Today’s Key Takeaways: OPEC expects global oil demand to exceed supply in 2023. Marathon needs more time to convert Kenai LNG export plant to an import terminal. Seventymile gold project drilling begins. Last week to register to vote in Alaska’s August 16 primary.
NEWS OF THE DAY:
From the Washington Examiner, Daily on Energy:
CLOCK’S TICKING ON RECONCILIATION: Corporate leaders and green energy businesses are reminding Democratic leaders that time is getting short for them to marshal a social and green energy spending bill through Congress before the November elections, which could put the party in the backseat.
More than 400 green energy companies signed on to a letter addressed to Biden, Speaker Nancy Pelosi, and Majority Leader Chuck Schumer talking up the readiness of the solar energy and storage industries to serve U.S. energy security needs.
“Please pass the tools in reconciliation to help us make that possible,” the letter said. “It’s time to get this done.”
A separate letter endorsed by seven corporate executives, including the heads of utilities Exelon and PG&E, said a reconciliation package with spending for green energy and supply chains will help their companies to combat inflation “right away.”
Schumer, other negotiators, and holdout vote Sen. Joe Manchin are continuing to meet and reportedly making progress — “picking up steam,” as Senate Finance Chairman Ron Wyden put it — on the package.
The lack of a deal has put more of the onus on executive agencies, and on Biden himself, to notch progress on Democrats’ green agenda. Biden has employed the Defense Production Act on several occasions to that end, most recently in a bid to grow domestic manufacturing of solar PVs, solar glass, and other similar products.
The infrastructure bill that passed with Republican support last year funded some of Biden’s green energy priorities, including the construction of an electric vehicle charging network, but priorities like more rigorous methane regulations and generous incentives for EV purchases remain outstanding.
Manchin has taken a particularly strong position against such incentives, considering Chinese dominance of critical minerals and other key supply chains, and called the pursuit “stupid.”
OIL:
First OPEC 2023 Outlook Shows No Relief from Oil Squeeze
Grant Smith, Bloomberg, July 12, 2022
OPEC’s first oil-market outlook for 2023 suggests no relief for squeezed consumers, with more crude needed from the group even though most members are already pumping flat out.
The Organization of Petroleum Exporting Countries expects global oil demand growth to exceed the increase in supplies by 1 million barrels a day next year. To fill the gap, OPEC would need to significantly hike production, but members are already falling far behind the volumes needed right now due to underinvestment and political instability.
Crude prices are holding above $100 a barrel as the world’s oil fields and refining facilities fail to keep pace with the post-pandemic rebound in fuel demand. That’s exacerbating a cost-of-living crisis and threatening to tip the global economy into recession.
President Joe Biden is urging Middle East producers to ease the crisis by opening the taps. He will visit the region this week with a planned stop in OPEC leader Saudi Arabia, but many analysts expect Gulf exporters to ration their remaining spare production capacity carefully.
National Security Advisor Jake Sullivan told reporters on Monday that the US believes OPEC has scope to raise production, though it’s ultimately up to member countries to determine what steps to take.
If Biden does persuade Riyadh and the neighboring United Arab Emirates to provide some extra supply, the move will likely be formalized at the next meeting of OPEC and its partners on Aug. 3, according to RBC Capital Markets LLC.
Supply Crunch
The report published by OPEC’s Vienna-based research department on Tuesday indicates the supply crunch will persist.
Global demand will expand by 2.7 million barrels a day next year, bolstered by growth in emerging economies, while supplies outside OPEC will increase by 1.7 million a day, according to the cartel’s analysis. Gasoline and diesel fuel will drive the growth in consumption.
To balance supply and demand, OPEC would need to provide an average of 30.1 million barrels a day in 2023. That’s 1.38 million a day more than the cartel’s 13 nations pumped in June.
OPEC has been reviving production halted during the pandemic, with a final tranche scheduled for next month. Yet the group is pumping well below its collective target because nations such as Angola and Nigeria have seen their capacity eroded by insufficient investment and operational problems. Troubled member Libya has suffered a collapse in its production collapse amid renewed political unrest.
Because of this supply shortfall, fuel inventories in industrialized nations are shrinking rapidly, dropping to 312 million barrels below the five-year average in May.
OPEC’s assessment of 2023 fits in with the prevailing view across the petroleum industry, with the Paris-based International Energy Agency — which represents consuming nations — also predicting that supplies will remain under strain.
GAS:
Marathon seeks more time to build LNG import project in Alaska
Scott DiSavino, Reuters, July 11, 2022
Marathon Petroleum Corp’s Trans-Foreland Pipeline Co unit wants more time to convert the Kenai liquefied natural gas (LNG) export plant in Alaska into an import terminal, U.S. energy regulators said on Monday.
A Federal Energy Regulatory Commission (FERC) notice said that Trans-Foreland last week sought an extension until December 2025 to complete the facility.
FERC approved Trans-Foreland’s request to build the plant in December 2020 and gave the company until December 2022 to place it into service.
Trans-Foreland said it has yet to make a final investment decision to build the project because the COVID-19 pandemic and the war in Ukraine have worsened economic and logistical conditions.
“Uncertainty and volatility in the global LNG market have made it difficult for Trans-Foreland to secure a suitable supply arrangement that would provide the financial certainty necessary for the project,” Trans-Foreland said in its filing.
Trans-Foreland has said the facility would import up to four tanker loads of LNG per year and use its boil-off gas management system to deliver imported gas to the adjacent Kenai Refinery.
The Kenai LNG export plant entered service in 1969. It has not exported LNG since 2015.
The plant was the only big LNG export facility in North America until Cheniere Energy Inc’s Sabine Pass export terminal in Louisiana entered service in February 2016. Nearly all of the LNG from Kenai went to Japan.
MINING:
Seventymile gold project drilling begins – North of 60 Mining News (miningnewsnorth.com)
Shane Lasley, North of 60 Mining News, July 7, 2022
Tectonic Metals Inc. July 7 announced that drilling is now underway at Seventymile, a district-scale gold project in eastern Alaska.
Optioned from Doyon Ltd., an Alaska Native regional corporation, Seventymile encompasses an underexplored 25-mile- (40 kilometers) long greenstone belt about 37 miles (59 kilometers) east of the town of Eagle, Alaska.
While gold has been identified along the entire greenstone belt covered by Seventymile, the 2022 drilling will focus on three targets along the roughly five-mile- (eight kilometers) long Flume trend toward the northwestern end of the property.
At these three prospects – Flanders, Flume, and Alder – shallowly-dipping, low-angle tension vein swarms occur adjacent to interpreted, largely undrilled, controlling shear structures. Limited historical diamond drilling in 1990 and 2000 at these targets demonstrated the presence of high gold grades and significant strike potential.
POLITICS:
Last week to register for Alaska’s Aug. 16 elections
James Brooks, Alaska Beacon, July 11, 2022
This is the last week to register to vote before Alaska’s Aug. 16 primary election and the special election for U.S. House.
Potential voters must register by July 17 in order to participate in the elections, which will take place on the same day.
Voters will not automatically receive a ballot in the mail for the Aug. 16 election but can request one.
Registration is available online or in person at a Division of Elections office. Alaskans can check the status of their registration after Wednesday online. (The system is offline while it is updated to account for this year’s redistricting process.)
To request a ballot by mail for the Aug. 16 election, apply online before Aug. 6. Otherwise, early voting will begin Aug. 1 at locations across the state, and polling stations will be open from 7 a.m. to 8 p.m. Aug. 16. The locations of election-day polling stations have not yet been finalized.
The primary election ballot will include state House, state Senate, and U.S. House and U.S. Senate candidates. Voters will be asked to pick one candidate for reach race. The winners of the primary election will advance to the November general election.
On the back side of the ballot will be the special U.S. House election featuring Sarah Palin, Nick Begich and Mary Peltola. Voters will be asked to rank all three candidates in order of preference. The winner of the special U.S. House election will represent Alaska in Congress until January.
Most Alaskans are already registered to vote: State law calls for anyone who applies for a Permanent Fund dividend or Alaska driver’s license to be registered unless they’re ineligible or specifically opt out.
New arrivals in the state are most likely to be the ones needing to register. Alaskans turning 18 and those who have had their voting rights restored after probation may also need to register.
As of July 8, the state had 597,395 registered voters. That figure likely includes tens of thousands of people who have registered in the state and since moved away. A voter stays registered unless they specifically cancel their registration or register in another state.
According to the registry, an individual registered voter has the greatest power in House District 40, which has 9,518 registered voters. A voter in the southern Kenai Peninsula has the least power because he or she is one of 17,680 registered voters.