving other nations the opportunity to pursue emissions cuts over the longer term.
  • “Developed countries have in fact increased their emissions between 1990 and 2020,” the document states, taking note that $100 billion a year in financial assistance from wealthier countries promised as early as 2009 has not materialized.
  • “These failures to deliver on the commitments agreed to by developed countries undermines trust and confidence in the multilateral system,” the countries state.

The bottom line: As climate expert, Li Shuo of Greenpeace, tweeted in response to the statement, “Glasgow will be one of the most difficult COPs in recent years.”