NEWS OF THE DAY:
19 States Urge Biden To Reinstate Keystone After Colonial Pipeline Hack Caused Mass Gas Shortages
Thomas Cattenaci, The Daily Caller, May 17, 2021
- A 19-state coalition urged President Joe Biden to reinstate the Keystone XL Pipeline and reverse his energy policies because of the recent gas shortages.
- “A temporary shutdown of one pipeline’s full-capacity operations shouldn’t bring half the country to the brink,” the states wrote to Biden on Monday. “We need more safe and clean energy sources. And that includes the Keystone XL Pipeline.”
- “Your impulse to bow to an extreme climate agenda untethered to scientific fact or reality—exhibited by the Keystone XL cancellation and other similar actions—affirmatively deprives Americans of the safe and clean energy supply they need now” the letter said.
OIL:
Oil Hits $70 Marking Two-month High as Europe, US Reopen Economies
Alex Lawler, Reuters, May 18, 2021
Oil rose on May 18 to hit $70/bbl for the first time since March, as expectations of demand recovery following reopenings of the European and U.S. economies offset concern over spreading coronavirus cases in Asia.
The British economy reopened on May 17, and Europe is starting to reopen cities and beaches. New cases in the U.S. continued to fall and New York lifted the mask requirement for vaccinated people.
Brent crude was up 47 cents, or 0.7%, at $69.93 by 0825 GMT, and earlier topped $70 for the first time since March 15. WTI crude in the U.S. was up 45 cents, or 0.7%, at $66.72.
“Economies are again switching a gear higher,” said Tamas Varga of broker PVM. “The euphoria is reflected in the general belief that the economic revival will be soon coupled with oil demand recovery.”
The latest gain to $70 brings Brent’s rally this year to 35%, supported by supply cuts by OPEC and allies. This could lead to a further advance, some analysts said.
“A rise through $70 should trigger more systematic buying and see it advance to $71.50 a barrel quite quickly,” said Jeffrey Halley, analyst at brokerage OANDA.
European and U.S. progress in the battle against the pandemic contrasts with the situation in Asia, which is limiting oil’s rally.
Singapore and Taiwan have reinstated lockdown measures, and India has seen a plunge in fuel demand following restrictions to curb infections.
Also limiting oil’s upside is the prospect of a revival of Iran’s nuclear deal that would allow the OPEC producer to fully restart exports.
In focus later will be this week’s U.S. supply reports, expected to show a 1.7 million-barrel rise in crude inventories. The first report, from API, is out at 2030 GMT.
GAS:
From the Washington Examiner, Daily on Energy:
AN UPDATE ON THE GAS PUMPS: Gas stations along the East Coast are seeing supplies come back, with yesterday seeing the largest daily drop-in stations without fuel since the Colonial Pipeline hack, according to data from GasBuddy.
GasBuddy analyst Patrick De Haan said he expects the number of stations without gasoline to drop under 10,000 today, a 38% improvement from the highest number of outages last Thursday. Gasoline demand is also falling, with demand 23.9% lower than last Monday, GasBuddy data shows.
Nonetheless, some regions in the East Coast are still seeing significant outages. Roughly half of the stations in North Carolina, 44% in South Carolina, 39% in Georgia, and 27% in Virginia are without fuel. In D.C., the number of outages has increased to 73%, as of last night.
In addition, even though fuel outages may be greatly improved by Memorial Day weekend, higher gas prices will likely still affect travel plans. GasBuddy expects the national average gas prices to be $2.98 per gallon on Memorial Day, the highest that time of year since 2014.
MINING:
Exploring wider Ambler District potential
Shane Lasley, North of 60 Mining News, May 18, 2021
Ambler Metals LLC’s US$27 million work program slated for the Upper Kobuk Mineral Projects in Northwest Alaska includes 14,600 meters of drilling directed at a wide variety of targets, from condemnation drilling where the company plans to build the processing plant and tailings facility at the Arctic Mine project to exploring for new deposits of carbonate-hosted copper-cobalt mineralization in the Cosmos Hills.
Trilogy Metals Inc. and South32 Ltd., equal owners of the Ambler Metals joint venture, will advance the highest priority projects and exploration targets across the 426,600-acre UKMP.
The 2021 program has three overarching priorities:
• Arctic project – Drilling at Arctic will include additional infill drilling to further improve the confidence of the mineral resources, as well as additional metallurgical and condemnation drilling to allow the partners to further de-risk the proposed mine.
• Arctic Hub – Exploration drilling aimed at discovering copper-rich satellite deposits within a 5,000-meter radius of the Arctic deposit.
• District exploration – This will include drilling and other exploration for volcanogenic massive sulfide deposits similar to Arctic across the Ambler VMS Belt and carbonate-hosted deposits like Bornite in the Cosmos Hills and the Ambler Lowlands.
“The proposed exploration program will be one of the biggest programs in the history of the Ambler Mining District and we have expectations that this program will eventually add to our mineral inventory within this emerging world-class mining district,” said Trilogy Metals President and CEO Tony Giardini.
Ambler Metals planned to carry out much of this work this year but decided not to carry out a 2020 field program due to the COVID-19 pandemic.
Looking ahead to the 2021 field season, Ambler says it will be adhering to strict COVID safety protocols that include requiring negative COVID-19 tests before traveling to site and prior to departing project, social distancing, face masks, and sanitization.
“We are looking forward to executing a safe and productive summer field season, expecting to hire approximately 60 personnel directly and an additional 75 through contractors working with us,” said Ambler Metals President and CEO Ramzi Fawaz. “We will of course prioritize hiring NANA shareholders from the Upper Kobuk villages followed by other shareholders in the NANA region and will be applying strict COVID protocols to protect our employees, contractors and the communities around us.”
Arctic drilling
A 2020 feasibility study details plans for a financially robust mine at the Arctic deposit that would produce 1.9 billion pounds of copper, 2.3 billion lb of zinc, 388 million lb of lead, 386,000 ounces of gold, and 40.6 million oz of silver over an initial 12-year mine life.
This operation is based on 43 million metric tons of reserves averaging 2.32% copper, 3.24% zinc, 0.57% lead, 0.49 grams per metric ton gold, and 36 g/t silver.
While high-grade VMS deposits such as this are typically mined from underground, the Arctic feasibility study proposes a lower-cost open-pit mine feeding a 10,000-metric-ton-per day mill.
The 2021 field program at Arctic will include 7,600 meters of drilling aimed at both extracting additional material for metallurgical work and upgrading mineral resources into the measured category, which could then potentially be upgraded to reserves.
This will include around 2,000 meters of geotechnical drilling in eight holes, 4,800 meters of resource conversion-metallurgical drilling in 28 holes, and 800 meters of condemnation drilling in four holes.
The condemnation drilling will provide geological information for the areas near the Arctic deposit where Ambler plans to build the processing plant and tailings management facility.
The goal of this summer campaign at Arctic is to advance and de-risk the project so the joint venture partners can make a future construction decision.
Arctic Hub
Ambler Metals has also identified three within three high-priority VMS target areas within 5,000 meters of the Arctic deposit that will be tested with 2,250 meters of drilling this summer:
• East Arctic – This target only about 200 meters east of the Arctic deposit is believed to host an extension of the three lowermost mineralized zones in the resource. Gossan – oxidized and weathered outcrop – on the eastern slope supports the idea of this potential Arctic extension.
• Southeast Arctic – This target, about 1,700 meters southeast of Arctic, includes an electromagnetic conductor that coincides with alteration hyperspectral response located with hyperspectral imaging on the projection of the Arctic mineralized horizon.
• Center of the Universe – A large target area covering the catchment immediately northwest of Arctic Valley that hosts multiple fold-fault repeats of the Arctic stratigraphy that coincide with electromagnetic geophysical and soil geochemical anomalies.
In addition to drilling, crews will carry out geological mapping and soil sampling over several prospects and geophysical anomalies outside these target areas, including the Pipe VMS prospect about 4,000 meters northeast of Arctic.
Detailed geological and structural mapping at Arctic and in the surrounding area will be used to build a three-dimensional geological model of the favorable geological horizons for VMS mineralization. This model is expected to be used for future exploration.
More VMS targets
Ambler Metals will also test three targets across the wider Ambler VMS Belt – Sunshine, Snow, and Cliff-DH-Horse – with 2,900 meters of drilling this year.
According to a calculation completed for Kennecott Mines in 1997, Sunshine hosts 20 million metric tons of historical resource averaging 1.4% copper, 2.5% zinc, 0.5% lead and 28.1 g/t silver.
Located about eight miles (13 kilometers) northwest of Arctic, Sunshine was the target of 2019 drilling by Trilogy that confirmed the robust nature of the Arctic-like VMS mineralization found there.
The planned drilling will test the west-southwest extension of high-grade intercepts in SC19-019, a hole completed by Trilogy Metals that cut 8.1 meters averaging 3.28% copper, 1.47% zinc, 0.27% lead, 0.15 g/t gold, and 25.64 g/t silver; and 7.88 meters averaging 2.23% copper, 5.62% zinc, 1.1% lead, 0.18 g/t gold, and 46.95 g/t silver.
Located on a ridge north of the Ambler River about 19 miles (30 kilometers) northwest of Arctic, Snow is a silver- and zinc-rich prospect discovered in the 1970s. This year’s drill will test the down-dip extension of silver- and zinc-rich mineralization encountered by previous drilling.
Located about 12 miles (19 kilometers) northwest of Arctic, Cliff-DH-Horse hosts VMS mineralization intersected in 12 of 18 holes drilled over a strike length of 3,000 meters during the 1970s.
Ambler plans to test potential mineralization with further drilling this year.
In addition, the company plans to carry out mapping and soil sampling at several other VMS prospects in the belt, including Ambler, Dead Creek, South Cliff, Nora, and roughly 10 high-priority electromagnetic anomalies identified during a 2019 versatile time domain electromagnetic (VTEM) survey carried out by Trilogy in 2019.
Exploring Bornite lookalikes
In addition to seeking new sources of VMS mineralization, Ambler Metals’ 2021 program will target carbonate-hosted copper-cobalt mineralization similar to Bornite, the second most advanced UKMP project.
Located about 16 miles (26 kilometers) southwest of Arctic, Bornite hosts 6.4 billion lb of copper and 77 million lb of cobalt in near-surface and underground deposits.
At a cut-off grade of 0.5%, the open-pit portion of Bornite hosts 40.5 million metric tons of inferred resource averaging 1.02% (913 million pounds) copper; and 84.1 million metric tons of indicated resource averaging 0.95% (1.77 billion lb) copper.
At the same cut-off grade, the Bornite open pit also hosts 124.6 million metric tons of inferred resource averaging 0.017% (45 million lb) cobalt.
The below-pit portion of Bornite, at a cut-off grade of 1.5%, hosts 57.8 million metric tons of inferred resource averaging 2.89% (3.68 billion lb) copper and 0.025% (32 million lb) cobalt.
“While we will not be drilling at the Bornite project this year, we believe in the potential of this project and plan to resume drilling there soon,” said Giardini.
This year’s program, however, will include exploration for other carbonate-hosted copper-cobalt mineralization in the Cosmos Hills that host Bornite and along strike in the Ambler Lowlands.
Outside of exploration work on the Bornite deposit itself, the Cosmos Hills have not been systematically explored since historical work was carried out by Kennecott in the 1990s.
Mapping and soil sampling planned for this year will cover a roughly six-mile- (10 kilometers) long area from the Aurora and Pardner Hill copper prospects in the west to Bornite East and will be used to define drill targets for 2022.
The Ambler Lowlands is a six-mile- (10 kilometers) wide glaciated valley between Arctic and Bornite that is virtually unexplored. NANA-1, one of only two holes ever drilled in this valley, was completed in 1974 and believed to have intersected dolomitized carbonate and carbonate breccia similar to the carbonates that host the Bornite deposit approximately nine miles (14 kilometers) to the west. Ambler says this drill hole indicates the potential for Bornite-style carbonate-hosted copper-cobalt mineralization concealed under shallow glacial cover in the lowlands and will be followed up with drilling this year.
POLITICS:
Treasury Secretary Janet Yellen Calls for Reform of Corporate Tax System
John McCormick, The Wall Street Journal, May 18, 2021
Treasury Secretary Janet Yellen, speaking Tuesday at a U.S. Chamber of Commerce event, called for reform of the corporate tax system to help pay for infrastructure upgrades and other goals advanced by President Biden.
“We believe the corporate sector can contribute to this effort by bearing its fair share,” she said. “At the same time, we want to eliminate incentives that reward corporations for moving their operations overseas and shifting profits to low-tax countries.”
Ms. Yellen, speaking at the chamber’s online Global Forum on Economic Recovery, labeled corporate taxes as being at a “historical low” of 1% of gross domestic product as she argued the administration is seeking to return them to historic norms.
Corporate taxes as a share of GDP can be misleading because over time more U.S. business activity has shifted to forms taxed under the individual income tax system. Mr. Biden’s proposal calls for raising the corporate tax rate to 28% from 21%, a move that would push the U.S. from the middle of the pack among major economies to near the top.
“We are confident that the investments and tax proposals in the jobs plan, taken as a package, will enhance the net profitability of our corporations and improve their global competitiveness,” she said. “We hope that business leaders will see it this way and support the jobs plan.”
Ms. Yellen also said that the nation needs to reorient its fiscal policy.
“We haven’t maintained our infrastructure let alone modernized it,” she said. “We haven’t sufficiently supported public research and development to ensure that America will maintain its technological edge. We haven’t embraced the investments in education and training that we need to keep up with technological change and to compete in the international marketplace as we once did.”
Ms. Yellen repeated her call for a global minimum corporate tax to “stop the race to the bottom.”
If the U.S. raises its tax rates and imposes higher burdens on foreign profits of U.S. companies, a global minimum tax would help prevent companies based in other countries from having a potential advantage.
Suzanne Clark, the chamber’s chief executive, provided an immediate rebuttal after Ms. Yellen spoke.
“It’s always an honor to hear from the Treasury secretary, including, and maybe even especially, when we disagree, as we do on taxes,” she said. “The data and the evidence are clear: The proposed tax increases would greatly disadvantage U.S. businesses and harm American workers and now is certainly not the time to erect new barriers to economic recovery.”
Ms. Clark said the administration is correct to champion infrastructure, but the chamber disagrees with the need to raise corporate taxes to finance the spending. “We want to be there with them to do that, but there are other ways to finance it,” she said.
CLIMATE CHANGE:
Energy companies eyeing Cook Inlet’s Mount Spurr volcano for geothermal project
Sabine Pous, , Alaska’s Energy Desk, May 17, 2021
Two companies are looking at the geothermal energy potential of Mount Spurr, an active volcano across Cook Inlet from Anchorage.
Once they have the final go-ahead from the state, GeoAlaska and Raser Power Systems can explore adjacent leases on Mount Spurr’s south side.
It’s the latest push to harness and develop geothermal energy from the 11,100-foot volcano, a feat no company has accomplished — at least not yet. The state has held geothermal lease sales for Mount Spurr since the 1980s.
Part of the challenge has been just locating the resource, said Steve Masterman, director of the state’s Division of Geological and Geophysical Surveys.
“Understanding the geology is really a key part to that,” Masterman said.
The basic idea of geothermal is to harness heat contained below the earth’s surface in the form of steam and water. Geothermal is a renewable resource, and like other renewables, can be used to heat homes or generate electricity.
But Mount Spurr poses a challenge for developers, according to Gwen Holdmann, director of the Alaska Center for Energy and Power in Fairbanks.
While it’s an active volcano, with a lot of trapped, simmering heat, “that system doesn’t have a lot of clear surface expression in terms of where you might want to drill, for example, to confirm a resource,” she said.
Gov. Mike Dunleavy’s administration wants to make geothermal exploration in Alaska easier for interested companies, whether it’s at Mount Spurr or elsewhere.
He’s proposed legislation that would, in part, allow companies to lease and explore nearly double the acreage they’re currently allowed.
Masterman said that would be helpful because surface hot springs often indicate the presence of reservoirs. But the hottest water isn’t always right beneath those springs.
“That might be a number of miles away from the place where it comes out of the ground,” he said.
Dunleavy’s legislation would also extend the maximum exploration period, from two years to five.
“It might take a number of summers in order to do the background work, the geology, the geophysics before you do the drawing,” Masterman said. “And then it might take a number of rounds of drilling before you’re successful with finding a viable resource.”
There are other geothermal projects in motion in the state. Chena Hot Springs has its own geothermal plant. And in Unalaska, two companies plan to start constructing a geothermal energy plant this summer for the city’s power grid.
Those plans, and the ones for Mount Spurr, are subject to the state’s current regulations, since Dunleavy’s legislation hasn’t yet passed, and may not before the Legislature adjourns next week.
According to Petroleum News, GeoAlaska, one of the companies looking for a permit, started in 2020 and is based in Anchorage. The other, Raser Power, is based in Utah. Raser Power filed for bankruptcy in 2011 in relation to a geothermal plant there.
Surveyors tried and failed to find hot water reservoirs at Mount Spurr a decade ago. Ormat Technologies did surveys and some exploratory drilling there between 2008 and 2011 but later relinquished their leases when it couldn’t locate the resource.
“They took a little bit of a conservative approach from the standpoint of drilling in a location that would be more optimal to develop a power plant and staying a little bit away from any areas that might be close to hazards,” Holdmann said.
But she said there is much more land to explore on the volcano. And data from the prior surveys are publicly available and could still be helpful for GeoAlaska and Raser.
“I am certain that they have looked closely at that data and are using that to rethink the program that they’re developing,” she said.
The up-front costs are expensive. But Holdmann said there are also regulatory hurdles to development, including restrictions from the Alaska Oil and Gas Conservation Commission.
“I think one that one thing that we want to be thinking about in addition to encouraging and promoting exploration is really thinking about what development might look like,” she said.
Then, there’s the question of a market, and whether a geothermal project at Mount Spurr is cost-competitive with existing energy sources.
But that’s all years down the road. First, the interested companies need to prove the resource is there — and that they can find it.