NEWS OF THE DAY:
American Petroleum Institute sues Biden over oil and gas leasing pause
Josh Siegel, The Washington Examiner, August 16, 2021
The American Petroleum Institute is leading a lawsuit challenging the Biden administration’s indefinite pause on oil and natural gas leasing in federal lands and waters. The suit was filed on Monday.
API and 11 other oil industry trade groups argue the Interior Department failed to satisfy procedural requirements and ignored congressional mandates for holding lease sales.
“The law is clear: the department must hold lease sales and provide a justification for significant policy changes,” said Paul Afonso, API’s senior vice president and chief legal officer. “They have yet to meet these requirements in the eight months since instituting a federal leasing pause, which continues to create uncertainty for U.S. natural gas and oil producers.”
The groups, which filed suit in the U.S. District Court for the Western District of Louisiana, say the Mineral Leasing Act requires quarterly onshore lease sales, and the Outer Continental Shelf Lands Act directs the government to pursue “expeditious” development of energy resources offshore.
A Louisiana-based federal district judge already ruled against President Joe Biden in June, granting a preliminary nationwide injunction to end the leasing pause to more than a dozen oil and gas producing states that sued.
Louisiana and other Gulf states filed a motion last week to Terry Doughty of the U.S. District Court for the Western District of Louisiana to compel compliance with his ruling that Biden’s leasing pause is illegal and must end.
But the Interior Department has not resumed lease sales.
Interior Secretary Deb Haaland has said Interior “is complying with the court order,” but “it’s not a switch you can turn on,” a response that has drawn objections from members of both parties, who are prodding the Biden administration to resume oil and gas lease sales.
Biden signed an executive order in January imposing an indefinite pause on issuing new oil and gas leases on federal lands and waters, a step toward fulfilling a major campaign promise as part of his aggressive agenda to address climate change.
The pause was met with fierce backlash from the fossil fuel industry and states, including Democratic-led ones, that depend on oil and gas production revenue to fund their budgets.
It has not stopped companies from obtaining permits to drill and develop oil and gas on existing leases. Interior Department officials have stressed that U.S. companies continue to develop oil and gas on federal lands during the pause on new leasing and that states and the federal government are not losing significant amounts of revenue.
Interior continues approving permits to drill for oil and gas on existing public lands leases at the highest rate since George W. Bush’s administration.
The department is expected to release a report later this summer on whether it intends to make the indefinite pause on oil and gas leasing permanent or propose reforms to raise costs and impose stricter regulation on oil and gas development on public lands and waters instead.
Mysterious bacteria found in the Arctic can break down oil and diesel
Maeve Campbell, Euro News Green, August 16, 2021
Ocean bacteria in the Canadian Arctic is capable of biodegrading diesel and oil, according to a new study.
Scientists at the University of Calgary found “unexpected” microbes in the icy waters of the Arctic which they say would respond well to an oil spill in the region. The study’s findings were published in the Applied and Environmental Microbiology journal.
Paraperlucidibaca, Cycloclasticus, and Zhongshania, types of bacteria which live in the Labrador Sea, are able to break down the fossil fuels present. They clear up the ocean, ensuring that it remains a vital resource for surrounding Indigenous communities.
Coauthor of the study Dr. Casey Hubert, an Associate Professor of Geomicrobiology at the university, explains that it was one of his students who alerted him to the problem.
Sean Murphy, who grew up in the region, instigated the project after recognizing the complex relationship the people of Newfoundland and Labrador had with offshore oil. It brought them benefits in the form of fuel, but the community had been deeply troubled by the Deepwater Horizon oil spill in 2010.
As a result, Murphy focused his master’s research on the Labrador Sea to “help inform future oil spill mitigation strategies… at cold temperatures in the region.”
How did scientists conduct the experiment?
In the study, investigators simulated oil spill remediation inside of bottles, by combining mud from the top few centimeters of the Arctic seabed with artificial seawater and either diesel or crude oil.
The experiments were performed at 4°C, to approximate the temperature in the Labrador Sea, and were left for several weeks to see what would happen.
Our simulations demonstrated that naturally occurring oil-degrading bacteria in the ocean represent nature’s first responders to an oil spill.
“Our simulations demonstrated that naturally occurring oil-degrading bacteria in the ocean represent nature’s first responders to an oil spill,” says Dr. Hubert.
Could the discovery help inform future oil spill strategies?
Essentially all pre-spill strategies, whether in the Arctic or elsewhere, identify prevention as the most important factor.
But response plans in the event of an emergency are equally as important, as was seen in March this year when the Israeli government was “not prepared” for a massive oil spill cleanup on its shores. A spill in Mauritius in 2020 also threatened the security of the island nation, leading to citizens resorting to using hair and stockings to limit the damage on beaches.
The impetus behind this Canadian Arctic study was that these “permanently cold waters” are seeing increasing industrial activity related to maritime shipping and offshore oil and gas.
So, the discovery of this fossil fuel-eating bacteria is crucial if we are to keep the region and its people safe in the future.
The Labrador coast is important for Indigenous peoples who rely on the ocean for food.
The Labrador coast is important for Indigenous peoples who rely on the ocean for food. Unlike at lower latitudes, there has been a lack of research on bioremediation this far north – until now, adds Dr. Hubert.
“As climate change extends ice-free periods and increasing industrial activity takes place in the Arctic, it is important to understand the ways in which the Arctic marine microbiome will respond if there is an oil or fuel spill,” he continues.
It’s especially significant, as “this region remains vast and remote, such that an oil spill emergency response would be complicated and slow.”
The bacteria located “may represent key players in the response to Arctic marine oil spills,” concludes Hubert.
Saudi Aramco Aims to Raise At Least $17 billion From Gas Pipelines
Pipeline and Gas Journal, August 16, 2021
Saudi Aramco is looking to raise at least $17 billion from the sale of a significant minority stake in its gas pipelines, higher than the $12.4 billion raised from its oil pipeline deal, sources familiar with the matter said on Monday.
Potential bidders including North American private equity and infrastructure funds, as well as state-backed funds in China and South Korea have been approached by Aramco through its advisors before a formal sale process kicks off in the next few weeks, they said.
The deal size may include $3.5 billion of equity and the remainder will be funded by bank debt, one source said, while another source said the transaction size could top $20 billion.
Saudi Arabia is the world’s sixth largest gas market, according to Aramco, whose Master Gas System (MGS) derives value from a range of gas deposits and helps deliver it to consumers.
“The gas deal is about the long-term view of gas utilization and consumption in Saudi Arabia,” said one source familiar with deal, explaining why the gas deal may generate higher proceeds.
The source said many industries will shift to gas under the economic Vision 2030, meaning domestic gas demand will rise.
Aramco is working with JPMorgan and Goldman Sachs on the deal to tap potential buyers, sources have said.
The companies tapped include the ones who took part in the stake sale process for Abu Dhabi National Oil Co’s gas pipelines, which was bought by a consortium of investors including Global Infrastructure Partners (GIP), Brookfield, Singapore sovereign wealth fund GIC and European gas infrastructure owner and operator SNAM .
Aramco, JPMorgan and Goldman declined to comment.
Brookfield and SNAM declined to comment. GIP did not immediately respond to a request for comment.
Other potential bidders showing interest in the Aramco sales process include China’s Silk Road, Chinese state-backed investment fund CNIC Corp, South Korea’s sovereign wealth fund Korean Investment Corp (KIC) and NH Investment & Securities, sources said.
KIC declined to comment, while the other companies did not respond to a Reuters request for comment.
Aramco, similar to Abu Dhabi National Oil Co (ADNOC), used a lease and lease-back agreement to sell a 49% stake of newly formed Aramco Oil Pipelines Co to the buyer and rights to 25 years of tariff payments for oil carried on its pipelines.
Pebble stands firm after 8.1M earthquake
A.J. Roan, North of 60 Mining News, August 13, 2021
Northern Dynasty Minerals Ltd. says the recent 8.1 magnitude earthquake caused substantially less ground movement at the Pebble site than factored in during the designing of the proposed tailings facility for a future mine at this world-class copper project in Southwest Alaska.
“We determined the 8.1M earthquake that occurred last month south of the Alaska Peninsula, about 300 miles from our site, create ground acceleration at Pebble that is 20 – 30 times less than the design earthquakes we’ve evaluated,” said Northern Dynasty President and CEO Ron Thiessen. “To put that into perspective, the 8.1M earthquake recorded July 28 is the largest seismic event in the United States in the past 50 years.”
Northern Dynasty’s 100% owned Alaska subsidiary, Pebble Limited Partnership, has assessed seismic risk at the Pebble site so that proposed tailings embankments and other mine facilities would not fail under even the most severe cases, which are extraordinarily unlikely.
The extreme seismic events modeled to test the stability of proposed tailings embankments and other mine-site facilities at Pebble include:
• a repeat of the 9.2 magnitude megathrust event that occurred in Alaska’s Prince William Sound in 1964 (the second largest seismic event ever recorded).
• An 8.0 magnitude earthquake occurring approximately 50 miles east of the Pebble Project site, similar to but of larger magnitude than the 7.1 magnitude event that occurred north of Anchorage in 2018.
• A 7.5 magnitude event along the entire length of the Lake Clark Fault, including those portions closest to the Pebble site for which no evidence of movement for more than 10,000 years has been detected.
• A 6.5 magnitude event occurring immediately below the proposed Pebble mine site, where no evidence of a fault exists.
“The highest ground acceleration at the Pebble site produced as a result of these potential, extreme seismic events is estimated to be 0.6g (or 60% of the rate of acceleration due to gravity). It is these types of extreme ground movements that our proposed tailings facilities are designed to withstand,” Thiessen explained. “By comparison, the extremely rare 8.1M event recorded last month created ground movement at Pebble of about 0.02 to 0.03g, or 20 – 30 times less than what we have considered.”
Located approximately 200 miles southwest of Anchorage in the Bristol Bay region and just 15 miles north of Lake Illiamna, seismic activity is part and parcel to Alaska as it lays along the edge of the famed plate boundary known as the Ring of Fire, where the Pacific Plate meets many surrounding tectonic plates and is considered the most seismically and volcanically active zone in the world.
“When it comes to engineering and environmental solutions to protect the long-term integrity of downstream water quality and aquatic habitat, our solutions bring modern and technically sound performance standards for American mining,” said Theissen. “We’re proud of it. We continue to believe it is the right approach for this important project in this unique location.”
Oil check is a sticking point for Alaska special session
Becky Bohrer, Associated Press, August 13, 2021
The great guessing game heading into fall used to center on how big a check Alaska residents would get from the state’s oil wealth fund. This year, it’s at zero due to legislative disputes that remain unresolved ahead of a third special session this year.
A budget plan that emerged from House and Senate negotiators in June called for a roughly $1,100 dividend, with money cobbled together from various sources, including a reserve fund that requires three-fourths support in each chamber to access. The vote failed, leaving the dividend at $525, an amount Republican Gov. Mike Dunleavy called a “joke” and vetoed.
The agenda for the special session starting Monday doesn’t include an appropriations bill for a dividend. Dunleavy, who set the agenda, said in an interview with The Associated Press that he wants lawmakers to take up his proposal to restructure the oil wealth fund and place in the state Constitution a new dividend formula. Then, he said, “we can look at other things that need to be looked at.”
Dunleavy spokesperson Jeff Turner has said budget issues, including a dividend, “can be addressed at the appropriate time by adding an appropriation bill” to the agenda.
Senate Finance Committee co-chairman Bert Stedman, a Sitka Republican, sees that approach as an attempt to try to “leverage” the dividend, “and I don’t think the Legislature is going to deal very well with it.”
“Normally, when you have a special session, you work out the details with the leadership teams, and you come up with a rough idea of what the outcome’s going to be and then you have a special session,” he said. “When you don’t do that, your special sessions normally end up with just consuming a lot of people’s time and a lot of state money, and they don’t accomplish anything. And I think that’s what is likely to happen in this special session.”
House Minority Leader Cathy Tilton, a Wasilla Republican, said her caucus would like to see movement on a fiscal solution “before maybe feeling comfortable with moving onto some kind of appropriations bill.” But she said a resolution on a dividend for this year is needed. Alaskans expect a dividend, and ensuring they receive one is a priority, she said.
Senate President Peter Micciche, a Soldotna Republican, said lawmakers and Dunleavy need to work together on a dividend and budget issues. He also said he’s hopeful for progress on a fiscal plan and toward ending the perennial dividend debates.
“I think if I were to say that we must leave special session with 100% of a fiscal plan hammered out and passed, I would be sort of painting an extremely unrealistic picture,” he said.
For years, dividends were calculated using a formula, but in 2016, then-Gov. Bill Walker cut the amount available for checks amid budget deficits. The Alaska Supreme Court later ruled that without a constitutional amendment, the dividend must compete for funding like other programs.
Debate over the check size in recent years has become politically charged and overshadowed other issues.
Dunleavy has gotten support from lawmakers in wanting to resolve the debate, but lawmakers have yet to coalesce behind a specific approach. A working group that includes two members from each legislative caucus has been tasked with making recommendations for a fiscal plan for the special session.
Lawmakers in 2018 began using oil wealth fund earnings, long tapped to pay dividends, to also help pay for government, and they sought to limit what can be withdrawn each year for those purposes. Dunleavy is proposing rolling the earnings into the fund’s principal and calling for a limited withdrawal — one that’s split 50/50 between dividends and government.
He outlined the approach in May, after arguing for years that the longstanding dividend formula should be followed until it’s changed. Proposed constitutional amendments require two-thirds support in each the House and Senate to advance to the ballot, and Dunleavy wants a vote on his plan.
“We’re going to do our best to present as many options as possible to try and get them to bring something to the floor so the people of Alaska at least can see where people stand on the issues — but more importantly to try and solve them,” he said.
Revenue Commissioner Lucinda Mahoney presented the working group with a list of revenue measures she said Dunleavy would support if lawmakers supported them, including a sales tax, legalized gambling and raising the motor fuels tax.
Dunleavy told the AP that he would consider possible revenue if they were part of a package that included a “meaningful” constitutional spending limit.
Senate Minority Leader Tom Begich, an Anchorage Democrat, said he doesn’t “see the will for a 50/50” plan in the Legislature.
Some lawmakers are concerned with the costs, and some don’t think the dividend or a dividend formula should be in the state Constitution.
“I think this session lands us on the shoal that shows that we’re not going to get 50/50 and we’re not going to get 80/20,” Begich said, referring to a proposal that would designate 20% of a draw to dividends.
That would leave lawmakers to work from there later this year or during the next regular session in January, he said.
Dunleavy, who has spent much of his term under threat of a recall effort initially fueled by public anger over proposed budget cuts, filed a letter of intent to seek reelection Friday.
Climate change becomes key theme in Q2 corporate earning calls
Hope King, Axios, August 16, 2021
Corporate action to tackle climate change ranked among the top themes on S&P 500 companies’ Q2 earnings calls.
The big picture: “For corporates, meeting ESG demands from investors is becoming an increasingly formidable task, requiring sustainability reports and additional ESG headcount,” Goldman Sachs strategist David Kostin writes.
- Investors are continuing to ask for ESG-themed investment products, including green bonds, they add.
Goldman highlighted a batch of executive comments, each speaking about their respective companies’ goals to improve the sustainability of their operations.
- “Our strategy aligns with the world’s growing need for affordable, reliable and cleaner energy that is necessary for human prosperity and global economic development. … [We] support the aim of the Paris Agreement and a global ambition to achieve net-zero emissions by 2050,” a Hess executive said.
- “We’re moving forward with investments in energy reduction, increased utilization of renewable energy and evaluation of new low-carbon technologies,” said an exec at LyondellBasell Industries.
Among the standout remarks were those who cited specific actions and results.
- Qualcomm: “As part of our ongoing ESG efforts, we recently started purchasing 100% renewable solar energy for our San Diego headquarters.”
- Interpublic Group of Companies: “[We] announced an action plan that consists of 3 climate roles: committing to set a science-based target; sourcing 100% renewable electricity by 2030; and joining The Climate Pledge, co-founded by Amazon in Global Optimism.”
- Caterpillar: “Our 2020 sustainability report highlights 7 new environmental, social and governance goals we’ve set to achieve by 2030. … One of these goals is to ensure that 100% of Caterpillar’s new products through 2030 will be more sustainable than the previous generation.”
Go deeper: How climate change kills the future