Today’s Key Takeaways: A look at AI in energy. Win-win gas supply for AKLNG. Destroying the environment to go green?
NEWS OF THE DAY:
Goldman Sachs Looks at AI in Energy
Andreas Exarheas, Rigzone, June 5, 2024
In first-quarter earnings calls, 41 percent of S&P 500 companies that had reported through May 15 mentioned AI, according to Goldman Sachs Research.
That’s what a Goldman Sachs Briefings newsletter sent to Rigzone recently by the Goldman Sachs team stated, adding that “that compares with 23 percent of companies mentioning AI in the first quarter a year ago”.
“Nearly 70 percent of S&P 500 energy companies mentioned AI on their earnings calls, up from 19 percent in the fourth quarter of 2023,” the newsletter added.
“Since the start of March, a basket composed of energy producers that benefit from rising power demand has outperformed a basket of companies pursuing or enabling AI technology,” it continued.
“Goldman Sachs Research expects U.S. power demand growth to accelerate to an annual average of 2.4 percent until 2030, from zero percent the previous decade, driven in part by the needs of AI,” it continued.
The Goldman Sachs Group describes itself as a leading global financial institution that delivers a broad range of financial services to a large and diversified client base that includes corporations, financial institutions, governments, and individuals.
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GAS:
‘Win-win’ gas supply deal paving the way for first phase of Alaska’s LNG project
Dragana Nikse, Offshore Energy, June 5, 2024
Great Bear Pantheon, a wholly-owned subsidiary of London-listed Pantheon Resources, which owns two Alaskan oil and gas fields, has entered into a gas sales precedent agreement (GSPA) with 8 Star Alaska, a subsidiary of the state-owned Alaska Gasline Development Corporation (AGDC), the developer of a liquefied natural gas (LNG) project in the U.S. northernmost state.
The GSPA sets forth the key commercial terms to be incorporated into the binding take-or-pay gas sales agreement (GSA) for the AGDC-led Alaska LNG project to receive gas from Pantheon’s Alaskan oil and gas fields, Kodiak and Ahpun.
Under the agreement, Pantheon is expected to supply up to 500 million cubic feet per day (mmcfd) of natural gas at a maximum base price of $1 per million BTU (mmBtu) in 2024 dollars. Additionally, the companies agreed on minimum daily contract volumes to calculate the level of the take-or-pay obligation.
The contract period for natural gas deliveries is set to 20 years, with extension options, and it was highlighted that Alaska could reduce the natural gas unit price below $1 per mmBtu by cooperating with Pantheon to decrease the cost of project financing.
The initial term of the GSPA is either June 30, 2025, or the execution date of the definitive GSA, whichever occurs first. The contract is set to automatically renew for additional one-year terms until either firm provides notice of termination.
Phase 1 – First order of business for Alaska LNG
POLITICS:
States’ emerging climate dilemma: Data centers
Adam Aton, ClimateWire, June 4, 2024
When Michigan state Rep. Joey Andrews describes the pros and cons of attracting data centers to his state — they’re a boon to property taxes but a drain on the electrical grid — he ultimately returns to one point: There’s no stopping them.
“We can’t put this genie back in the bottle,” said Andrews, who is sponsoring legislation to offer data centers a sales tax exemption. That has pitted the Democratic lawmaker, who also owns a solar installation company, against environmental advocates who warn that power-thirsty data centers could overwhelm the state’s renewable energy targets.
But with climate tech going increasingly digital, Andrews argues that activists need to get used to these kinds of trade-offs.
“Everything we’re doing to fight climate change requires more energy production,” he said. “We have to constantly be scaling our energy production to meet the increased energy demands of decarbonizing — which, you know, seems counterproductive. But that’s the way it is.”
From Lansing to Annapolis to Atlanta, this year has seen the data center sector advance favorable policies — such as tax exemptions — or beat back efforts to restrict their growth. The industry’s expansion is one of the main reasons U.S. energy demand is projected to grow significantly for the first time in decades. And many utilities are responding with proposals to burn more fossil fuels, sometimes at a greater cost to ratepayers.
That’s ringing alarm bells for climate hawks as well as some Republicans. But the concerns haven’t stalled the industry’s advance — especially in states trying to position themselves on the cutting edge of the energy transition. And the industry says that while data center companies have strong climate goals themselves, it’s up to utilities to manage the electricity sector’s emissions.