Today’s Key Takeaways: OPEC increases supply. Regenerate Alaska returns Arctic lease. Shell refuses to pay in rubles – Russia cuts them off. EV can have six times more minerals than a combustion vehicle, which makes them 750 pounds heavier. 10 incumbents won’t seek re -election in AK legislature.
NEWS OF THE DAY:
OPEC+ agrees to boost supply by over 200,000 barrels a day
Jacob Knutson, Axios, June 2, 2022
OPEC and its allied producers agreed Thursday to boost oil production more than 200,000 additional barrels a day in July and August.
Why it matters: The move may help ease surging oil prices and rising inflation over the high-demand summer months.
- It may also help to overcome Russian production shortages as a result of its unprovoked invasion of Ukraine.
By the numbers: OPEC now plans to produce around 650,000 barrels a day in total over those months.
- It had only planned to increase production by about 400,000 barrels per day in total.
The big picture: The boost comes just days after European Union leaders agreed to block most Russian oil imports over its invasion of Ukraine.
- It could also thaw relations between the U.S. and Saudi Arabia, which will likely account for most of the supply increases along with the United Arab Emirates, according to the Financial Times.
- President Biden is considering visiting Saudi Arabia to meet its de facto ruler Prince Mohammed bin Salman, whom he has heavily criticized over human right abuses, namely the killing of U.S.-based journalist Jamal Khashoggi.
What they’re saying: “Recent media reports suggest today’s change could herald a broader thaw between Riyadh and Washington ahead of a formal visit to the Kingdom by President Joe Biden,” ClearView Energy Partners said in a note Thursday.
- “It might, but we would suggest, more fundamentally, that OPEC may be looking out for its own interests: high oil prices could bring demand destruction and push import-reliant economies into recession.”
Go deeper … Once-unthinkable: Subsidies for American oil drillers
Another oil company backs out of leases in Alaska’s Arctic National Wildlife Refuge
Alex DeMarban, Anchorage Daily News, June 1, 2022
The only oil company that bought a single lease in the Arctic National Wildlife Refuge early last year has canceled its lease, according to the U.S. Interior Department.
The move by Regenerate Alaska is the latest example of the industry stepping away from possible oil and gas development in the 19-million-acre refuge.
Hilcorp and Chevron have also canceled their interest in separate, older leases, on a small tract of Alaska Native corporation-owned land within the refuge’s boundaries. Those oil companies spent $10 million to exit their deal with Arctic Slope Regional Corp.
Regenerate Alaska, a subsidiary of Australia-based 88 Energy, purchased its lease in the federal government’s first sale in the refuge’s 1.6-million-acre coastal plain. The Trump administration held the sale in its closing days in January 2021.
Regenerate was one of just three entities to vie for the 10-year leases in the sale, which attracted no major oil companies.
The company bid about $800,000 to lease 23,000 acres along the western boundary of the refuge’s coastal plain, on a sliver of acreage near the Canning River and state land. It’s the area in the refuge that’s closest to existing oil field infrastructure, with ExxonMobil’s Point Thomson development to the west on state land.
But early last year the Biden administration blocked exploration in the refuge, raising questions about the future of the leases and possible development. The Interior Department suspended the leases for further review after calling the sale process legally flawed. Congress in 2017 required the lease sale.
Regenerate Alaska asked for the cancellation and for its money back, according to a statement from an Interior Department spokesperson on Tuesday.
“The Bureau of Land Management has a well-established procedure to do this, and last month rescinded and canceled the lease, as requested,” the Interior statement said. “The Office of Natural Resources Revenue refunded (the) full bonus bid and first year rentals.”
88 Energy did not respond to requests for comment Tuesday about why it ended the leases. A former 88 Energy official said early last year that if the federal government did not allow development in the refuge, the company would expect repayment.
88 Energy′s departure leaves just two lease holders.
The Alaska Industrial Development and Export Authority acquired seven leases covering about 370,000 acres. The state agency is suing the federal government over the lease suspension.
Knik Arm Services, a real estate company owned by Mark Graber, also picked up a lease in the federal government’s sale.
Graber said Wednesday that he’s holding on to his lease and watching the state’s lawsuit. He hopes to one day find a lot of oil in the refuge, he said.
“There’s no plan to do anything until the lawsuit is resolved and we can move forward,” he said.
With ANWR exploration facing stiff political resistance, other potential developers have looked to oil prospects on state land west of the refuge, and in the National Petroleum Reserve-Alaska, another chunk of federal land in northern Alaska.
88 Energy has projects on those state and federal lands, and last year announced promising results from recent drilling in the reserve.
Russia’s Gazprom cuts off some natural gas to Germany after Shell refused to pay for it in rubles
Huileng Tan, Business Insider, June 1, 2022
- Gazprom said it has halted its natural-gas supply to Shell under a contract that supplies the fuel to Germany
- The suspension from June 1 is due to Shell’s refusal to pay for supplies in rubles, Gazprom said.
- On March 31, Russian President Putin demanded natural gas payments be made in rubles.
Russian energy-giant Gazprom said it has completely halted natural-gas supply to Shell under a contract that supplies the fuel to Germany, Europe’s largest economy. The move came after Shell refused to pay Gazprom in rubles.
Gazprom made the announcement on Wednesday — a day after it cut off natural-gas supplies to the Netherlands for the same reason.
In a March 31 decree, Russian President Vladimir Putin demanded that natural-gas payments be made in rubles, which would entail opening a euro and ruble account with the country’s Gazprombank to process payments.
Gazprom said in its Telegram channel on Tuesday that Shell Energy Europe had notified Gazprom “it does not intend to make payments under the contract for the supply of gas to Germany in rubles.”
“As of the end of the business day on May 31 (the payment deadline stipulated by the contract), Gazprom Export had not received payment from Shell Energy Europe Limited for gas supplies in April,” the Russian company wrote.
“Gazprom Export notified Shell Energy Europe Limited of the suspension of gas supplies under this contract from June 1, 2022” — until payment is made in rubles, the Russian company continued.
Contracts for Russian gas to Europe transported via pipelines are typically denominated in euros, according to the Financial Times.
Gazprom supplies up to 1.2 billion cubic meters of natural gas a year to Shell. That’s just 1.3% of the 95 billion cubic meters of natural gas Germany consumes each year, according to the country’s economy ministry.
While Shell has refused to pay Gazprom in rubles, Germany’s major natural-gas importers Uniper and DWE have paid for Russian fuel under Moscow’s new payment plan, Reuters reported on Tuesday.
Uniper is the largest importer of Russian gas in Germany. It depends on Russia for more than half of its natural-gas needs, according to Bloomberg. The German energy giant is also the country’s largest gas import and storage company, per the media outlet.
Potential for a ‘significant recession’
Germany could fall into a “significant recession” if supplies of Russian natural gas and oil are cut off, a top banker said in April. The economic powerhouse is heavily reliant on Russian gas, which accounted for 55% of Germany’s gas imports in 2021 and 40% of its gas imports in the first quarter of 2022, Reuters reported.
Germany’s economy ministry did immediately not respond to Insider’s request for comment sent outside regular business hours. A spokesperson for the German government told CNN on Tuesday it was “monitoring the situation very closely.”
Shell told Insider it “has not agreed to new payment terms set out by Gazprom.” The energy giant has also not opened any special accounts to process ruble payments.
“We will work to continue supplying our customers in Europe through our diverse portfolio of gas supply,” Shell added in a statement.
On Tuesday, Gazprom said it has fully suspended gas supplies to GasTerra due to the Dutch trader’s “failure to pay in rubles.” On Wednesday, the Russian gas company said it has also halted gas supplies to Danish power company Orsted as it, too, refused to pay in rubles.
Gazprom had earlier cut off gas supply to Poland, Bulgaria and Finland, as they all refused to pay in the Russian currency.
ELECTRIFICATIONEVs vs. Gas Vehicles: What Are Cars Made Out Of?
Bruno Vendetti, Elements, May 31, 2022
Electric vehicles (EVs) require a wider range of minerals for their motors and batteries compared to conventional cars.
In fact, an EV can have up to six times more minerals than a combustion vehicle, making them on average 340 kg (750 lbs) heavier.
This infographic, based on data from the International Energy Agency (IEA), compares the minerals used in a typical electric car with a conventional gas car.
Editor’s note: Steel and aluminum are not shown in analysis. Mineral values are for the entire vehicle including batteries and motors.
Batteries Are Heavy
Sales of electric cars are booming and the rising demand for minerals used in EVs is already posing a challenge for the mining industry to keep up. That’s because, unlike gas cars that run on internal combustion engines, EVs rely on huge, mineral-intensive batteries to power the car.
For example, the average 60 kilowatt-hour (kWh) battery pack—the same size that’s used in a Chevy Bolt—alone contains roughly 185 kilograms of minerals, or about 10 times as much as in a typical car battery (18 kg).
Lithium, nickel, cobalt, manganese, and graphite are all crucial to battery performance, longevity, and energy density. Furthermore, EVs can contain more than a mile of copper wiring inside the stator to convert electric energy into mechanical energy.
Out of the eight minerals in our list, five are not used in conventional cars: graphite, nickel, cobalt, lithium, and rare earths.
Since graphite is the primary anode material for EV batteries, it’s also the largest component by weight. Although materials like nickel, manganese, cobalt, and lithium are smaller components individually, together they make up the cathode, which plays a critical role in determining EV performance.
Although the engine in conventional cars is heavier compared to EVs, it requires fewer minerals. Engine components are usually made up of iron alloys, such as structural steels, stainless steels, iron base sintered metals, as well as cast iron or aluminum alloyed parts.
EV motors, however, often rely on permanent magnets made of rare earths and can contain up to a mile of copper wiring that converts electric energy into mechanical energy.
The EV Impact on Metals Markets
The growth of the EV market is not only beginning to have a noticeable impact on the automobile industry but the metals market as well.
EVs and battery storage have already displaced consumer electronics to become the largest consumer of lithium and are set to take over from the stainless steel industry as the largest end-user of nickel by 2040.
In 2021 H2, 84,600 tonnes of nickel were deployed onto roads globally in the batteries of all newly sold passenger EVs combined, 59% more than in 2020 H2. Moreover, another 107,200 tonnes of lithium carbonate equivalent (LCE) were deployed globally in new EV batteries, an 88% increase year-on-year.
With rising government support and consumers embracing electric vehicles, securing the supply of the materials necessary for the EV revolution will remain a top priority.
Alaska general election filing deadline passes with 10 incumbents not seeking reelection
Sean Macguire, Alaska’s News Source, June 1, 2022
The filing deadline for Alaska’s general election passed at 5 p.m. on Wednesday. At least one-third of the Alaska Legislature will not serve in the offices they currently hold: 10 legislators are not seeking reelection, eight are running for different offices, and two Democratic incumbents are set to lose their seats after being paired with two other Democrats in the same districts due to redistricting.
There are 10 candidates for governor and lieutenant governor who have filed to run on joint tickets. They include:
- Republican Gov. Mike Dunleavy and former Department of Corrections Commissioner Nancy Dahlstrom
- Independent former Gov. Bill Walker, who is running with fellow independent Heidi Drygas as his running mate
- Democratic former state Rep. Les Gara, who is running with Jessica Cook
- Republicans Charlie Pierce and Edie Grunwald are running together
- Republicans Rep. Chris Kurka is on a ticket with Paul Hueper as his lieutenant governor
Before November’s election, there are already set to be big shake ups in the House of Representatives. At least 15 of 40 legislators there are not returning to the seats they currently hold.
Democratic Reps. Jonathan Kreiss-Tomkins, Tiffany Zulkosky, Liz Snyder, and Ivy Spohnholz have announced that they are not seeking reelection, and so have Republican Reps. Steve Thompson and Sara Rasmussen.
There are seven House legislators who are running for other offices: Democratic Rep. Adam Wool is running for Alaska’s lone seat in the U.S. House of Representatives, and Rep. Geran Tarr is running for an open Alaska Senate seat.
Rep. Matt Claman, D-Anchorage, filed shortly after 4 p.m. on Wednesday to run for the Alaska Senate seat currently held by Sen. Mia Costello, R-Anchorage. Eagle River Republican Reps. Kelly Merrick and Ken McCarty have filed to run for the Alaska Senate seat currently held by fellow Republican Sen. Lora Reinbold, who announced last month that she is not seeking reelection.
Rep. James Kaufman, R-Anchorage, has filed to run for the Alaska Senate seat held by Sen. Josh Revak, R-Anchorage, who in turn is running for the U.S. House. Kurka is running to be governor.
This year’s redistricting cycle means some incumbents are set to run against each other. Democratic Reps. Chris Tuck and Andy Josephson are in the same district, and both have filed to run for reelection. Josephson and Tuck are friends who say they support each other, but they are deciding who will continue in the race.
Democratic Reps. Zack Fields and Harriet Drummond are also paired in the same Anchorage House district, and both say they are running for reelection. Fields and Drummond say they share similar policy goals.
There are several open House districts due to redistricting, and several other districts that have no incumbents:
- An Eagle River House district is set to see former Republican Reps. Dan Saddler and Sharon Jackson run against each other
- Another Eagle River House seat is set to see Republican Anchorage Assembly member Jamie Allard face off against fellow Republican Roger Branson
- An open Wasilla House seat has Republican candidates Rachel Allen, Jessica Wright, Steven Menard, and Jesse Sumner all running against each other
- An open Anchorage House district is set to see Alyse Galvin, a former two-time candidate for Congress, face off against Republican Nicholas Danger
In the Senate, at least five of 20 legislators there are not returning. Republican Senate President Peter Micciche has announced that he is not running for reelection, and so did fellow Republican Sens. Natasha von Imhof, and Lora Reinbold. Sen. Josh Revak, R-Anchorage, is not seeking reelection as he’s running for the U.S. House.
Senate Minority Leader Tom Begich, D-Anchorage, also confirmed on Wednesday that he is not running again. He said by phone that it has been “a very, very difficult year,” and that he will focus on helping build strong coalitions in the Alaska Legislature, and to try to restore civility in U.S. politics.
Löki Tobin, a registered Democrat who has served as Begich’s legislative aide, has filed to run to for his Anchorage Senate seat. Republican Heather Herndon has also filed to run for the same seat.
Several incumbents in the Senate potentially face tough races. Sen. Mike Shower, R-Wasilla, is being challenged by fellow registered Republican Doug Massie, who resigned as head of the Alaska Wildlife Troopers last week. City of Fairbanks Mayor Jim Matherly, a Republican, is challenging Democratic Sen. Scott Kawasaki for his seat. Sen. Gary Stevens, R-Kodiak, has two Republican challengers: Heath Smith, a former Homer council member, and Walter Jones, a U.S. Army veteran of Anchor Point.
In an open Anchorage Senate seat, Rep. Geran Tarr is set to face off against Anchorage Assembly member Forrest Dunbar, a fellow Democrat, and Democratic former legislative aide Drew Cason. Andrew Satterfield, a Republican, also filed to run for the same Senate seat.
The top four vote-getters at the primary election, regardless of party affiliation, will advance to the general election. Alaskans will then use ranked-choice voting to pick a winner. The deadline for state candidates to withdraw is June 25. The primary election day is Aug. 16 and the general election is Nov. 8.