Today’s Key Takeaways: The collapse of clean fuel startups. AK’s oil and gas industry a “boon for the state economy.” Contango ORE expands in Alaska. U.S. LNG project updates. All eyes on AK congressional primary.
NEWS OF THE DAY:
Clean Fuel Startups Were Supposed to Be the Next Big Thing. Now They Are Collapsing.
Amrith Ramkumar, The Wall Street Journal, August 18, 2024
Start-ups promising to power planes, ships and trucks with clean fuel are sputtering before they get off the ground, showing how hard it will be to wean many industries off oil and gas. A venture backed by United Airlines that raised hundreds of millions of dollars to turn trash into jet fuel appears to have shut down. Another, backed by Airbus, JetBlue, and GE Aerospace, that was working on using hydrogen to power planes, went bust. Chevron, BP and Shell, meanwhile, are scaling back projects to make biofuels from cooking fats, oils, greases and plant material.
“The excitement of the early days has not lived up to the hype,” said Andy Marsh, chief executive of Plug Power, a start-up that recently opened one of the country’s first plants making green hydrogen, a potential replacement for fossil fuels in industries such as steel making and chemical production. Shares of Plug Power have tumbled more than 90% since the passage of the U.S. climate law two years ago. Shares of biofuels start-up Gevo, where Marsh is a board member, are down about 80% in that span.
The failures and delays are all but extinguishing the early optimism after the climate law passed. Rising costs have delayed timelines and made it more difficult for companies to raise money. Government delays in completing tax credits are adding to the challenges. Without clean fuels, emissions at many companies could keep climbing, threatening climate targets. Industries including aviation and shipping are counting on the new fuels because wind and solar power and batteries can’t meet their energy needs.
“It’s really challenging to get new technology to do what the fossil-fuel industry has been doing for 80-plus years,” said Jimmy Samartzis, CEO of LanzaJet, a start-up backed by Shell, Southwest Airlines and Microsoft. LanzaJet will soon start production at a Georgia plant, one of the first for sustainable aviation fuel in the U.S. Construction ended up being a lot more expensive than expected. The company’s fuel, which is made from ethanol, costs about twice as much as conventional jet fuel without subsidies.
OIL:
Econ 919: Alaska Oil and Gas Association says industry remains a boon for the state economy
Ashlynn O’Hara, KDLL, August 17, 2024
The Alaska Oil and Gas Association is optimistic about the industry’s future in the state. That was a theme of an update the trade group gave during a luncheon at the Kenai Chamber of Commerce and Visitor Center last week. The presentation came on the heels of a meeting with member companies, including several Cook Inlet developers.
Kara Moriarty is the association’s president and chief executive officer. She said oil and gas production is up from where it was expected to be at this time ten years ago.
“Our production last year ended up 488,000 barrels a day,” she said. “That is 160,000 barrels a day, more than the forecast in 2013.”
She says those numbers are good for the industry, but also for Alaska’s economy. That’s because more production by developers means more money contributed to the principle of the Alaska Permanent Fund.
In 2022, for example, Moriarty said the industry paid more than $4.5 billion in state and local taxes. That includes more than $15 million in property taxes on the Kenai Peninsula, representing about a fifth of the borough’s total property tax base. She said almost 70,000 jobs in Alaska are supported directly, or indirectly, by the oil and gas industry.
“Our industry continues to be a significant source of jobs throughout the state,” she said. “We do have the highest economic impact. … No other industry has that level of economic generation than we do, and we’re clearly part of Alaska’s future.”
GAS:
U.S. LNG Project Spotlights:
- ExxonMobil, in partnership with QatarEnergy, is developing the Golden Pass LNG project in Texas. This project faced a six-month delay due to cost disputes and contractor issues. ExxonMobil also faces challenges due to the U.S. federal permitting freeze impacting the LNG industry.
- Glenfarne Group’s Texas LNG project in Brownsville, Texas, is affected by a temporary federal permitting pause. Despite this, the project has secured preliminary supply agreements and is on track for a final investment decision later this year.
- NextDecade’s $18 billion Rio Grande LNG project in Texas faced a legal setback when a court revoked a key regulatory approval. Despite this, NextDecade plans to proceed with the project, which is expected to be operational by 2027.
MINING:
Avidian closes sale of Alaska gold assets
Shane Lasley, North of 60 Mining News, Augus6 16, 2024
Contango ORE buys the Golden Zone and Amanita exploration projects held by Avidian Gold Alaska.
Avidian Gold Corp. Aug. 7 announced that it has finalized the sale of its Alaskan subsidiary, Avidian Gold Alaska Inc., to Contango ORE Inc. for $2.4 million (C$3.3 million), plus a potential future payment of $1 million (C$1.4 million) if Contango decides to develop a mine at the mineral exploration projects that came with the sale.
With the purchase, Contango ORE gains ownership of three properties – the Golden Zone gold-silver-copper project midway between Fairbanks and Anchorage; and the Amanita and Amanita NE properties adjacent to Kinross Gold Corp.’s Fort Knox mine north of Fairbanks, Alaska.
POLITICS:
What to watch in Florida, Wyoming, and Alaska primaries
Rachel Schilke, The Washington Examiner, August 19, 2024
With just a handful of states left to hold their primaries in 2024, Alaska, Florida, and Wyoming are up next on Tuesday to see who will win the Democratic or Republican nominations for House and Senate seats.
In Alaska, eyes are on the sole House seat as vulnerable Rep. Mary Peltola (D-AK) seeks to defend her seat as the first House Democratic representative in five decades. In Wyoming and Florida, top GOP senators are hoping to defend their seats, while eyes will also be on Rep. Matt Gaetz‘s (R-FL) House race as he faces a challenger backed by former House Speaker Kevin McCarthy.