Today’s Key Takeaways: AOGCC announces Orphan Well Plugging Program for contractors. JPMorgan sees oil at $150. China buying/selling Russian natural gas for a profit. Large U.S. Driller moves into LNG. More gold in Southcentral Alaska. AXPC asks Biden/Congress to “open arms” to LNG exports.
NEWS OF THE DAY:
AOGCC Orphan Well Plugging and Remediation Program
CALLING ALL CONTRACTORS!
NOTICE OF CONTRACTOR MEETING
Alaska Oil and Gas Conservation Commission
Orphan Well Plugging and Remediation Program
RFP for Construction Manager/General Contractor
The Northern Region State of Alaska Department of Transportation and Public Facilities (Department), Construction Section is seeking a Construction Manager/General Contractor (CMGC) to assist the Department during pre-decommissioning planning and execution of the Alaska Oil and Gas Conservation Commission (AOGCC) Orphan Well Plugging and Remediation Program (Project).
Background
The objective of the Project is to identify, plug and abandon, and remediate all orphan wells and sites within the State of Alaska. Accompanying goals are methane monitoring and reduction through source control, and identification and remediation of any contamination occurring to surface and groundwater.
The Project is funded through a grant from the Federal Department of the Interior (DOI).
Meeting information
The Department in coordination with AOGCC will hold a VIRTUAL meeting on September 22nd, 2022, from 2:00 – 3:00 PM to learn more about the contractor selection process, CMGC, and the Orphan Well Plugging and Remediation Program.
Meeting login information:
Join Zoom Meeting
https://us06web.zoom.us/j/81663191965?pwd=cGxBZUErZkx5dzdOWFdXRUlHdTFtUT09
Meeting ID: 816 6319 1965
Passcode: 359505
For technical questions contact:
Bryan McLellan
IIJA Orphan Wells Project Manager
Alaska Oil & Gas Conservation Commission
Tel: 907-793-1226
Email: Bryan.Mclellan@alaska.gov
For CMGC related questions contact:
Lauren Little, P.E.
Project Manager
Alaska Department of Transportation and Public Facilities
Tel: 907-378-5911
Email: Lauren.Little@alaska.gov
OIL:
JPMorgan Sees Oil Prices Climbing as Alternatives Fall Short
Ilena Peng, Lisa Abramowicz, Bloomberg, September 13, 2022
- Renewable, coal and gas supplies insufficient to replace crude
- JPMorgan’s Malek reiterates bank’s $150-a-barrel forecast
Oil prices will be pushed higher as demand outpaces supply and alternative energy sources such as natural gas and renewables fail to plug the gap, according to JPMorgan Chase & Co.
Christyan Malek, the bank’s global head of energy strategy, reiterated his $150-a-barrel price forecast during an interview with Bloomberg TV on Tuesday.
As global crude output lags demand growth, “we’re back to the same issue, which is how do we meet this energy deficit in the future?,” Malek said. “It can’t be coal, it can’t be gas — we’re maxed out on NG. It’s got to be through solar and wind and then when you’ve gone through that, we still have a major deficit in oil, which basically means that we’re going to see a repricing of oil significantly higher.”
Malek said international oil explorers aren’t spending enough on drilling to replace old reserves, and markets are relying too heavily on OPEC nations to keep the world amply supplied. On the demand side of the equation, Chinese demand probably will see a resurgence once pandemic-related lockdowns are lifted, he noted
GAS:
American Energy Society, September 12, 2022:
– Special report: China is buying a lot of Russian natural gas (+29% y/y). This is not to be confused with pipeline LNG from Russia to China, which has also increased about 63%. Why? China has lower demand for energy due to a broad, macro-economic downturn. It appears that China is buying the Russian LNG at a discount and reselling it as “Chinese LNG” to Europe at marked-up prices. For instance, China’s JOVO Group and Sinopec, big LNG traders, recently sold cargoes of LNG to European buyers, and the latter acknowledged in an earnings call that it has been “channeling excess LNG to international markets.” (Russia has discounted the price by 50%, yet is still making a profit.)
This Large U.S. Driller Just Made A Big Move Into LNG
David Messler, OilPrice.Com, September 12, 2022
- Devon Energy announced its participation in Delfin Midstream last week.
- Delfin says that it is on schedule to make the FID on the first FLNG vessel by the end of this year.
- Devon’s move to buy into Delfin Midstream is a well-managed risk that it can certainly afford.
Devon Energy, (NYSE: DVN), announced a deal with Delfin Midstream (privately held) on Monday September 5th, to buy into a Floating Liquefied Natural Gas-FLNG vessel, yet to be FID’d and constructed. The financial terms were not released, but this certainly involves a major cash commitment from Devon. In what amounts to a delayed reaction, in the absence of other news, the market didn’t seem to like it at first in Friday’s trading, and Devon stock sagged for much of the day. A day when other E&P stocks were rising on what turned into a good day for WTI (up $3.00+) in the oil markets. DVN managed to stage a late-day rally Friday, of modest proportions, rising 1.71% as the market closed. Suggesting that investors were taking a longer view of this transaction and realizing why it might pay out for the company a few years hence. Any story that doesn’t involve debt pay down, stock buybacks, or dividend news is unwelcome conceptually, as investors grow used to huddling around the mailbox at dividend distribution time. A sentiment that surely accounts for the temporary softness in the company’s shares last week.
In this article, we will look a little deeper than the trading response, from which shares have since recovered, and look at the strategy behind this decision on the part of Devon management.
MINING:
HighGold hits more high-grade gold at DC
Shane Lasley, North of 60 Mining News, September 12, 2022
HighGold Mining Inc. Sept. 12 announced that its 2022 drilling is extending high-grade gold mineralization at Ellis Zone, a recently identified mineralized trend associated with the bonanza-grade gold drilled last year at the Difficult Creek (DC) prospect on the company’s Johnson Tract property in Southcentral Alaska.
Johnson Tract is currently anchored by JT Deposit, which hosts 3.49 million metric tons of indicated resource averaging 5.33 grams per metric ton (598,000 ounces) gold, 6 g/t (673,000 oz) silver, 5.21% (400.8 million pounds) zinc, 0.59% (43.1 million lb) copper, and 0.67% (51.5 million lb) lead.
When you calculate the value of all the metals into gold equivalency, this comes to 1.05 million oz of indicated resource averaging 9.39 g/t gold-equivalent.
Discovery drilling completed late in the 2021 season, however, indicates that the DC prospect area about 2.5 miles north of JT could be the higher-grade and potentially larger prize at Johnson Tract.
Hole DC21-010 cut 6.4 meters averaging 577.9 g/t (18.58 ounces per metric ton) gold, 2,023 g/t (65 oz/t) silver, 2.15% zinc, and 0.3% copper.
Geological modeling carried out during the winter months indicated this bonanza-grade gold is associated with an east-west striking trend of steeply dipping mineralization named after the late Bill Ellis.
“This emerging new zone of high-grade mineralization has been named the Ellis Zone in honor of the late Bill T. Ellis, who played a key role in the initial discovery and advancement of the Johnson Tract project and was a major force in the Alaska exploration community,” said HighGold Mining CEO Darwin Green.
POLITICS:
INDUSTRY GROUP ASKS WASHINGTON TO OPEN ARMS TO LNG EXPORTS: The American Exploration and Production Council is asking both the Biden administration and Congress to revisit policies governing liquefied natural gas exports and to deem exports to be in service of U.S. national security interests.
AXPC, an industry group representing large independent oil and gas producers, released an “LNG export agenda” yesterday, encouraging the administration to reverse its policy opposing U.S. financing for fossil fuel projects abroad with limited exceptions.
The administration’s policy, as first established in December, makes exemptions for certain projects if it can be demonstrated that they support U.S. national security or foreign policy aims, and officials have made clear since the war in Ukraine began that the administration is supportive of helping to finance some natural gas projects in Europe.
Going further on ‘public interest’: AXPC also recommended that Congress revisit the Natural Gas Act and tilt the scale more in favor of LNG export approvals.
The NGA’s current language provides that the Energy Department shall approve export authorizations unless it determines that the export “will not be consistent with the public interest.”
Congress instead should “[provide] that it is the policy of the United States that LNG exports are in the public interest unless a narrowly limited set of exceptions applies,” AXPC said.
The larger political fight: LNG has become a fixture in the post-invasion political fight over U.S. energy policy and diplomacy.
Biden pledged to help facilitate more shipments of LNG to Europe to displace Russian molecules, and his Energy Department has approved new export authorizations left and right, all to the dismay of environmental groups.
Oil and gas industry groups, meanwhile, have urged Biden to abandon his green posturing and to embrace U.S. LNG fully as a green energy solution — relative to coal and Russian pipeline gas.
From the Washington Examiner, Daily on Energy