Today’s Key Takeaways: Manchin appalled by administration memo on oil in Cook Inlet. AK Congressional delegation meets with the President to plead for Willow approval. Hot US LNG market on the way. Millrock looks for nickel and cobalt in Alaska. Fairbanks Chamber opposes proposed EPA sanctions.
NEWS OF THE DAY:
Sen. Manchin blasts Biden administration over memo on oil development in Alaska’s Cook Inlet
Alex DeMarban, Anchorage Daily News, March 3, 2023
An internal memo from the U.S. Interior Department suggesting that the agency set the highest possible royalty fee on potential oil and gas development before last year’s Cook Inlet lease sale is drawing blowback from the Democratic chair of the Senate Energy and Natural Resources Committee.
West Virginia Sen. Joe Manchin said in a statement he was “appalled” by the memo, which he said was leaked and prioritized a “radical climate agenda” over the energy needs of Alaskans and the U.S.
An Interior spokesperson said in an emailed statement on Friday that the memo was not leaked but given to Manchin “at his request.” The spokesperson said the agency had no further comment.
The 24-page memo was written in November by Amanda Lefton, director of the Bureau of Ocean Energy Management, and is addressed to Laura Daniel-Davis, President Joe Biden’s nominee to be an assistant Interior secretary of land and minerals management. The Bureau of Ocean Energy Management oversees the federal offshore oil and gas leasing program.
In the memo, Lefton writes that while a 16.66% royalty would more likely support development in Cook Inlet and provide greater energy security and government revenue in Alaska, an 18.75% royalty would better balance environmental considerations and account for the social cost of upstream greenhouse gas emissions from oil and gas production. The memo notes that Cook Inlet is facing concerns about the future supply of natural gas that heats and powers homes across Southcentral Alaska.
OIL:
Biden Hears Oval Office Plea for Alaska Oil Project in Lobbying Frenzy
Jennifer Dlouhy, Bloomberg, March 4, 2023
- ConocoPhillips project could yield 600 million barrels of oil
- Opponents rallied outside White House to demand denial
Alaska’s congressional delegation personally appealed to President Joe Biden to approve a proposed ConocoPhillips oil development in the state, joining a last-minute lobbying frenzy around the project that’s being cast as a test of his commitment to combating climate change.
The lawmakers, including freshman Democratic Representative Mary Peltola, said they made their case for authorizing the plan to allow drilling from three locations at the Willow project during an Oval Office meeting on Thursday that lasted more than an hour.
In a joint statement, the lawmakers called the conversation with Biden and senior aides “honest and respectful,” saying they “appreciated the president’s recognition of how critical this moment is for Alaska’s future our nation’s energy transition.”
The $8 billion project is forecast eventually to yield 180,000 barrels per day of crude, or about 1.6% of current US production, with a cumulative output of about 600 million barrels. The Interior Department could issue a final decision as soon as Monday.
GAS:
Hot USA LNG Labor Market Incoming
Andreas Exarheas, Rigzone, March 6, 2023
A hot U.S. LNG labor market is coming, a new Rystad Energy market update sent to Rigzone recently stated.
“As the U.S. attempts to quench the world’s thirst for LNG, the Gulf Coast is set to undergo a further boom of LNG project sanctioning over the next few years,” Rystad Energy Senior Vice President Matthew Fitzsimmons said in the update.
“The pace of this growth far exceeds what the region has experienced in the past and will significantly strain the labor market,” he added.
In the update, Fitzsimmons outlined that the Gulf Coast’s LNG project capital expenditure will jump from just over $5 billion in 2022 to approach $15 billion by 2025 and said construction activity is forecast to nearly triple as a result.
“During peak activity across all the region’s LNG projects, we see 17 greenfield projects that will start construction,” Fitzsimmons said in the update.
“This is two and a half times the amount seen during the recent peak of 2017 and will force worker premiums in the oil and gas industry for EPC labor trades to double,” he added.
“LNG developers will struggle to fill vacant roles without increasing salaries considerably, and these higher rates are likely to be felt on the operator’s bottom line,” Fitzsimmons continued.
MINING:
Alaska Energy Metals makes its debut
Shane Lasley, North of 60 Mining News, March 3, 2023
Millrock shifts its focus to nickel-cobalt-rich Nikolai project
Millrock Resources Inc. March 1 announced that it is shifting its focus to exploration of Nikolai, an Alaska project prospective for a large deposit of critical energy metals such as nickel, copper, cobalt, and platinum group elements.
As part of this shift in focus, the company plans to change its name to Alaska Energy Metals Corp. and complete a 10-to-one share consolidation.
“Despite strong execution of the project generator model over the past few years, Millrock’s share price has declined,” said Millrock Resources President and CEO Gregory Beischer. “Bold changes are necessary, and the Nikolai project presents a timely opportunity.”
Discovered by INCO in the 1990s and explored by Pure Nickel Inc. from 2007 through 2014, the Nikolai project hosts a roughly 10-mile- (15 kilometers) long trend of nickel-copper-cobalt-chromium-PGE mineralization.
POLITICS:
Chamber weighs in on EPA proposed sanctions
Jake Barnwell, Fairbanks Daily News Miner, March 5, 2023
Interior business and industry interests have taken a stand against the Environmental Protection Agency’s proposed partial disapproval of Alaska’s plan to address air pollution in the Fairbanks North Star Borough.
The Greater Fairbanks Chamber of Commerce hosted a virtual panel Friday morning to address the issue.
The panel included representatives from Interior Gas Utility; Lynden Transport; the Chamber itself; Doyon, Limited; Fairbanks Economic Development Corporation; Fairbanks Resource Agency; and Aurora Energy Solutions.
“We need to clean the air without sacrificing our economy,” said Patrick Cotter, the chamber board president.
The EPA proposes to partially disapprove the Alaska Department of Environmental Conservation’s Serious State Implementation Plan. The plan was drafted under the federal Clean Air Act requirements to address fine particulate matter pollution (or PM2.5) levels in the Fairbanks and North Pole areas.
The borough’s nonattainment area, which includes Fairbanks and North Pole, has had some of the nation’s worst air quality dating as far back as 2009, due in large part to smoke from wood stove use during the winter.
The EPA contends that the Serious SIP failed to support conclusions on implementing best control methods for coal and oil plants and implement control strategies for heating sources such as requiring ultra-low sulfur diesel inadequate emission control.
If the EPA finalizes disapproval of the state’s plan, the Clean Air Act mandates a freeze in transportation planning, the imposition after 18 months of a permitting requirement that, for every unit of emissions from a new or modified source in the area, two units must be reduced, and restriction of funding for highway projects after 24 months.