Today’s Key Takeaways: New BLM rule “sneaky, detrimental,” Saudi Aramco bullish on 2023 oil demand. New record set for U.S. LNG. Pebble gains more time. Offshore wind forecast scaled back – again.
NEWS OF THE DAY:
Proposed federal land conservation rule sneaky, detrimental
Rachel Gable, Colorado Politics, June 26, 2023
The House Committee on Natural Resources’ hearing on H.R. 3397, sponsored by Rep. John Curtis (R-Utah) to require the Director of the Bureau of Land Management to withdraw the proposed conservation rule was tense. Tense also describes most conversations among cattlemen in states were permittees graze public lands, including this one. The BLM’s Conservation and Landscape Health proposed rule lacks the congressional oversight dictated by the Federal Land Policy Management Act (FLPMA). If the rule goes into effect, it will be the first time FLPMA would be rewritten without congressional action, exactly what the Act is designed to prevent.
FLPMA is the BLM’s “organic act” that establishes the agency’s multiple-use and sustained yield mandate to serve present and future generations. This proposed rule flies in the face of FLPMA by elevating conservation to a use and removing extraction — grazing, oil and gas, minerals, etc. — from public lands and thereby removing opportunity for sustainable yield from those lands.
Sigrid Johannes, director of the Public Lands Council, said the Conservation Land Use Rule is a major change to multiple use land management and one that would normally carry a 12-month scoping period with extensive opportunities for stakeholder engagement.
This rule has been rushed through a short comment period and only three public meetings have been held, none of which offered comments or questions from attendees. Further, the meetings were in Denver, Reno, and Albuquerque, far from the majority of permittees across the western states. This was glaring enough South Dakota Gov. Kristi Noem testified nearly 98% of BLM surface lands in South Dakota are grazed by permittees; her state hosts 76 actively producing oil and gas leases that cover 36,762 acres; and the acres managed by the BLM provide recreation opportunities. Noem said the proposed rule overemphasizes conservation rather than the economic needs of Americans; lacks an economic analysis, fails to provide data to indicated better outcomes for conservation practices if implemented; and the BLM claims the rule does not have a “significant economic effect” or that it does not affect “a significant amount of small entities,” a claim Noem called ridiculous.
Wyoming Gov. Mark Gordon said, “This proposed rule was rushed forward without material input from Wyoming or other states,” Gordon said. “It did not have the benefit of the views of impacted public land users. The proposed rule mischaracterizes conservation, seeks to preempt wildlife management from the States, and oversteps the Bureau’s statutory authority. The best solution is to rescind the rule.”
One of the major facts — not talking points, but facts — is that livestock grazing is conservation. Period. Well-managed grazing reduces invasive species, cultivates healthy rangelands, maintains wildlife habitat, serves as fire mitigation, and grazing on public lands is closely monitored.
Johannes said the title of the proposed rule is disingenuous, as the livestock community is certainly committed to conservation. One of the fears of the grazing community is “the BLM has created a system under their so-called conservation leasing system where it’s up to third parties to come in and say what they think is a use that is compatible with conservation.” There are gobs of anti-livestock and anti-agriculture groups licking their chops anticipating the chance to claim the cessation of grazing is the best conservation practice.
If public lands are placed in conservation leases, that could mean all multiple uses are precluded from that land. This includes hiking, photography, hunting, bird watching, and the like.
J.J. Goicoechea, former Nevada state veterinarian and current director of the Nevada Department of Agriculture said in a hearing the agency has failed to define what is considered a “compatible” use or an “incompatible” use with an underlying conservation lease.
“While the BLM has previously stated they believe grazing is a conservation tool, the rule contains no text that would make the industry confident that this rule is not targeted to remove grazing access. Further, the rule makes clear that uses like hunting, fishing, and recreation, when done with a commercial component — like outfitting, guiding, and other conservation activities — would not be defined as a “casual use” and could be precluded due to the presence of a conservation lease. In sum, the BLM has proposed a system that will be rife for abuse and litigation without consistent standards and application.”
Rife is right.
This rule is likely to spell disaster if users are forced off the land. From an agricultural standpoint, this could drive protein prices far above the reach of families on a budget and put families out of business. The process has been rushed, sneaky, and is a thinly veiled attempt to remove the uses the Biden administration finds unpleasant from public lands.
The PLC requested a 150-day extension of the comment period based on the scope of the rule. BLM announced a 15-day extension, with all public comment due prior to July 5.
OIL:
SAUDI ARAMCO SAYS CHINA AND INDIA WILL PROP UP OIL DEMAND IN 2023: The head of Saudi Arabia’s state-owned oil company said he remains bullish on oil demand projections for the rest of 2023, noting an expected uptick in demand from China and India in the second half of the year.
“We believe that oil market fundamentals remain generally sound for the rest of the year,” Saudi Aramco CEO Amin Nasser said in Malaysia today, according to CNBC. The assessment comes even as demand growth in China has remained below expectations, prompting several cuts to its key lending rates.
“Despite the recession risks in several OECD countries, the economies of developing countries, especially China and India, are driving oil demand growth of more than 2 million barrels per day this year,” Nasser added.
His assessments appear to bolster IEA projections that global oil demand will rise by 2.4 million bpd in 2023, outpacing 2022’s growth of 2.3 million bpd. In its report earlier this month, IEA cited Chinese demand as accounting for 60% of the gains.
GAS:
U.S. Sets New Record In LNG Export Capacity
Tsvetana Paraskova, OilPrice.Com, June 26, 2023
- The U.S. is set to add a total of 5.1 billion cubic feet per day (Bcf/d) of LNG export capacity in the first half of 2023, beating the full-year record of approved volumes from 2014.
- Despite cost inflation concerns and higher interest rates, long-term deals are on the rise, especially in Europe, following the Russian invasion of Ukraine and subsequent energy supply disruptions.
- With the approval of two projects and a third nearing final investment decision, U.S. export capacity will increase significantly, retaining its position as the world’s top LNG export capacity holder.
MINING:
Northern Dynasty’s Pebble copper project gains more time
Cecilia Jamasmie, Mining.Com, June 26, 2023
Northern Dynasty Minerals (TSX: NDM)(NYSE: NAK) will have to wait until the end of the week to hear the US Army Corps of Engineers’ (USACE) comment on future plans regarding the company’s Pebble copper project in southwest Alaska.
The Canadian miner said the body’s Alaska district had requested a second extension of 45 days to June 29 to decide whether or not the miner can proceed with permitting its copper-gold-molybdenum project.
Pebble has been on a roller coaster of regulations for the past 15 years. Former US President Barack Obama opposed the project, and his successor Donald Trump ultimately did too, deeming it “too risky”.
President Joe Biden has openly expressed its opposition to the project, taking steps as soon as he took the post in 2021 to permanently protect Alaska’s Bristol Bay.
As part of the administration’s measures against Pebble, the US Environmental Protection Agency (EPA) blocked the company in January from storing mine waste in the state’s watershed, home to the world’s largest sockeye salmon fisheries.
Northern Dynasty has since raised doubts about its ability to continue if it is unable to raise the necessary capital for the project and continue the permitting process for the mine.
The Pacific Ocean Division of the Army Corps agreed in April to take another look at its refusal in 2020 to approve the project, after Northern Dynasty successfully appealed the decision.
For decades, explorers and developers have been attracted to resource-rich southwestern Alaska, known for holding significant deposits of gold, copper, molybdenum and other minerals near the headwaters of two rivers flowing into Bristol Bay.
But conservationists, local activists, fishermen and federal regulators have argued that industrial, open-pit mining operations to extract the lode threatens the region’s thriving sockeye salmon fishery.
If and when the mine moves into production, it would be the largest in North America.
POLITICS:
Consultants scale back growth forecast for floating offshore wind
Staff, Offshore, June 26, 2023
Forecast installation of floating offshore wind energy in 2030 and 2035 has been adjusted downward for the second time in 12 months.
Forecast installation of floating offshore wind energy in 2030 and 2035 has been adjusted downward for the second time in 12 months, according to the latest market intelligence report by TGS and 4C Offshore, representing a 25% downgrade year-on-year for the 2030 outlook.
The twice-yearly Floating Offshore Wind Report forecasts that 12.4 GW of potential floating wind capacity will be operational or under construction globally by 2030, rising to 39 GW by 2035.
These figures are down 1.8 GW and 6.4 GW, respectively, to the previous analysis from fourth-quarter 2022.
According to TGS, the main cause is the slowing of the process of attaining offtake contracts and permits, which has led to greater volume being shifted post-2030. Of the forecast 12.4 GW by 2030, 6-7 GW now looks set to be operational, with the remainder under construction.
The report also finds that the UK remains the world’s most attractive market for floating wind, followed by Norway, South Korea, the US, and Japan.
Analysis of floating offshore wind’s levelized cost of energy (LCOE) and capex for existing and future projects suggests that LCOE will fall over time but at a slower rate than expected due to rising supply and capital costs.
TGS and 4C Offshore expect energy costs for floating wind to be about €85-100/MWh by 2030 (for projects starting offshore installation), €70/MWh by 2035 and €50/MWh by 2040.
The pathway to €50/MWh, the companies added, can be secured via scale economies, decreasing capital costs, technology innovations and longer lifetimes.
Director of Research Richard Aukland said, “Floating wind holds a lot of promise, but delivery is challenging. Offtake visibility is currently limited, and regulatory uncertainty is high in key emerging floating markets. There are many countries whose processes have not yet been tested and matured through bottom-fixed wind. Consequently, we don’t expect the build-out of floating wind to scale significantly until after 2030.”