OIL
Oil Surges After OPEC+ Agrees to Keep Oil Output Unchanged
Andres Guerra Luz and Alex Longley, Yahoo Finance!, March 4, 2021
Oil surged to the highest in more than a year after the OPEC+ alliance surprised traders with its decision to keep production unchanged, signaling the potential of an even tighter market next month.
Futures climbed more than 5% in New York on Thursday to the highest intraday level since January 2020, while global benchmark Brent also jumped. The OPEC+ alliance agreed to keep oil output unchanged in April and Saudi Arabia will also maintain its 1 million barrel-a-day voluntary production cut next month, according to delegates.
Crude has rebounded this year after the group and its allies slashed output to drive a rebalancing of the market following last year’s virus-induced slump. The aggressive supply management has helped to drain inventories, while worldwide demand is recovering with the roll-out of Covid-19 vaccines.
Read more: OPEC+ Silence Has Oil Market Second-Guessing Next Move
Oil started the day strongly amid gathering tensions in the Middle East after Yemen’s Houthi rebels claimed attacks on Saudi targets. The rebels, who are backed by Iran, said they bombed an airbase in Saudi Arabia’s southwest with a drone and hit a Saudi Aramco crude facility in Jeddah. Aramco and Saudi officials didn’t immediately respond to requests for comment.
GAS
Enstar inks supply deal with new Inlet entrant
Elwood Brehmer, Alaska Journal of Commerce, March 3, 2021
Prices for long-term supplies of natural gas from Cook Inlet remain high relative to much of the country but are inching downward based on the latest in a series of recently signed public contracts.
Enstar Natural Gas Co. filed a contract with the Regulatory Commission of Alaska containing a starting price of $7.30 per thousand cubic feet, or mcf, of natural gas with Vision Resources LLC, the new owners of the North Fork Unit on the Kenai Peninsula. The RCA reviews and rules on supply contracts for regulated utilities.
While the five-year gas sale and purchase agreement covers nearly 3 percent — about 1 billion cubic feet, or bcf, of gas per year — of the Southcentral gas utility’s annual demand, the starting price is also 3 percent less than the initial rate of $7.55 per mcf Enstar agreed to in a contract for the vast majority of its gas needs last May.
The starting price in the Enstar-Hilcorp deal, which amended and extended an existing contract, is also 7 percent less than the utility and producer had originally agreed to in their prior contract.
Hilcorp Alaska, the dominant gas producer in Cook Inlet, also inked a contract approved by the Fairbanks area Interior Gas Utility in mid-January with a starting gas price of $7.60 per mcf. Though the price is higher than in the comparable Enstar-Vision Resources deal, also for roughly 1 bcf per year, it is less than the $7.72 IGU had previously been paying Hilcorp and IGU leaders also note the price includes Hilcorp’s willingness to match gas supply to the small utility’s highly seasonal demand swings.
MINING
Review: Rare earth independence a decade off
Joe Deaux, Stephen Lee, Bloomberg News, March 3, 2021
President Joe Biden’s ambition to make the U.S. less dependent on other nations for rare earths and minerals critical to the clean energy transition will take years to accomplish.
A review of the U.S. critical minerals and rare earths supply chain that the president ordered this week is likely to show that even with sweeping changes the nation is at least a decade from becoming self sufficient.
That will mean turning to countries such as Canada, which has the largest number of rare earth projects in the world, according to Gareth Hatch, managing director of Strategic Materials Advisors Ltd.
“There’s far greater expertise in rare earths and critical minerals in Canada and Australia than there is in the U.S.,” said Hatch, who is also the CEO of Innovation Metals Corp., a subsidiary of Ucore Rare Metals, which has a rare-earth project in the U.S. “But the downstream markets are in the U.S., so it’s in the interest of all three countries to work together with the U.S. being the ultimate end market.”
America lacks capacity to produce enough permanent magnets, needed to run the engines of everything from missile guidance systems to the wind turbines and electric cars at the center of the clean energy transition. Miners say it takes so long to get federal and state environmental permits, and that the process is so unpredictable and open-ended, that they struggle to plan new mines.
POLITICS
Kaktovik tribe says Biden didn’t reach out before agreement with Canada over caribou in Arctic refuge
Wesley Early, Alaska’s Energy Desk, March 3, 2021
The Native Village of Kaktovik is speaking out against the Biden administration, claiming their tribe wasn’t consulted about an agreement President Biden made with Canadian Prime Minister Justin Trudeau regarding protections of the Porcupine caribou herd in the Arctic National Wildlife Refuge.
Last week, in a joint statement with Prime Minister Justin Trudeau, President Joe Biden pledged to “help safeguard the Porcupine caribou herd calving grounds that are invaluable to the Gwich’in and Inuvialuit peoples’ culture and subsistence.”
The herd’s migration takes them through both Canada and the United States.
It’s the latest in a series of moves from the Biden administration to stop oil drilling in the Arctic National Wildlife Refuge. Shortly after taking office, Biden placed a halt on lease sales in the refuge.
CLIMATE CHANGE
The oil industry is getting greener faster as U.S. policy shifts to climate change
Patti Domm, CNBC, March 3, 2021
Key Points
- The U.S. energy industry is moving more aggressively to reduce its carbon footprint, spurred in part by a new U.S. focus on climate and also ESG investing.
- Energy CEOs have been discussing their plans at the annual CERAWeek by IHS Markit energy conference, held virtually this year.
The greening of the American oil industry has gone into overdrive.
Dan Yergin, IHS Markit vice chairman, said it’s an important turning point for the fossil fuel sector, which has been anticipating big changes with President Joe Biden’s climate-focused, clean energy policies.
“The oil and gas industry is calibrating itself to what has become the new benchmark — net zero carbon by 2050. There’s a lot of variation in strategies and thinking about what will be the new map to get there,” said Yergin. “But the big cross-cutting themes that jump out this week are hydrogen, carbon capture, innovation — and the need for large companies with engineering capabilities that can operate at scale — which is where the oil and gas industry happens to be.”