AK redistricting deadline looms. Alberta wants $ for Keystone. Sustainable Coal.

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Today’s Key Takeaways:  Russia-Ukraine crisis continues to impact supply, demand, and prices. Flooded old, disused coal mines may be able to provide decarbonized heat to buildings. Judge to rule on AK redistricting tomorrow – expect a challenge to the Supreme Court. Alberta is seeking $1.3 from U.S. for Biden’s cancellation of the Keystone XL pipeline’s permit. Great Climate Change Escape.


Oil-hungry buyers reel from prospect of Russia sanctions
Serene Cheong, Sherry Su, World Oil, February 14, 2022

Oil importers are racing to assess the risk of purchasing Russian supplies as tensions over Ukraine enter a potentially decisive week. 

Traders and buyers of Asia’s favored oil grades from Russia, particularly ESPO and Sokol from the far east, are becoming increasingly wary of being caught up in possible trade restrictions should the OPEC+ producer be sanctioned, they said. While that outcome is less likely, market participants told Bloomberg that they were starting to reconsider procurement plans for April. 

Several buyers in Europe said they are still waiting to see the full impact of the Ukraine situation. Prices are already taking a hit though, with Urals crude in Europe plunging to the biggest discount to forward Dated Brent since April 2020, according to S&P Global Platts data for Friday. That’s in stark contrast to strength in almost every other corner of the oil market.

Asia-focused grades had been holding up well. Last week, Sokol traded at its widest premium in two years as buying interest surged due to strong gasoline and diesel margins as well as a divergence in oil benchmarks. Traders will be closely watching the next Sokol tender, which closes Tuesday, along with the ESPO trading cycle that starts this week.

Crude from Saudi Arabia and Abu Dhabi will be the possible beneficiaries should Asia shun Sokol and ESPO, traders said. Buyers will likely ask for more supplies from the kingdom, which are sold on a long-term basis, or turn to spot supplies of Murban from Abu Dhabi.

West Texas Intermediate and North Sea oil are less viable alternatives in Asia with Western demand for those grades surging and making them more expensive relative to Middle East supplies. Nearby prices are also at steep premiums to later ones, meaning such cargoes are unattractive in regions that take longer to ship to. 


Volatile oil markets eye Russia-Ukraine crisis
Ben Geman, Axios, February 14, 202

Oil prices Monday morning have slipped off seven-year highs reached earlier in the session as markets brace for a possible Russian invasion of Ukraine that would likely send prices soaring above $100 per barrel.

Why it matters: The potential invasion — which U.S. National Security Adviser Jake Sullivan says could happen “any day” — is putting upward pressure on already-high prices amid the demand recovery from COVID and tight supply.

  • A Russian move against Ukraine and the economic response could affect energy from Russia, Europe’s largest source of natural gas and the world’s third-largest oil producer.
  • Oil prices moving even higher would have spillover effects on U.S. gasoline prices, which are already a political headache for Democrats.

What they’re saying: “Market participants are concerned that a conflict between Russia and the Ukraine could disrupt supply,” said UBS analyst Giovanni Staunovo, per Reuters.

Where it stands: The global benchmark Brent crude is trading at $93.90 after going above $96 earlier in the session.


Alberta government seeking $1.3 billion from U.S. over cancelled Keystone XL pipeline
The Canadian Press, February 9, 2022

Alberta is seeking $1.3 billion in compensation from the U.S. government in the wake of President Joe Biden’s cancellation of the Keystone XL pipeline’s permit.

The provincial government says it has filed a notice of intent to launch a claim under legacy rules tied to the old North American Free Trade Agreement, or NAFTA.

The proposed Keystone XL pipeline had been the subject of a decade-plus battle that pitted the energy industry against environmentalists.

Biden revoked the permit for Keystone XL shortly after his inauguration last year.

Calgary-based TC Energy, the company behind the proposed pipeline, filed a similar claim in July seeking US$15 billion, after formally cancelling the project and taking a $2.2-billion write-down.

The Alberta government had invested in the project and was left on the hook for $1.3 billion when it was cancelled.


Coal mines transformed society. Now, their flooded remains could heat the homes of the future
Anmar Frangoul, CNBC, February 14, 2022


  • In Scotland, work is underway to look at how the water that has flooded old, disused mines can be used to provide decarbonized heating to buildings.
  • And in the northeast of England, a local authority has been working on a development aiming to repurpose part of the area’s mining heritage.

The ramifications of the Industrial Revolution, which had its roots in 18th-century Britain, were huge.

Britain’s abundance of coal — as well as the ease with which it could be accessed — was a crucial ingredient in this historical turning point, powering the steam engines which helped drive society’s transformation.

But things have changed. The number of operational coal mines there has plunged, and last June, authorities announced Britain would stop using coal to generate electricity from October 2024, a year earlier than the original target of 2025.

Even though most mines in the U.K. have closed, their centuries-old story isn’t necessarily over. In Scotland, work is underway to look at how the water that has flooded old, disused mines can be used to provide decarbonized heating to buildings.

Conducting this research is a facility known as the Glasgow Geoenergy Observatory, which is run by the British Geological Survey. A dozen boreholes have been drilled, with the majority in Rutherglen, a town southeast of Glasgow.

According to those behind the project, both Glasgow and Rutherglen were home to some of the busiest coal mines in Scotland. After their closure, natural floods filled them with water of about 12 degrees Celsius.

Mike Stephenson, who was until recently executive chief scientist for decarbonization at the British Geological Survey, told CNBC that the project was about “doing research on the heat in coal mines and also, to some extent, whether you can store heat in old coal mines.”

Stephenson said that at the site where the work is taking place, the team was“experimenting with … how fast water flows amongst these mines, how warm the water is, how … fast, if you take warm water out, does the water replenish — so how fast does the warmth come back.”

“It is a research site, not a demonstration,” he said. Research was being undertaken “to try and understand what are the limits to the amount of heat, how much heat there is.”

“All those things will be a set of scientific findings and equations and models,” he added. He said this would provide valuable information to both companies and local authorities interested in the idea.

“It will help them decide where to do it, how close you drill the holes together, how deep you drill them, how you design them to make it as efficient as possible.”

The project has made progress over the last 12 months or so. In the summer of 2021, it was announced that pumping tests had been completed and samples collected from 10 of the site’s boreholes.

“The latest data show that the boreholes of the Glasgow Observatory are well-connected to the flooded mine workings,” Alan MacDonald, a hydrogeologist with the British Geological Survey, said at the time.

Mine water between 50 and 90 meters under Glasgow measures between 11 and 13 degrees Celsius, he added. For comparison, the average temperature of Scottish groundwater is 10 degrees, MacDonald said.

Potential uses

According to Britain’s Coal Authority, 25% of the U.K.’s residential properties sit on coalfields. As a source of heating, the potential of underground, flooded mines such as the ones being researched in Glasgow appears to be considerable.

Citing its own calculations, the Coal Authority says the “constantly replenishing water within these mines could potentially be a large enough resource to provide all of the heating requirements for the coalfield areas.” It could also have applications in sectors such as manufacturing and horticulture.

“The water in these mines is a low carbon, sustainable heat source, which under the right conditions can compete with public supply gas prices and deliver carbon savings up to 75% compared to gas heating,” it notes.

A host of governments are attempting to move away from coal, but it still plays a crucial role in many nations. According to the International Energy Agency, coal supplies around a third of worldwide electricity generation.

Last December, the Paris-based organization said coal-fired power generation was due to hit an all-time high in 2021. As for coal production, the IEA said it’s “forecast to reach an all-time high in 2022 and then plateau as demand flattens.”

While it was crucial to the planet’s industrialization and remains an important source of electricity, coal has a substantial effect on the environment.

The U.S. Energy Information Administration lists a range of emissions from coal combustion. These include carbon dioxide, sulfur dioxide, particulates, and nitrogen oxides.

Elsewhere, Greenpeace has described coal as “the dirtiest, most polluting way of producing energy.”

In the northeast of England, South Tyneside Council has been working on a project aiming to repurpose part of the area’s mining heritage.

According to the council, the £7.7 million ($10.4 million) Hebburn Minewater Project will “draw geothermal energy from abandoned flooded mines in the former Hebburn Colliery.”

The initiative aims to supply heat to several buildings that the council owns by using mine water from the old colliery, which opened in the late 18th century and shut down in 1932.

The project is centered on the drilling of two boreholes. A water source heat pump will extract the mine water’s heat, after which it will be compressed to a far greater temperature. After being funneled to an energy center, a new network of pipes will be used for distribution.

The council is working on the project, which is slated for completion in June 2023, alongside Durham University and the Coal Authority. Last October, it was announced that testing had shown the mine water’s temperature was warmer than initially thought.

New lease of life

Attempts to use the warm waters of flooded mines are not unique to the U.K. In 2008, a facility described by the European Commission as the first mine water power station in the world opened in the Netherlands. A similar project based on using mine water to heat buildings in Asturias, northern Spain, has also been developed.

Back in South Tyneside councilor Ernest Gibson, whose brief covers climate change, spoke to CNBC about the industry’s deep-rooted relationship with the area and his hopes for the future.

“The economics of the area declined [as] soon as the coal mines closed,” Gibson, a former miner, said.

He explained how the shutting down of a colliery affected not only the mining industry but also others like the steel and transport industries, as well as smaller operations like local shops and the “ragman,” a term for a person who would buy, collect and sell old items.
Gibson went on to tell CNBC that he’s “proud” of the fact old coal mines are being used again.

“The collieries closed but … they were revived in a different format,” he said, later striking a more philosophical tone. “It’s like life — everything changes, nothing stands still. And I think it’s for the best.”


Alaska redistricting trial concludes, with judge required to rule by Feb. 15
James Brooks, Anchorage Daily News, February 13, 2022

Alaska’s political boundaries are now in the hands of an Anchorage Superior Court judge, and the order he writes over the weekend could determine control of the state House and Senate.

On Friday, Judge Thomas Matthews heard closing arguments in a case that combined five legal challenges to the boundaries set by Alaska’s redistricting board last year.

Matthews will rule for or against those challenges by Feb. 15, determining whether or not the redistricting board must redraw its chosen boundaries.

“You’ll get my decision next week, hopefully before 11:59 on Tuesday,” Matthews said.

Attorneys involved in the cases said his ruling will be appealed to the Alaska Supreme Court by whoever loses, and Matthews himself has said to expect an appeal. Though Matthews’ word will not be the final one, it will guide future legal action.

The deadline for a candidate to enter this year’s election is June 1, and many potential candidates have said they’re waiting for the results of the redistricting process before they decide whether or not to enter this year’s races.

The redistricting board is in charge of the once-per-decade job of redrawing political districts to account for changes in population. Under the Alaska Constitution, each House district must be “formed of contiguous and compact territory containing as nearly as practicable a relatively integrated socio-economic area,” and several Alaska Supreme Court rulings provide additional guidance.

In a trial that lasted two weeks, attorneys representing the plaintiffs attempted to argue that the board’s five members violated state law and the constitution. Though the plaintiffs had different arguments, most criticized the board’s process, accusing board members of taking action in executive session and collecting secret information by text message and email.

The board’s map for the state Senate creates two Republican-leaning Senate seats in northeast Anchorage by joining a portion of Eagle River to Muldoon. That decision is the subject of one of the lawsuits, which alleges that the decision was the result of political gerrymandering.

The proposed state House map puts Rep. Grier Hopkins, D-Fairbanks, into a district whose voters overwhelmingly picked former President Donald Trump in the 2020 presidential election. In north Anchorage, Republican incumbent Rep. David Nelson has been put into a district whose voters leaned toward President Joe Biden.

More districts lean Republican than Democratic or independent, according to a partisan analysis, but the number of Republican-leaning and Democratic-leaning districts didn’t change significantly.

(A new ranked-choice election system and new campaign finance rules, plus the normal uncertainty of campaigns, mean a district’s leaning doesn’t guarantee victory, political analysts have said.)

Four lawsuits allege specific House districts were drawn incorrectly.

Because of delays in the 2020 census caused by COVID-19, the redistricting board didn’t finish its work until November. That meant the legal challenges — which in prior years had been heard over months — were compressed into six weeks of frenetic work that concluded Tuesday.

East Anchorage state Senate lawsuit

Alaska’s 20 Senate districts are each made up of two connected House districts.

The challenge to the board’s Senate map came from three residents of East Anchorage who dispute the board’s decision to join an Eagle River House district with a district in Muldoon, and another Eagle River House district to one covering Joint Base Elmendorf-Richardson and Government Hill.

The plaintiffs, represented by attorney Holly Wells, are asking for the two Eagle River districts to be joined instead.

“This case is really one of process more than anything,” Wells said.

She argued that the board held multiple rounds of public testimony for House districts but didn’t unveil its Senate map until the last days of the process, then made a decision after extensive closed-door discussions.

Citing information sent from Republican voting consultant Randy Ruedrich to Republican-appointed board members, she accused the board of drawing its Senate map to benefit Republican candidates. Board members have said otherwise.

Alaska’s constitution requires only that Senate districts “be composed as near as practicable of two contiguous house districts,” but Wells said joining Eagle River with Muldoon violates the equal-protection clause of the Alaska Constitution because it “constitutes a geographic gerrymander (with partisan and racial undertones) in violation of the Alaska Constitution.”

Attorney Matt Singer is representing the board and said the plaintiffs’ case is “a myopic attempt to secure a political outcome through litigation.”

Under prior Alaska Supreme Court precedent, each part of Anchorage is as good as any other when it comes to social and economic integration, he said, adding that Muldoon-Eagle River pairing was chosen for rational reasons, including social and economic ties between Eagle River and JBER.

“We are all Anchorageites under Alaska’s constitutional law,” he said.

Mat-Su and Valdez state House lawsuit

The redistricting board’s map of state House districts puts Valdez into a broad House district that stretches west along the Glenn Highway to the suburbs of Palmer and Wasilla.

Valdez sued, arguing that it should be placed into a district stretching north, along the Richardson Highway. The Matanuska-Susitna Borough sued on related grounds, saying that the inclusion of Valdez contributes to overpopulated House districts in the Mat-Su.

For trial purposes, the Mat-Su and Valdez cases were combined, and they argued their case together.

If all 40 of Alaska’s House districts had an equal share of the state’s population, they’d each have 18,335 residents. Various factors, including the requirements of the state constitution, mean that districts vary in population.

Five of the seven most overpopulated districts are in Mat-Su. Attorney Stacey Stone, representing the borough, said that indicates the borough was treated unfairly.

She said the redistricting board improperly considered the boundaries of regional Alaska Native corporations when setting the boundaries of rural House districts, which forced Mat-Su districts to be smaller, overpopulating them.

Doyon Corp. is the regional corporation for Interior Alaska, and all of the villages in its region now share the same House district. To back her accusations of unfair treatment, Stone referenced text messages between board member Nicole Borromeo and an attorney representing Doyon. Some of those texts took place around the time of a closed-door session intended to set district boundaries.

Attorney Robin Brena, representing Valdez, said the final result amounts to illegal preferential treatment “favoring and enhancing the shareholders for Doyon and Ahtna,” another regional Native corporation.

Singer, representing the board, said the “board’s job is to get the best map for the whole state of Alaska, and that requires tradeoffs and that sometimes requires disappointing some people.”

During last year’s redistricting process, board members frequently debated the best way to handle Valdez, which has about 4,000 residents. If placed in the Interior district, it would overpopulate that district, forcing board members to find another place for many Interior villages. If put into a coastal district, it would overpopulate that as well.

“Valdez’s solution,” Singer said negatively, “is to blow up half the state’s socio-economic integration.”

Calista raises a challenge in Southwest Alaska

In Southwest Alaska, regional Native corporation Calista sued the redistricting board after its shareholder villages were split among three state House districts. By population, the Calista region contains enough people for about one and a half “ideal” districts.

Attorney Mike Schechter, representing Calista, said the board did a poor job keeping the region socioeconomically integrated. In written arguments, he said the preservation of other ANCSA boundaries, but not Calista’s, represents unequal treatment.

Lee Baxter, representing the board, said local school district boundaries determined the boundaries of some rural southwest districts, and that other boundaries were the product of necessary tradeoffs to balance population between districts.

“Drawing a three-district Alaska is very easy. Drawing a 40-district Alaska is very hard,” he said.

Skagway hopes for a link to downtown Juneau

The Southeast town of Skagway filed suit in hopes of forcing the board to draw a new state House district linking it with downtown Juneau, instead of Juneau’s suburb, the Mendenhall Valley.

The suburb is geographically closer to Skagway, but Brena — who represented Skagway as well as Valdez — argued that Skagway has better social and economic ties to downtown Juneau.

Juneau is too large for a single state House district but too small for two complete districts, thus requiring some kind of link.

Singer, returning to his prior argument that all parts of a borough are equally socially and economically integrated, said linking any part of Juneau with Skagway is legal, and it makes geographic sense to use the Mendenhall Valley.

Linking downtown Juneau to Skagway “would be like taking Girdwood and then using the water of Turnagain Arm, wrapping around Earthquake Park, and combining Girdwood with residents of downtown Anchorage,” he said. “On its face, that approach is just less compact.”

State Supreme Court arguments to come

After Matthews releases his decision on Tuesday, the legal battles over redistricting will move to the Alaska Supreme Court, which has an April 1 deadline to reach a decision.

In an interview this week, Chief Justice Daniel Winfree said the court already has “a tentative calendar set for what we need to do if a redistricting appeal comes up.”

In 2012, the court ordered the redistricting board to redraw its map and submit it for further legal review. After the court again rejected it, the board’s map was used on an interim basis for the 2012 election, then was completely redrawn the following year.


Youngkin’s Great Climate Change Escape
The Editorial Board, The Wall Street Journal, February 11, 2022

The Virginia Governor moves to withdraw from a regional state pact that would raise electricity prices.

Virginia Gov. Glenn Youngkin last fall campaigned against his state’s rising cost-of-living. Now the Republican is trying to make good on his promise to withdraw from a Northeast cap-and-trade pact that will raise electricity prices.

After taking control of the General Assembly in 2020, Democrats enacted legislation that authorized then Democratic Gov. Ralph Northam to join a cap-and-trade accord with 10 other states. The pact imposes a cap on CO2 emissions from power plants that declines over time. Power generators are required to buy permits if they exceed the cap, and states can spend the proceeds on climate programs.

This is an energy suicide pact. States agree to raise their energy prices, so none has a competitive economic advantage. Liberals note that electric prices in the Northeast fell 5.7% during the pact’s first nine years. But that’s because natural-gas prices plunged and offset compliance costs. Electric rates are now rising in tandem with gas prices.

Virginia’s entry in the Northeast pact last year also increased demand for permits. Prices will soar as the cap declines. The auction-clearing price for permits in December had more than doubled to $13 a ton since 2019. Dominion Energy, the state’s largest utility, recently estimated the pact would cost Virginia rate payers between $1 billion and $1.2 billion over the next four years.

Liberals hope cap-and-trade will accelerate the shift to renewable energy. They should look at what’s happened in Europe. Wind and solar power have increased due to generous subsidies, but so has demand for gas power to back them up. The result: Skyrocketing permit prices and electric rates. Europe provides a lesson to Americans of what not to do at home.

Enter Mr. Youngkin, who on his first day in office this year issued an executive order seeking to withdraw from the suicide pact. Democrats who control the state Senate, however, claim he can’t do this without the General Assembly’s consent. But the climate law Democrats enacted two years ago authorized the Governor to establish a cap-and-trade program. It didn’t mandate it.

Mr. Youngkin doesn’t need legislative approval. But maybe he should ask Democrats why they want Virginians to pay even higher prices to keep the lights on when inflation is already punishing households.