Today’s Key Takeaways: High salaries not enough to attract young workers. Exxon not concerned about Australian gas policies. AK to hold geothermal lease sale at Mt. Spur. California supremes reject county ban on new fossil fuel drilling.
Big Oil’s Talent Crisis: High Salaries Are No Longer Enough
Mari Novik, Collin Eaton, The Wall Street Journal, August 6, 2023
Energy companies scramble to attract engineers as young workers fret over climate and job security
Good news from the oil patch: Jobs are plentiful and salaries are soaring.
The bad news is that young people still aren’t interested.
Even as oil-and-gas companies post record profits, the industry is facing a worsening talent drought.
At U.S. colleges, the pool of new entrants for petroleum-engineering programs has shrunk to its smallest size since before the fracking boom began more than a decade ago. European universities, which have historically provided many of the engineers for companies with operations across the Middle East and Asia, are seeing similar trends.
Students and high-skilled young workers are concerned about the industry’s role in climate change, as well as long-term job security given that global economies are transitioning away from fossil fuels to other energy sources, according to executives, analysts and professors.
The trend is a stark departure from previous cycles, when the industry’s workforce ebbed and flowed with the rise and fall of oil prices.
Between 2016 and 2021—a period when the Brent crude price nearly doubled—the number of petroleum-engineering graduates more than halved, according to the U.S. Department of Education.
Exxon Brushes Off Concerns About Australia’s Natural Gas Policies
Charles Kennedy, OilPrice.Com, August 7, 2023
Exxon is no longer worried about the future of its natural gas operations in Australia after the Albanese government imposed restrictions on gas prices late last year to prevent them from rising too high.
The Albanese government announced caps on the price of natural gas and coal in December 2022. The price of natural gas will be capped at $8.15 (A$12) per gigajoule and at $85 (A$125) per ton of coal and the cap will be in effect for a year.
“Extraordinary times call for extraordinary measures, and we know, with the Russian invasion of Ukraine, what we’ve seen is a massive increase in global energy prices,” Albanese told media in December.
Criticism from the energy industry was quick. “A policy of such significance, proposed without any meaningful consultation with industry, creates an environment of uncertainty that will result in investment activity dropping across energy markets. This will make solving the underlying structural problems in the energy market harder, not easier,” Woodside said in a statement soon after the announcement was made.
Another energy major in the region, Senex, announced it would suspend an investment project planned for the Surat Basin in Queensland after the caps.
Four months later, the Albanese government said it would extend the price caps until July 2025 to make sure Australians have gas at ‘reasonable prices”. Small producers of natural gas have been granted an exemption as long as they supply their output to the local market.
At the time the cap was introduced, Exxon was among the most vocal critics, calling the decision “reckless free-market intervention”, the Western Australian recalls. Since then, however, the government has been in discussions with energy majors on the new code of conduct for the industry in the new circumstances. According to an Exxon executive, these have been encouraging and “uncertainty is beginning to resolve”.
Alaska Division of Oil and Gas plans geothermal lease sale for volcano near Anchorage
Yereth Rosen, Alaska Beacon, August 5, 2023
Mount Spurr, 80 miles from Alaska’s biggest city, was the site of past lease sales and ambitions — new policies might help make development a success, the division says.
The Alaska Division of Oil and Gas is preparing to hold a lease sale offering rights to explore for geothermal energy resources of Mount Spurr, a snow-capped volcano about 80 miles northwest of Anchorage.
The decision was announced on July 28 by Division Director Derek Nottingham
It comes two years after the division issued noncompetitive permits to two companies to explore geothermal energy resources on specific parcels on the 11,070-foot Spurr, the closest of Alaska’s numerous active volcanoes to the state’s largest city.
If the division follows through, this would be the fourth competitive lease sale held for Mount Spurr geothermal resources, after sales in 1983, 1986 and 2008.
The most successful of those past competitive auctions, the 2008 sale, resulted in the leasing of about 36,000 acres and an exploration drilling program carried out by Ormat Technologies, one of the world’s leading geothermal companies. However, Ormat dropped its Mount Spurr programin 2015.
There are reasons to believe that leasing this time will produce a more successful result, according to the analysis issued by Nottingham.
Under the Inflation Reduction Act of 2022, there are several new financial incentives for geothermal energy development, including a federal tax credit up to 30% through 2032, tax credits for geothermal power plants and credits for makers of geothermal technologies, the document said.
“In sum, federal energy policy has shifted significantly since the noncompetitive permits were issued in 2021, which has generated renewed interest in geothermal exploration,” the document said.
California Supreme Court rejects county’s ban on new fossil fuel drilling
Wes Venteicher, Energywire, August 4, 2023
The court ruled the state oil and gas supervisor retains authority over new wells and extraction methods.
The California Supreme Court on Thursday upheld the state’s authority over fossil fuel drilling in Monterey County, rejecting the county’s ban on new oil and gas activities.
The court ruled that a 1961 state drilling law, which delegates authority over extraction methods to the state oil and gas supervisor, superseded a 2016 Monterey County law that sought to ban all new oil and gas wells.
The ruling preserves the status quo for oil extraction in the state, rejecting an appeal from local environmental group Protect Monterey County that could have expanded local governments’ authority to regulate drilling.
Voters approved the Monterey County ordinance, known as Measure Z, with 56 percent approval. It banned the drilling of new oil and gas wells in unincorporated parts of the county and forbade injection of wastewater that is heated to steam to liquefy the region’s viscous oil for extraction. It also banned fracking, which hasn’t occurred yet in the county.
Chevron Corp. and other oil producers and mineral rights holders sued Monterey County over the law. A trial judge ruled in their favor but left the fracking ban in place since it’s not yet relevant. The county eventually dropped its appeal, but Protect Monterey County continued the case.
The court’s ruling suggests that local drilling restrictions — such as one passed by the Los Angeles City Council in December — may be permissible as long as they ban production outright and don’t get into specifics.
The court homed in on language in Monterey County’s ban that defined oil and gas wells as including “any type of well ‘drilled for the purpose of … aiding in the recovery of oil and gas.'”
By getting into the purpose of the well, the law usurped authority reserved to the state, according to the ruling. The state Supreme Court specified that, like the appellate court, it was not expressing any opinion on “whether local entities may restrict or ban oil production within their boundaries based on proper zoning restrictions.”
Environmentalists said they thought the ruling wouldn’t affect other local restrictions on fossil fuels. “We’re disappointed by the decision, but the silver lining is it was pretty specific to Measure Z and the language that it used,” said Hollin Kretzmann, a senior attorney with the Center for Biological Diversity who represented Protect Monterey County.