Today’s Key Takeaways: Significant decline in oil and gas emissions from 2019-2021. Oil prices are up on large inventory draw. Alaska’s CODEL praises reaffirmation of AKLNG. Ambler road decision delayed – again. Rift over COP28 leadership.
NEWS OF THE DAY:
The intensity of methane emissions from oil and gas sector has declined, study finds
Emma Newburger, CNBC, May 23, 2023
- The intensity of methane and greenhouse gas emissions from the oil and gas sector declined 28% and 30%, respectively, between 2019 and 2021 among the largest producers in the country, according to an analysis published by the nonprofits Clean Air Task Force and Ceres.
- The report found that the methane emissions intensity of natural gas production and the greenhouse gas emissions intensity of oil and gas production vary dramatically across companies.
- Natural gas producers in the highest quartile of methane emissions intensity have an average emissions intensity that’s nearly 26 times higher than producers in the lowest quartile, the study found.
OIL:
Oil Moves Higher As EIA Reports Huge Crude Draw
Irina Slav, OilPrice.Com, May 24, 2023
Crude oil prices jumped higher today after the U.S. Energy Information Administration estimated inventories in the country had shed 12.5 million barrels in the week to May 19.
A day earlier, the American Petroleum Institute had estimated that crude oil inventories in the U.S. had gone up/down by a sizable 6.7 million barrels, which surprised traders and prompted increased oil buying that boosted prices.
A week earlier, the EIA had estimated a crude oil inventory build of 5 million barrels, which, however, failed to move prices depressed by fears of a U.S. debt default.
At 455.2 million barrels, the EIA said, U.S. crude oil inventories are 3% below the five-year seasonal average.
In fuels, the EIA estimated inventory draws for the week to May 19.
Gasoline stocks shed 2.1 million barrels, which compared with a draw of 1.4 million barrels for the previous week.
Gasoline production averaged 10.3 million barrels daily last week, which compared with 9.5 million barrels daily a week earlier.
Middle distillate inventories last week fell by 600,000 barrels. This compared with a modest inventory increase to the tune of 100,000 barrels for the previous week.
Middle distillate production averaged 4.9 million barrels daily last week, which compared with 4.9 million barrels daily the week before.
The API’s report of an inventory decline yesterday pushed prices higher, especially as it coincided with a statement by the Saudi energy minister that short sellers in the oil space should “watch out”.
“Speculators, like in any market they are there to stay, I keep advising them that they will be ouching, they did ouch in April, I don’t have to show my cards I’m not a poker player… but I would just tell them watch out,” Abdulaziz bin Salman said, as quoted by Reuters.
At the time of writing, Brent crude was trading at $78.03 per barrel with West Texas Intermediate at $74.12 per barrel, both up from opening.
GAS:
Delegation Welcomes Reaffirmation of Alaska LNG Project
Alaska Native News, May 24, 2023
U.S. Senators Lisa Murkowski and Dan Sullivan (both R-AK) and Representative Mary Peltola (D-AK) Friday welcomed a ruling from the U.S. Court of Appeals upholding the Federal Energy Regulatory Commission’s (FERC) approval of the Alaska Liquefied Natural Gas (LNG) project. The court’s decision both dismissed and rejected claims from Lower 48 environmental groups while reaffirming FERC’s authorization of the major project to connect Alaska’s North Slope resources to an LNG export terminal in Nikiski, Alaska.
“Alaska has over 40 trillion cubic feet of natural gas readily available for production and export, which would bring incredible economic and geopolitical benefits to Alaska, America, and our allies. This project will create jobs, generate revenues, strengthen our energy security, benefit our national security, and help decrease global emissions, all at the same time,” said Senator Murkowski. “We have proven time and time again that our resources are developed under most stringent environmental standards in the world. This ruling is the latest testament to the thorough vetting and review process undertaken by FERC and reaffirms that the project should be allowed to move forward without delay.”
“Tuesday’s ruling is more good news for the only fully-permitted West Coast LNG project in the United States,” Senator Sullivan said. “This project is also backed by the full faith and credit of the United States due to billions of dollars in federal loan guarantees Senator Murkowski and I put in the bipartisan infrastructure bill. Over the last several months, my team and I have worked relentlessly in meeting with key stakeholders—investors, producers, engineering firms, the Biden administration, and Japanese and Korean government officials—to help advance this important project further. As the G-7 prepares to meet and discuss ways to get America’s Asian and European allies off of Russian gas once and for all, this decisive ruling reaffirms that Alaska LNG deserves serious consideration, especially considering FERC’s analysis confirms Alaska’s natural gas is some of the cleanest in the world.”
MINING:
Ambler road decision in Alaska delayed again, this time to mid-2024
Cecelia Jamasmie, The Northern Miner, May 24, 2023
The U.S. Department of Interior (DOI) has once again delayed the release of the record of decision (RoD) for the Ambler road project, which will give access to untouched deposits of copper, zinc, lead, silver and gold in north-western Alaska.
The resolution on Trilogy Metals‘ (TSX: TMQ; NYSE: TMQ) and South32’s (LSE: S32; ASX: S32; JSE: S32) proposed 340-km road from the Upper Kobuk Mineral Projects (UKMP) to the Dalton Highway is now expected on the second quarter of 2024.
As of last week’s status report, the DOI was promising a decision by the end of the year.
The need for an industrial access road has been recognized by U.S. lawmakers for decades, but it wasn’t until 2020 that the Bureau of Land Management (BLM) the Army Corps of Engineers, and the National Park Service issued a joint decision providing the federal authorizations needed to build it.
Last year, however, BLM suspended the permits issued under the Trump administration, citing a lack of adequate consultation with Alaska tribes and evaluation of the road potential impacts on fish and caribou habitats.
The Biden administration suspended at the time the issuing of permits for all projects that cross federal lands. The Ambler access road would cut through gates of the Arctic National Park and Preserve, crossing 11 major rivers and thousands of streams.
Ambler Metals, formed in 2019 by Trilogy Metals and South32, said the fresh “unnecessary” delay threatened a project that will provide much-needed jobs and economic growth for Alaskans.
“We are obviously disappointed to hear the latest status update from the DOI,” president and CEO Ramzi Fawaz said in the statement.
“It has been a year since the court granted DOI’s request for a voluntary remand of the permit, providing ample time for the department to conduct the needed supplemental work on the EIS”, Fawaz added.
The UKMP projects, consisting of Arctic and earlier-stage Bornite copper assets, have a combined resource of 8 billion lb. of copper, 3 billion lb. of zinc and 1 million oz. of gold equivalent.
The proposed mine is expected to produce more than 159 million lb. of copper, 199 million lb. of zinc, 33 million lb. of lead, 30,600 oz. of gold and 3.3 million oz. of silver annually over a 12-year mine life.
Based on studies conducted by the world’s largest copper miner, Chile’s Codelco, the world’s energy transition to stop climate change will take demand for the metal from 25 million tonnes per year now to just over 31 million tonnes in 2032.
This means the world would need to build eight projects the size of BHP’s Escondida in Chile, the world’s largest copper mine, over the next eight years.
In terms of investment, experts estimate the industry needs more than US$100 billion to build mines able to close what could be an annual supply deficit of 4.7 million tonnes expected by 2030.
POLITICS:
Making sense of the rift over COP28
Ben Geman, Axios, May 24, 2023
The new effort to jettison the head of upcoming United Nations climate talks will likely fail, but it’s a revealing — and maybe even consequential — moment nonetheless, Ben writes.
Catch up fast: Over 130 Capitol Hill Democrats and European parliament members are seeking the removal of Sultan Ahmed Al Jaber, the United Arab Emirates official who is president-designate of this year’s annual summit.
- The letter from progressives — addressed to President Biden, European Commission head Ursula von der Leyen, and top UN officials — attacks Al Jaber’s role as head of state oil giant ADNOC.
Threat level: Al Jaber risks “undermining the negotiations,” it states.
- The letter also urges steps to “limit the influence” of fossil fuel interests in the late-2023 talks; the UAE is hosting and organizing this year’s event.
State of play: The White House isn’t bowing to pressure from the left.
- A U.S. official, in a statement to Axios, called the UAE a “crucial partner” on climate.
- The official called Al Jaber an “experienced diplomat and business leader,” citing his chairmanship of the big renewables player Masdar.
- EU leaders haven’t backed off support either.
What we’re watching: The drumbeat of criticism could still influence COP28 without a change at the top.
- “Whether or not this prompts the UAE to rethink [Al Jaber’s] role, it does put people on notice that there is zero appetite for any attempt to ‘greenwash’ the fossil fuel sector at the COP,” Pete Ogden, an Obama-era climate aide whose now vice president for climate and environment at the UN Foundation, told Axios via email.
Quick take: Tussles around Al Jaber are part of a wider battle over the oil industry’s role in energy transition.
- Activists fear COP28 will be vulnerable to industry influences that weaken the summit outcome.
The competing view: While the oil industry should do more, it’s an indispensable player with the resources and expertise to scale tech like carbon capture.
- That’s basically the view of Al Jaber, who has been welcoming of industry participation at COP28,which Andrew wrote about in March.
One big question: How much connective tissue actually exists between COP28 leadership, and steps countries take on climate?
What they’re saying: Kalee Kreider, a climate diplomacy vet and president of the firm Ridgely Walsh, said she understands why there’s pressure on Al Jaber, the first oil exec in the role.
- “But, we shouldn’t forget that the real power of the Paris Agreement rests with nation-state leaders to deliver on what they promised in 2015,” Kreider, a former adviser to Vice President Al Gore, said via email.
- “[A]s an international agreement, Paris doesn’t have a single point of failure. The presidency rotates, the commitments are shared around the world. It’s a web, not a chain,” Kreider adds.
The bottom line: UN climate summits are always fraught affairs. But the glare on this year’s event is especially hot.