OIL
Will New Funding Rules Kill Alaska’s Oil Boom?
Nikos Tsafos, Center for Strategic & International Studies, June 29, 2020
In early 2020, several banks announced they would no longer directly finance projects in the Arctic, part of an effort to align their lending portfolios with new environmental and social priorities and risks. The announcements triggered diverse reactions: cheers from environmentalists, protests from Alaska’s politicians, and relative indifference from analysts who often discount Alaska’s oil fortunes anyway (due to high costs). In reality, the tightly worded policies will not halt Alaska’s oil boom, but they might slow it—depending on how broadly or narrowly these policies are interpreted.
Alaska’s (Underappreciated) Oil Boom
Oil in Alaska often means the Arctic National Wildlife Refuge (ANWR) or the federal offshore, two places where drilling remains controversial for environmental reasons. But there is more to Alaska than these areas. From 2010 to 2019, companies invested almost $30 billion in the North Slope, and that money has reshaped the state’s prospects, a change evident in the annual 10-year forecast for oil production released by the state’s Department of Revenue. Production has been near or above the forecast lately, and the state now expects production to stay flat to 2029 (after a small dip), driven by several projects in and near the National Petroleum Reserve in Alaska. At no point since 1988, when oil production peaked, has the state managed to keep production flat for that long.
GAS
Alaska Voices: LNG project economics still challenging
Larry Persily, The Peninsula Clarion, June 29, 2020
An updated cost estimate for the state-led Alaska LNG project has trimmed about $5 billion from the construction price tag, down to $38.7 billion. Though the new estimate, released at the Alaska Gasline Development Corp.’s June 25 board meeting, is 12% below the number of several years ago, it’s still significantly higher per tonne of output capacity than most other proposed LNG developments around the world.
MINING
Copper Prices Close at $6,000 [per ton] on Supply Concerns
Madurihma Das, Zacks, June 30, 2020
Over the month of June, copper prices have gained 11% and currently trending close to the level of $6,000 [per ton]. This uptrend can be attributed to optimism over financial stimulus and strong demand in China, which is the top consumer, amid growing fears of disruption in copper output in Chile. LME Copper prices closed at $5,957 per ton on Jun 29. Copper, whose demand is linked to global economic growth and activity, fell prey to the impact of the COVID-19 in the first quarter and suffered a decline of 22%. However, the red metal has made a dramatic comeback in the second quarter with a gain of 25%.
POLITICS – From the Washington Examiner, Daily on Energy:
MURKOWSKI AND MANCHIN AREN’T GIVING UP ON THEIR ENERGY BILL: Passing the bill, which would be the biggest update to energy law in over a decade, is even more important now in the pandemic and economic downturn, said Sens. Lisa Murkowski and Joe Manchin, the top Republican and Democrat on the Senate Energy Committee, in remarks on the floor Monday.
The senators are aiming to bring their bill back to the Senate floor this year, after a fight over separate legislation to limit greenhouse gas refrigerants known as HFCs sank the bill in March. Lucy Murfitt, chief counsel for the Senate Energy Committee Republicans, said Monday that Environment Committee senators fighting over the HFC provisions are making “real progress,” and if a deal is reached, the energy bill could be back up for a vote as soon as July.
Murkowski and Manchin aren’t waiting until then, though: Murkowski has offered two pieces of the broader energy bill — legislation on advanced nuclear energy and on critical minerals — as amendments to the defense bill the Senate is considering this week. She did so to provide a “second pathway” in case the whole bill can’t come to the floor, but it isn’t her preferred option, she said.
“My clear, clear, clear and undeniable preference is that we engage all of these measures as part of the energy package,” Murkowski said. “We are not taking our foot off the gas.”
She added the worst-case option would be to punt the issue to next Congress (it’s worth noting Murkowski will no longer be chairman of the Energy Committee then because she is term-limited). “It would be a mistake, a significant mistake for Congress to simply give up on energy policy for yet another year,” she said.