Biden Backs off Ban. AIDEA & ANWR. AK Production, Price Increase Beat Forecast.

In News by wp_sysadmin


Interior sec’y says no plan ‘right now’ to ban new oil, gas leasing
Valerie Volcovici, Reuters, June 23, 2021

U.S. Interior Secretary Deb Haaland on Wednesday told a congressional hearing that there is no plan to permanently ban new oil and gas drilling on federal land but her agency will soon release a report that will assess the future of the federal oil and gas leasing program. The Biden administration paused the government’s oil and gas leasing auctions on federal acres in January pending a review that is expected to be completed in the coming weeks. The move was part of a sweeping plan to rein in fossil-fuel extraction and combat the effects of climate change.

Republican and some Democratic lawmakers in oil-reliant states have raised concerns that the pause would lead to a permanent ban, depriving those states of revenue.

“I don’t think there is a plan right now for a permanent ban but … the review will come out early summer and we will assess the fossil fuel programs at that time,” Haaland told a House natural resources subcommittee.

She said oil and gas production “will continue well into the future” but said the administration wants “to make sure American taxpayers are getting a good return on their investment.”

Last week, a federal judge in Louisiana granted a preliminary injunction to Louisiana and 12 other states that sued Democratic President Joe Biden and the Interior Department over the freeze on new drilling auctions. Louisiana is a major hub for offshore oil and gas production.

Republican Congressman Garret Graves of Louisiana asked Haaland at the hearing whether the Interior Department has taken any steps to resume new leasing activity in light of that court decision, including publishing a new lease sale in the Federal Register.

Haaland said the Interior Department has not published details of a new lease sale in the Federal Register and said her agency and the Justice Department were reviewing the decision.

Separately, Republican Congressman Pete Stauber of Minnesota asked Haaland why the Biden administration plans to rely on ally countries for the bulk of the metals needed to build electric vehicles. Reuters first reported the strategy last month.

Stauber’s district includes Antofagasta Plc’s proposed Twin Metals copper mine, which is under regulatory review by the Interior and Agriculture departments. The Interior Department has also taken steps that impede U.S. critical minerals projects from Rio Tinto Ltd, ioneer Ltd and others.

Haaland did not answer Stauber’s question directly but said that Biden supports U.S. energy independence.

“We agree that ensuring the availability of critical minerals and the future of our energy needs is very important to Americans,” she said.


Alaska agency challenges Biden over ANWR oil freeze
Heather Richards, E&E News reporter, June 24, 2021

A state development agency in Alaska wants to map oil reserves in the Arctic National Wildlife Refuge, moving toward a face-off with an administration that has expressly forbid searching for crude in the remote coastal region.

The Alaska Industrial Development and Export Authority board voted yesterday to put the Biden administration freeze to the test by authorizing $1.5 million to conduct pre-permitting activity for a 3D seismic surveying proposal to map hydrocarbon potential beneath the refuge.

Board Chair J. Dana Pruhs called it a “first step” toward determining what crude oil reserves lie beneath the leases AIDEA purchased in January and dismissed potential opposition from the White House.

“I don’t think the state should give up any of its rights regardless of who’s in the executive offices in Washington, D.C.,” he said.

But if AIDEA wants to perform seismic surveying, it may run into a federal wall. The Biden administration has made no secret of its opposition to any oil activity in the refuge.

A spokesman for the Fish and Wildlife Service pointed to Interior Secretary Deb Haaland’s order this month halting any oil and gas activities in the coastal plain (E&E News PM, June 1).

“[It] indicates that the Bureau of Land Management and the U.S. Fish and Wildlife Service will not process any pending or future applications for activities such as leasing, exploration, development, production or transportation related to the Coastal Plain Oil and Gas Leasing Program in the Arctic National Wildlife Refuge,” said Laury Marshall, a FWS spokesperson, in an email.

The secretarial order mandated a reevaluation of the oil program to correct any deficiencies in the environmental analysis conducted by the Trump administration, which finalized the ANWR drilling program and sold leases just before leaving office.

Board members of AIDEA — which is charged with financing industrial activity in the state through funds managed independently from the state — said yesterday their ultimate intention was for industry to develop the refuge leases.

AIDEA officials recently told S&P Global Inc. that the authority was preparing for a multiyear seismic program to scout for oil reserves, beginning as early as this winter.

The agency’s $1.5 million sum for seismic permitting is a small slice of the $20 million it set aside last year to advance oil and gas development in the refuge, a longtime aim of the state of Alaska, one of the most oil- and gas-dependent states in the nation.

The organization spent nearly $13 million securing several ANWR leases in the first-ever sale of drilling rights in January, according to AIDEA public documents.

A state development organization participating in a federal oil sale was unprecedented. But the stakes were high for pro-oil Alaska to ensure rights were secured in that first sale. Drilling proponents feared that a future Congress could overturn the oil program, or a new president could try to bar activity.

Additionally, at the time oil prices were low and industry interest in bidding on the leases was expected to be anemic.

Large corporations like BP PLC, as well as independents like Anadarko Petroleum Corp. or Marathon Oil Corp., have exited Alaska oil fields, where development is more expensive than in other parts of the country. Meanwhile, public pressure has pushed the largest banks in the U.S. to bar direct funding for Arctic oil development, sometimes specifically banning financing for ANWR oil projects.

The Republican-majority Congress in 2017 created the federal oil program in the refuge, overturning a decades long successful campaign against oil exploration there by Democrats and conservation organizations. The program requires two oil and gas lease sales in the coastal plain.

The Trump administration advanced the first lease sale in January, conveying leases to high bidders — there were two other participants in the sale in addition to AIDEA — shortly before leaving office.

The Biden administration then immediately froze oil and gas activity, but its long-term plan for the refuge is unclear.

Earlier this year, the administration dismissed a push from an Alaska Native corporation to conduct seismic in the refuge. Federal officials ran out the clock on the environmental review for the proposal (Greenwire, March 17).

Arctic champions argue seismic surveys leave lasting scars on the sensitive tundra and the heavy equipment could disrupt or kill denning polar bears and their cubs.

Interior did not provide an update on the status of that seismic application when asked by E&E News.

The AIDEA board meeting yesterday underscored the simmering controversy over development in the refuge, even in oil-friendly Alaska.

During public comments, groups including the Alaska Resource Development Council and the Associated General Contractors of Alaska expressed support for furthering oil development in the refuge to generate jobs and other economic activity.

Others dissented, noting the refuge’s unique cultural and environmental sensitivity.

Nauri Toler, an Iñupiaq community organizer for Native Movement, said support for ANWR oil drilling in the Arctic is overblown and opposition from residents of the small community within the refuge has been “stifled.”

“You are hearing from corporations that financially benefit from this. I think it’s important to hear from them, but not just from them,” she said.

“I urge you to read the room,” Toler said. “The cards are stacked against this project.”

Board member Bernie Karl said he respected the critics and considered himself “the most environmental puke you’ve ever met,” but he insisted oil was a necessity of modern life.

“There isn’t a better place to do it than where the oil is at, and the oil happens to be there,” he said.


Reuters Events: Power CEOs defend role for natgas in shift to climate-friendly grid
Valeri Volcovici, Isla Binnie, Ross Kerber, Reuters, June 24, 2021

Power company executives argued during a global energy conference this week that natural gas will have a long-lasting role in the transition to a climate-friendly global economy, even as environmental groups, progressive politicians, and intergovernmental organizations contend fossil fuels of all types must be phased out fast to stop global warming. 

The heads of U.S. utilities Duke Energy Corp and Edison International, Spanish multinational Iberdrola SA, power equipment and technology provider GE Gas Power, and engineering firm John Wood Group PLC, told the “Reuters Event: Global Energy Transition” conference this week that natural gas will be needed for decades to come.

They said its near-term role would be to continue to replace its dirtier rival coal, and that its longer-term role would be as a complement to renewables, switching on during periods when emissions-free sources, like solar and wind energy, are unavailable.

“As we look into the future, we see it transitioning away from being a baseload, all-the-time, resource to more of a peaking and balancing resource,” said Lynn Good, chief executive of Duke Energy, the largest electric utility in the United States, who estimated natural gas would be part of the energy mix well into the 2040s.

Ignacio Galan, CEO of Iberdrola, agreed: “Natural gas is going to be needed still for a long period of time but not as baseload.”

He predicted that regulators would need to figure out new ways to pay gas-fired power plants to remain on standby, so they are “readily available whenever it is needed.”

Scott Strazik, CEO of GE Gas Power, said he expects gas to be long-term complement to solar and wind power, and that its emissions would eventually be dealt with through carbon capture and sequestration technology, which stores greenhouse gases underground.

“Gas is a force multiplier for growing renewables. It allows us to take advantage of the awesome power of the wind and sun … for the inevitable periods when renewables alone are not able to meet demand,” Strazik said.

Pedro Pizarro, CEO of Edison International which operates in California, said his company believed 6% of wholesale power would still come from natural gas in 2045.

Gas continues to be a bridge fuel, I don’t think you can pull the plug on it overnight,” he said.


The comments clash with some climate advocates who want a clean break from fossil fuels. While gas has long been seen as a relatively clean-burning source of energy, research has been mounting that its use leads to unintended emissions of methane, a powerful greenhouse gas, leading environmental groups and some local governments to push for anti-gas regulation.

The International Energy Agency, an intergovernmental group, meanwhile, issued a report last month that said reaching net-zero emissions by 2050 would require an end to all fossil fuel investments, including for gas, and that the world’s electricity should be made up of a combination of renewables and nuclear power by that point.

U.S. President Joe Biden wants utilities to achieve net zero emissions in power plants by 2035. And in Europe, the European Commission has proposed rules to restrict funding for natural gas projects because of the risk they pose to the bloc’s climate goals to decarbonize by 2050.

Robin Watson, CEO of consulting and engineering company John Wood Group, told the Reuters conference that he believed funding of existing gas assets should be optimized even as more money is funneled to building more sustainable future sources.

“To maintain energy security, which still underpins our quality of life, we need to accept and shape a role for hydrocarbons that is still compatible with our net-zero ambitions. This is a pragmatic and important compromise, not a cop-out,” Watson said.

Scotland-based Wood’s business lines include work in both renewable energy and the oil and gas and chemical sectors.


Russia prepares to hit metals firms with $2.3b in export taxes
Mining.Com, June 24, 2021

Russia is preparing new export taxes for steel products, nickel, aluminum, and copper which will cost their producers $2.3 billion between Aug. 1 and December 31, its officials told a government meeting on Thursday.

Moscow wants to protect its defence and construction industries from further growth in raw materials costs as prices for metals rise at a global level.Top of Form

“Our economy is not ready for the kind of avalanche-like shock transfer of global prices to the domestic market that we have seen over the past year,” First Deputy Prime Minister Andrei Belousov said.

“The increase in domestic prices for certain metals ranged from 60% to 100%.”

Moscow will use the August to December period, while the extra taxes are in place, to prepare a permanent mechanism to “accumulate part of the profits from these super favorable market conditions”, the economy minister Maxim Reshetnikov said.

Taxing ferrous metals such as steel will bring in 114-billion roubles ($1.6 billion), and base metals such as nickel and aluminum 50-billion roubles, Belousov said, adding that that represents 20%-25% of the “excessive income” firms will get from a favorable market.

He said he believed the size of metals exports from Russia would remain unaffected by the tax.

The expected tax take is above Belousov’s previous estimate. He said in May that Russian metals producers could face a demand to pay 100 -million roubles in additional tax to the government for what he termed ‘screwing the state’.

Russia’s Nornickel, the world’s largest producer of refined nickel, and Rusal, the world’s largest aluminum producer outside China, as well as the main steel producers, did not reply to a Reuters request for comment.


North Slope crude production outpaces state forecast as prices improve
Elwood Brehmer, Alaska Journal of Commerce, June 24, 2021

Improving oil prices and a little better than expected North Slope production are bits of good news for Alaska’s budget situation, but everything is relative when compared against the worst of 2020.

The price for Alaska North Slope crude has been on a consistent upward trend in recent weeks and closed June 22 at $74.64 per barrel, according to state Revenue Department figures, which is far greater than the department’s average price forecast of $53.05 for state fiscal year 2021 that ends June 30.

However, the forecast, made in March, is very close to the actual yearlong average North Slope price of $53.64 per barrel. When releasing the updated forecast in March, the state estimated the better price per barrel would result in an additional $322 million in unrestricted General Fund revenue for the current fiscal year.

Oil market analysts largely believe prices will remain strong — they are currently as high as they’ve been since fall 2018 — as global demand continues to recover from the pandemic.

On the production side of the equation, actual North Slope production of 487,368 barrels per day has outpaced the spring forecast compiled by the Department of Natural Resources by 5,391 barrels per day, which adds up to nearly 2 million barrels over the course of the year.

Division of Oil and Gas spokesman Sean Clifton noted via email that the official forecast figures are the mean in a production forecast range and the modest increase in production above the mean forecast is still well within the broader forecast range.

Clifton wrote that while it’s possible the operators could be responding to improved prices, it’s not likely given the more methodical approach to North Slope oil development as compared to the more agile shale operations across much of the Lower 48.

The average daily production for most of fiscal year 2021 is also a 2.5 percent increase over 2020, when production averaged just less than 475,000 barrels per day after ConocoPhillips curtailed much of its North Slope production during the worst of the pandemic-induced oil price collapse.

The to-date 2021 production of 487,368 barrels per day is still a decline of nearly 12,000 barrels per day from 2019, when North Slope production averaged approximately 499,100 barrels per day.

All of the recent-year figures mark the lowest levels of North Slope production since startup of the Trans-Alaska Pipeline System in 1977, according to state production records.

Department of Natural Resources officials believe North Slope production will bottom out next year at roughly 460,000 barrels per day before new projects start to bring new oil online and starts a steady increase back to more than 565,000 barrels per day by 2030, according to the spring forecast.


Startup that makes homes climate-friendly raises $16 million
Andrew Freedman, Ben Geman, Axios, June 24, 2021

Sealed, a startup that helps homeowners overcome cost barriers to efficiency upgrades and electrification, just raised $16 million to fuel its expansion into more states.

Why it matters: Many important climate tools rely on the far wider deployment of well-known methods and concepts — in this case upgrading homes to waste less energy.

Homes account for an estimated 20% of U.S. carbon emissions, and they can be lowered by addressing leaks and installing modern equipment.

Driving the news: The New York-based company raised the Series B funding from investors including the real estate-focused VC firm Fifth Wall and Robert Downey Jr.’s FootPrint Coalition Ventures.

How it works: Sealed assesses homes’ energy profiles, drafts upgrade plans and oversees them.

  • It matches customers with contractors for services like better insulation and sealing, modernizing heating and cooling, and changing from oil heaters and boilers to electric heat — a way to cut emissions as grids get cleaner.
  • They cover upfront costs, track performance and structure repayment around how much energy is actually saved — the company vows that if energy use isn’t reduced, it doesn’t get paid.

The big picture: Sealed said it has now raised $33 million and has partnerships with all the major New York State power companies including Con Edison.

The company said the latest fundraise will help it expand beyond New York, starting with New Jersey and Connecticut, with launches in additional markets, eyed over the next year.

What they’re saying: “Sealed is a company that’s on a mission to take homes off of fossil fuels. And we’re doing that by trying to modernize home heating and cooling,” CEO and co-founder Lauren Salz tells Axios.

  • “What Sealed is doing is lowering the barriers to doing it by making it as easy and affordable as possible,” she said.
  • Salz also said: “We’ve created technology that is very accurate at predicting people’s future energy usage based on the improvements that they’re going to make. And that’s what enables us to have this unique financing product.”

The intrigue: A big part of the pitch is to enhance comfort and value, not simply appeals to the planet or lowering energy bills, and Salz said this helps Sealed position itself.

  • “Traditionally…the value of the improvements has been undersold by just focusing on the planet or energy savings,” she said.
  • The proposition “allows us to capture a much bigger portion of the market.”