Today’s Key Takeaways: Biden admits oil & gas will be around for years. India to add oil and gas. Asia, not Europe, will drive long-term LNG demand. Permit for lithium mine affirmed. Sullivan asks AK legislature to pass resolution of support for Willow.
NEWS OF THE DAY:
Biden Goes Off-Script to Concede Oil Demand Will Last for Years
Jennifer A. Dlouhy, Ari Natter, Bloomberg News, February 7, 2023
President Joe Biden went off-script during an otherwise climate-friendly State of the Union speech Tuesday night to acknowledge an uncomfortable reality for the White House: “We’re still going to need oil and gas for a while.”
The unusual assessment from the president, slipped twice into his address and not included in prepared remarks circulated beforehand, lays bare the conflict between his administration’s climate and economic goals. Biden has repeatedly exhorted oil companies to invest in pumping more crude even as he seeks to end its use.
Biden’s speech also underscored the still-simmering tension between Biden and US oil companies. He once again blasted them for using record profits to buy back stock — “rewarding their CEOs and shareholders” — instead of plowing that money into more drilling to increase production and “keep gas prices down.”
Biden said oil executives he’d pressed on the issue had told him bluntly: “We’re afraid you’re going to shut down all of the oil wells and all the oil refineries anyway so why should we invest in them?”
Biden offered his answer Tuesday night. “We’re going to need oil for at least another decade,” he said, quickly adding, “and beyond that,” after boos from some lawmakers.
Biden’s comments offered only partial comfort to some oil industry representatives who have insisted they need more encouraging signals from Washington about the enduring need for fossil fuels in order to lure more capital and drive investments that take decades to pay off.
“The president is right that Americans and the world will continue to need affordable, reliable energy for decades to come,” Ben Marter, vice president of the industry’s top lobbying group, the American Petroleum Institute, said by email. “So why attack the industry working day and night to provide it?”
Biden called on Congress to quadruple a new tax on corporate stock buybacks, saying that would encourage more long-term investments. The push dovetails with California Governor Gavin Newsom’s proposal to slap a windfall-profits tax on refineries.
By continuing “to politicize market fundamentals and single out stock buyback programs,” the president is overlooking how his “own policies discourage the reinvestment of earnings back into the US liquid fuel supply chain,” said Chet Thompson, president of the American Fuel and Petrochemical Manufacturers trade group. It’s “counterproductive” to explore new taxes “at a time when more supply is what’s needed.”
India will add oil and gas while it chases net-zero — Modi
Energywire, February 7, 2023
India, the third-largest greenhouse gas emitter, is planning for an expansion of its oil and gas sectors even as it aims to hit net zero by 2070.
The nation intends to increase oil refining volumes to 450 million tons a year by the end of decade, from about 250 million tons, and will also boost liquefied natural gas import capacity, Prime Minister Narendra Modi said Monday.
“Energy is a big factor in fulfilling the aspirations of Indians,” Modi said, opening a three-day energy forum in Bengaluru that’ll draw 30,000 delegates, including officials and executives from Saudi Arabia, Russia, the U.S. and China. “From industries to offices, factories to homes, India’s energy demand continues to rise.”
India currently holds the Group of 20 presidency and intends to keep a focus on energy security and access to electricity in the developing world alongside efforts to curb greenhouse gas emissions. The nation last week defended its continued reliance on coal, pointing to moves by some European nations last year to lift consumption of the fuel as they shunned Russian gas.
Natural gas should account for 15 percent of India’s electricity generation by 2030 from about 6 percent now, while the country’s share of global oil demand will ultimately more than double to 11 percent, Modi told the conference.
Modi was scheduled to hold talks at the Bengaluru event with key energy sector executives as India seeks further investments in refineries, petrochemical plants and LNG terminals, along with the development of its clean energy sector.
India will launch an international biofuels alliance with nations including the United States and Brazil to promote use of the lower-emissions energy source. Modi also offered backing to a new initiative to commercialize solar cooking stoves, a move aimed at curbing the burning of biomass for food preparation.
US looks to Asia for long-term LNG demand
Naomi Klinge, Upstream, February 8, 2023
Growing LNG capacity in the US requires long-term deals, rather than short-term demand in Europe
During Europe’s energy crisis, the US stepped up its supply of liquefied natural gas to the region to replace Russian fossil fuels.
However, looking ahead to growth of the US LNG market in the coming years, Asia is likely to be the biggest supporter in the long term.
The US has been an ideal last-minute LNG supplier to Europe given that most of its LNG cargoes are free-on-board, meaning they don’t have a destination clause built into the contract. Cargoes that were set for Asia were able to be diverted to Europe instead.
“That means those volumes can go to whatever market they deem fit, or whatever market can pay the highest price. That’s why we see the highest flexibility coming from the US and saving Europe [in 2022],” Emily McClain, vice president of North America gas markets at Rystad Energy told Upstream.
Despite the push for US LNG to aid Europe’s energy crisis, the burgeoning US liquefaction capacity is seeing long-term contracts come out of Asia, not Europe.
“Trends from a long-term perspective haven’t changed with the invasion of Russia and Ukraine, we still see Asia is going to be the primary seeker for LNG, then secondary to that is Europe,” McClain said.
Judge largely affirms federal permit for Thacker Pass lithium mine near Winnemucca
Daniel Rothberg, The Nevada Independent, February 7, 2023
A U.S. district court judge Monday upheld the federal government’s decision to approve the Thacker Pass lithium mine north of Winnemucca after a permit issued in 2020 faced three legal challenges from conservationists, Indigenous communities and a local rancher.
Judge Miranda M. Du found the U.S. Bureau of Land Management generally did not err in approving the permit for the massive lithium mine but asked the agency to revisit one section of the environmental analysis upon which the decision was based. The ruling could pave the way for the mine to proceed and does not undo the federal permitting as challengers hoped.
The ruling, however, requires the company and the federal agency to validate mining claims for storing waste rock on federal public land, what a mining watchdog described as a “strict test.” Under that order, the agency must assess mining claims that Lithium Americas, the company developing the mine, holds in accordance with an 1872 law governing mining on public lands.
At the center of the closely-watched court battle was the future of a geologic deposit described as the largest known lithium source in North America. Policymakers and politicians have touted the hard-rock mine as an essential piece of the domestic supply chain. Last week, automaker General Motors announced a $650 million investment to bring the Thacker Pass mine online.
But the mine has come to symbolize the tensions — and costs — of an energy transition that will require more mining for minerals needed in technologies including batteries and electric vehicles. Thacker Pass faced pushback from local residents and tribal governments with deep connections to the land and environmental organizations who cited the impact a mine project would have on wildlife and the ecosystem at the base of the Montana Mountains.
Sen. Sullivan stresses economic promise of Willow drilling project and military spending in annual address to Legislature
Liz Ruskin, Alaska Public Media, February 8, 2023
U.S. Sen. Dan Sullivan on Tuesday urged the Alaska Legislature to use its collective power to support the Willow project, ConocoPhillips’ big Arctic drilling proposal.
“Close to 200,000 barrels a day. 17 billion in revenues for the feds, for the state, for the North Slope Borough,” he said, reciting the predicted results of the project. “Highest environmental standards and lowest greenhouse gas emissions of any major project like this in the world, and broad-based support from so many Alaskans, particularly the Alaska Native leaders and Alaska Native citizens who live in the region.”
But, Sullivan said, the battle over the project will be “ferocious” over the next month, while the Biden administration decides whether to greenlight the proposal.
That’s because environmental advocates fiercely oppose the project. So do the city and tribe of Nuiqsut, the nearest village. They say the project will endanger wildlife and a subsistence lifestyle while accelerating climate change.
Sullivan, in his annual address to the Alaska Legislature, asked state lawmakers to pass a resolution supporting Willow.