Today’s Key Takeaways: Alaska joins lawsuit to challenge authority of environmental review agency. Trump tariff plans concern oil industry. Weight restrictions increase costs at Alaska mine. Exxon says “drill, baby, drill” unlikely.
NEWS OF THE DAY:
Court case in North Dakota calls federal environmental review regime into question
Mary Steurer, Alaska Beacon, November 30, 2024
Alaska joined 20 other states in a case seeking to reinstate the rulemaking approach adopted during Trump’s first term as president
A lawsuit before a North Dakota federal district court could upend nearly five decades of environmental regulations affecting infrastructure projects.
The Council on Environmental Quality was created through an executive order by President Richard Nixon in 1969. It implements the National Environmental Policy Act, which directs federal agencies to assess how projects under their jurisdiction will impact environmental factors like air and water quality.
A coalition of 21 Republican-led states, including North Dakota and Alaska, seeks to overturn a new regulation adopted by the council that took effect in July. The states argue that the rule introduces unreasonable requirements that will slow or even sink important infrastructure including new highways, airports, bridges and water systems, and unlawfully over-emphasizes climate change and environmental justice in the environmental review process.
In a lawsuit filed in May, the states asked the court to strike down the rule, direct the council to adopt regulations consistent with federal law and reinstate a weaker version the agency enacted during President Donald Trump’s administration in 2020.
A group of 13 other states, plus the District of Columbia, New York City and a handful of advocacy groups, have joined the case on the side of the Council on Environmental Quality. The defendants argue the agency’s work is vital to protect the environment and public health, and that the 2024 rule should be left in place.
It’s possible that neither side will get what it wants. In a hearing earlier this month, U.S. District Court Judge Daniel Traynor said the Council on Environmental Quality’s entire regulatory regime may be unlawful.
The U.S. Court of Appeals for the D.C. Circuit found in a November order that the agency does not have rulemaking authority because Congress never explicitly granted it the power to implement the National Environmental Policy Act. The appellate court did not strike down any of the council’s regulations, leaving it up to other courts to decide whether the rules should stand.
Traynor questioned how he could leave the regulations intact given the D.C. court’s findings. He said if he were to apply the court’s reasoning to the North Dakota case, he may conclude that all National Environmental Policy Act regulations passed by the council are void. The council issued its first rule implementing the act in 1978.
“If they have no authority, they have no authority,” Traynor said of the council. “It is a paper tiger.”
OIL:
Exclusive-Trump plans no exemption for oil imports under new tariff plan, sources say
Jarrett Renshaw, Reuters, November 29, 2024
U.S. President-elect Donald Trump does not intend to spare crude oil from his planned 25% import tariffs on Canada and Mexico, sources told Reuters on Tuesday, as the oil industry warned the policy could hurt consumers, industry and national security.
Canada and Mexico are the top sources of U.S. crude oil imports, together accounting for around a quarter of the oil U.S. refiners process into fuels like gasoline and heating oil, according to the U.S. Department of Energy.
The U.S. and Canadian oil industries had been optimistic that Trump’s broad plans for protectionist trade measures would spare oil imports because many U.S. refineries rely on the two countries and have equipment designed to process their oil types.
Two sources familiar with Trump’s plans said that oil would not be exempted from the plan. They asked not to be named due to the sensitivity of the issue.
America’s top oil trade groups, meanwhile, said imposing the tariffs would be a mistake – exposing a rare moment of discord between the industry and Trump.
“Across-the-board trade policies that could inflate the cost of imports, reduce accessible supplies of oil feedstocks and products, or provoke retaliatory tariffs have potential to impact consumers and undercut our advantage as the world’s leading maker of liquid fuels,” said a spokesperson for the American Fuel and Petrochemical Manufacturers group, which represents oil refiners.
MINING:
Costs Rise, Stock Drops at Alaska Mine
Staff Writer, Mining.Com, November 30, 2024
Shares of Contango ORE (NYSE American: CTGO) plummeted on Friday after the company provided an increased cost guidance for the Manh Choh gold mine in Alaska, which it holds under the Peak Gold joint venture with Kinross Gold (TSX: K, NYSE: KGC) on a 30/70 basis.
It is now projected that the all-in sustaining cost (AISC) over Manh Choh’s approximate 4.6-year mine life will be $1,400/oz. of gold equivalent (AuEq) sold, a 25% increase compared to the $1,116/oz. outlined in a 2023 technical report. AISC for 2025 on a standalone basis is expected to be $1,625/oz. AuEq sold.
The anticipated rise in AISC, says Contango, relates to recent weight restrictions placed on the bridge used to transport the Manh Choh ore, as well as higher moisture content in the Manh Choh ore, limiting the overall amount of ore being transported annually by approximately 20%.
Rising processing costs are also contributing to the higher AISC projections, it adds.
POLITICS:
Exxon Pours Cold Water On Trump’s “Drill, Baby, Drill” Plans
ZeroHedge, November 29, 2024
Contrary to expectations for a self-defeating flood of new energy production under the second Trump admin, Exxon’s Upstream President Liam Mallon said that oil and gas producers in the US will not raise output significantly in the coming years despite calls from President-Elect Donald Trump to “drill, baby, drill.”
“I think a radical change is unlikely because the vast majority, if not everybody, is primarily focused on the economics of what they’re doing,” Mallon said on Tuesday at a conference in London, according to Bloomberg.
Trump is expected to open up federal lands for more oil and gas drilling, in part to execute on Scott Bessent’s “3-3-3 plan” which envisions boosting US oil production by an addition 3 million barrels per day (from the current record 13.3 million), but much of the land in the country’s largest oil and gas producing state, Texas, is private. Still, there’s plentiful federal land in neighboring New Mexico which includes the oil- and gas-rich Permian Basin.
“If those rules were substantially changed, you would be able to drill more, assuming you have the quality and met your economic threshold,” Mallon said. “But I don’t think we’re going to see anybody in the drill, baby, drill mode. I really don’t.”