Biden’s Hydrogen Bombshell. Attracting More Investment in Cook Inlet.

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Today’s Key Takeaways:  Filling Alaska’s gas gap. Saudi’s only option. Gas grab  riles Europeans. China hits America where it hurts. Term limits in Alaska?


With shortfall looming, report outlines ways to fill Alaska’s gas gaps
Sabine Poux, KDLL, July 3, 2023

More than a year after Cook Inlet’s largest oil and gas producer warned of a looming natural gas shortfall, consultants released a report last week detailing possible ways to fill in the gas gap after 2027, from natural gas imports in the short term and a pipeline down from the North Slope in the longer term.

Most of the options outlined in the report will come at a higher price tag than what utilities get for Cook Inlet gas today. But with the sun setting on the basin’s gas producing lifespan, they won’t have much choice as they look for new ways to meet demand.

“The bottom line is, we’re at a point here in our state’s history [when] we have the opportunity to develop a long-term plan that sets up future generations for success,” said John Sims, president of natural gas utility Enstar, at a hearing Wednesday. “And there is no doubt that it’s going to take all of us working together to make that happen.”

Enstar is part of a working group of Alaska utilities from Homer to Fairbanks that get the vast majority of their power supply from Cook Inlet natural gas.

That available supply is running out. Last year, Cook Inlet’s primary producer, Hilcorp, said it couldn’t guarantee future gas contracts with utilities. And now, despite decades of warning and previous close calls, demand for gas could outstrip supply in as few as four years, according to the state. Homer Electric Association has the earliest expiring contract with Hilcorp, in 2024.

After Hilcorp’s announcement, utilities started meeting to talk about possible steps forward and commissioned a report from Berkeley Research Group. Project Manager Lieza Wilcox presented the report to the Regulatory Commission of Alaska Wednesday, following hours of testimony from Aniak residents about spiking power prices there.

Wilcox told regulators she’s not as concerned about the longterm picture for utilities, since she thinks Alaska could import liquified natural gas at a reasonable price from the world market.

“But it’s the short to medium term that I think we’re all concerned about,” she said.

Wilcox said utilities will need to find new sources of gas from a mix of places.

She said the first option would be to attract more investment in Cook Inlet. But with little interest there from producers, that option won’t satisfy long-term needs.



Cut Extension Was Saudi Arabia’s Only Option
Andreas Exarheas, Rigzone, July 5, 2023

Saudi Arabia’s only option was to extend voluntary cuts into August given weakness in oil prices seen since they were first announced in early June.

That’s what Joseph Gatdula, the Head of Oil and Gas at BMI, a Fitch Solutions company, told Rigzone, adding that a reduction or roll-back in the cuts would have been premature and likely would have had strong downside impacts to prices, “as bearish sentiment is dominating price action.”

“Sentiment driven bearish is keeping prices from rising despite the broad consensus for tighter markets in the months ahead,” Gatdula said.

The BMI Head of Oil and Gas also outlined that Russia’s continuation of a 500,000 barrel per day cut is likely to do little to impact physical trade, “as our estimates have less than half of the pledged cuts being implemented so far”.

“Our view is that Russia will not meet these cut targets, instead focusing on maximizing output and exports to maintain state revenue and preserve recent gains in Asian market share,” Gatdula said.

“This will likely increase behind the scenes tensions between key OPEC members, though the outward facing stance will remain as a united OPEC+ response to market conditions,” he added.

“If the tensions become more public, it could pressurize the relationship between Russian and Saudi Arabia, adding uncertainty to the supply outlook and prices,” Gatdula warned.


Biden’s hydrogen bombshell leaves Europe in the dust
 Gabriel Gavin, Ben Lefebvre, Politico, July 5, 2023

European leaders have devoted tens of billions of dollars toward encouraging production of hydrogen, a clean-burning fuel that advocates say will create jobs and help fight climate change.

But now, many of those jobs will be going to the United States instead.

The clean energy subsidies that undergird President Joe Biden’s climate agenda have just prompted one Norwegian manufacturer to choose Michigan, not Europe, as the site of a nearly $500 million factory that will produce the equipment needed to extract hydrogen from water. And other European-based companies are being tempted to follow suit, people involved in the continent’s hydrogen efforts say — making the universe’s most abundant substance the latest focus of the transatlantic trade battle on green energy.



China to ban chipmaking metal exports
Shane Lasley, Metal Tech News, July 4, 2023

Going back to its 2010 rare earths playbook, China will ban gallium and germanium exports without state approval.

Reminiscent of export restrictions that sent the price of rare earth elements through the roof in 2010, China has announced that it is placing state-controlled restrictions on the export of two technology metals vital to chipmaking – gallium and germanium.

On July 2, China’s Ministry of Commerce posted notices that the exports of eight gallium and six germanium products will require state approval after Aug. 1. The ministry cited a need to “safeguard national security interests” as the reason for the government lockdown on these tech metals and is convening industry stakeholders along China’s gallium and germanium supply chains to discuss the upcoming export restrictions.

While the markets for gallium and germanium are minuscule in comparison to the economies of the United States and China, these metals have tremendous leverage due to their uses in high-tech and green energy products.

Gallium serves as a primary ingredient in semiconductors used in next-generation smartphones, telecommunication networks, light-emitting diodes (LEDs), thin-film solar cells, and medical devices.

More details on gallium and its uses can be read at Gallium may be more critical than realized in the Critical Minerals Alliances 2022 magazine published by Data Mine North.

Germanium, an intrinsic semiconductor with superior optical qualities, is a powerful ingredient in fiber optics, night vision devices, triple-layered solar panels, and transistors for classic and quantum computers.

More details on gallium and its uses can be read at The quantum states of germanium demand in the Critical Minerals Alliances 2021 magazine published by Data Mine North.

Various semiconductor products made from both gallium and germanium are used to manufacture the computer chips that are at the center of the global economy due to their use in nearly every electronic device. The dearth of new vehicles for sale on showroom floors during and after the COVID pandemic is an example of how a lack of these computer chips can stall the global economy.

“China has hit the American trade restrictions where it hurts,” Peter Arkell, chairman of the Global Mining Association of China, said of the coming gallium and germanium export restrictions.



Alaska ballot measure filed to set term limits for state legislators
Sean Macguire, Anchorage Daily News, July 2, 2023

A newly filed ballot measure would set term limits for lawmakers serving in the Alaska Legislature.

State legislators would be restricted to serving a maximum of 12 years consecutively in the state House or Senate, and they then would be required to take a six-year break before serving again. They would also be limited to serving for a lifetime maximum of 20 years as members of the Legislature.

Sixteen other states have term limits for state legislators, including in California, Florida, and Ohio. Alaska governors are already limited by the state constitution to serving two four-year terms consecutively. There are no term limits in U.S. Congress.

The three main sponsors of the proposed ballot initiative all unsuccessfully ran as Republicans for the Alaska Legislature. Elijah Verhagen, a candidate for a Fairbanks Senate seat in the last election, said that he heard widespread support for term limits from across the political spectrum while knocking on doors.

Enacting term limits would help combat incumbents’ advantages with name recognition and in fundraising, he said, adding that “a lot of the people — the common people — are very frustrated.”

The ballot measure would apply time served for incumbent legislators. Four senators have served in the Legislature for 20 years or longer and would be ineligible to run again. A few other House and Senate members have served more than 12 years consecutively or are set to cross that threshold in the next couple of years.