Today’s Key Takeaways: 151 executives predict where oil prices will end in 2023. ConocoPhillips on energy transition, net-zero emissions. More on AK importing LNG. Message to mining regulators – “we are urgently off course.” Auto makers to EPA – new vehicle emissions target isn’t “reasonable or achievable.”
NEWS OF THE DAY:
Executives Predict Where WTI Oil Price Will End Up in 2023
Andreas Exarheas, Rigzone, June 29, 2023
Executives from 151 oil and gas firms have predicted where the West Texas Intermediate (WTI) price will end up this year as part of the latest Dallas Fed Energy Survey.
When asked in the second quarter survey what they expected the WTI crude oil price to be at the end of 2023, the average survey response was $77.48 per barrel. The low forecast in the survey came in at $60 per barrel, while the high forecast came in at $100 per barrel. The price of WTI during the survey was $69.89 per barrel, the survey highlighted.
In the previous first quarter Dallas Fed Energy Survey, which was released back in April, the average survey response to the same question, from executives from 145 oil and gas firms, was $79.64 per barrel. The low forecast in that survey was $50 per barrel and the high forecast came in at $160 per barrel. The WTI price during that survey was $68.51 per barrel, the first quarter Dallas Fed Energy Survey pointed out.
OIL:
ConocoPhillips in transition
Tom Young, Carbon Economist, June 15, 2023
Superindie talks to Carbon Economist about the energy landscape.
ConocoPhillips is an official sponsor of the 24th World Petroleum Congress (WPC), which will take place from 17–21 September in Calgary, Canada. Here, Bij Agarwal, president of ConocoPhillips Canada, talks to Carbon Economist about the energy landscape as he sees it.
The theme of this year’s WPC is ‘transition’. Can you talk about what ConocoPhillips is doing on this front, in terms of scope one and scope two emissions?
Agarwal: ConocoPhillips’ ‘triple mandate’ is focused on meeting the energy transition pathway demand, delivering competitive returns, and achieving our net-zero operational emissions ambition by 2050. In 2021, we established a Low Carbon Technologies team to support our net-zero ambition, and in 2022, we published our Plan for Net-Zero Energy Transition. In April 2023, we announced an acceleration of our operational greenhouse gas (GHG) emissions-intensity reduction target for 2030 from 40–50pc to 50–60pc, using a 2016 baseline.
We have reduced our methane emissions intensity by approximately 70pc since 2015 and have exceeded our 2025 methane intensity reduction goal of 10pc, achieving a 13pc reduction in 2021 from a 2019 baseline. We set a new medium-term target to achieve a near-zero methane emissions intensity by 2030, and in 2022, based on flaring reductions to date, we committed to achieving zero routine flaring by 2025—five years in advance of the World Bank Initiative’s goal of 2030.
How important are individual and collective reduction targets for oil and gas producers as they approach the transition?
Agarwal: We believe that individual and collective emissions reduction targets—near, medium, and long term—will help to keep companies and countries on track as we pursue our net-zero operational emissions by 2050 ambitions. We continue to position ConocoPhillips for the energy transition and are committed to reducing operational (scope one and two) emissions, over which we have ownership and control.
How is the renewed global focus on energy security changing the strategic thinking of firms involved in energy supply?
Agarwal: We believe North America is strongly positioned to continue serving as a stabilising force that strengthens global energy security. However, we need a regulatory atmosphere that promotes investment and the unrestricted trade of natural gas, crude oil and refined products between the US, Canada, and Mexico, as well as exports to the world market. This complementary market integration will support North America’s continued economic prosperity, security, and global energy leadership as we work to achieve the energy transition.
We focus on remaining resilient and competitive in any scenario by safely and responsibly providing low-cost, low-GHG-intensity oil barrels and natural gas molecules by asset type with continuously improving ESG performance. Our strategy uses a fully burdened cost of supply, including cost of carbon, as the primary basis for capital allocation. Providing low cost of supply also addresses a key component of a just and orderly transition—a secure and affordable energy supply that strengthens global energy security.
GAS:
Alaska utilities say imported LNG appears best option to meet looming gas supply shortfallTim Bradner, The Frontiersman, June 28, 2023
Imported liquefied natural gas, or LNG, appears to be the best near-term option for averting a pending natural gas shortage in Southcentral Alaska, where most Alaskans live, according to a group of electric utilities including Matanuska Electric Association and Enstar Natural Gas, the state’s major gas utility.
The utilities briefed the Regulatory Commission of Alaska Wednesday, June 28, on preliminary results of a study on averting the gas shortfall.
In a report issued earlier this year the state Division of Oil and Gas said that gas produced in the Cook Inlet Basin of southern Alaska will begin falling short of annual demand by 2027. In 2022 Hilcorp Energy, the major Cook Inlet gas producer, told utilities it will not be able to renew current gas supply contracts as they expire because of declines in reserves.
Concern for the shortfall is acute because natural gas produced from Cook Inlet fields is almost sole source of fuel for space heating in the region as well as for most power generation.
“Importing liquefied natural gas is likely the least cost, easiest option for the near term,” said Arthur Miller, CEO of Chugach Electric Association, the state’s largest electric utility. Although results of the joint utility study were presented to the state regulators Chugach had conducted its own assessment with Black & Veatch, a consulting group, and found its findings “in alignment” with the group study, which was facilitated by Berkeley Research Group.
Chugach is also doing a detailed assessment of bringing on more power from renewable energy like wind, solar and hydro.
Tony Izzo, CEO of Matanuska Electric Association, said: “We expect natural gas to be a component of MEA’s energy mix as we transition towards our diversification goals and the results of this study will be helpful in assessing options with our fellow utilities and other stakeholders.”
Other utilities participating include Golden Valley Electric Association in Interior Alaska; and Homer Electric Association on the Kenai Peninsula south of Anchorage.
“Cook Inlet supplies begin to taper off as early as 2027, meaning ‘railbelt’ (Southcentral and Interior Alaska) gas users face little time to assess potential solutions and make decisions to meet the eventual gap,” the utilities said in a joint statement.
“Timing in a critical component of any selected project to avoid a shortfall. The (utilities’ working group additionally focused on reliability as a key factor to ensure the project predictably meets area needs for several years,” the statement said.
MINING:
World faces ‘terrifying’ future if miners, regulators don’t step up – Newcrest
Melanie Burton, Reuters, Mining.Com, June 28, 2023
Regulators urgently need to fast track approvals for new mines and the renewable energy projects to power them to ensure the supply of minerals essential to averting climate change, gold miner Newcrest’s interim head said on Thursday.
“We are urgently off course, and we need to course correct immediately,” Sherry Duhe, interim CEO of Australia’s top gold miner and a former oil industry executive, told a mining conference in Brisbane.
The mining industry needs to bring online the equivalent of 17 more Escondidas, the world’s biggest copper mine, by 2050, to meet demand projections, she said as an example of the scale of the problem.
Other metals, such as nickel, cobalt, and lithium, used in batteries and wind turbines, are also urgently needed for the energy transition.
Miners need to step up development by an order of magnitude and governments need to slash regulatory timelines and beef up regulatory staffing, as regulation is becoming more complex, including duplicated rules, Duhe said.
“The next five to 10 years are critical,” she said.
“The alternative is terrifying.”
Newcrest is relying on a wind farm to supply 40% of its electricity needs for its Cadia gold mine in New South Wales state, but that power project development is struggling with regulatory time frames.
Shareholders in Newcrest, which has gold and copper projects in Australia, Canada, and Papua New Guinea, are due to vote later this year on a A$26.2 billion ($17.3 billion) takeover offer from Newmont Corp.
POLITICS:
AUTO GROUP MAKES CASE: A top U.S. automotive trade group is taking aim at the Biden administration’s new vehicle emissions targets, saying in a new memo that the proposal is “neither reasonable nor achievable” and risks limiting consumer choice, disadvantaging the auto industry, and triggering “substantial” price hikes for all types of vehicles.
In a draft memo, slated to be sent to the EPA July 5, the Alliance for Automotive Innovation outlined five of its top concerns with the EPA’s 2027-2032 vehicle emissions targets, which seek to cut emissions by 56% compared to the existing 2026 requirements.
AAI, which represents GM, Volkswagen, Hyundai, and others, called the proposal a “de facto battery electric vehicle mandate,” and pushed for the administration to make several key changes to its current proposal. Among them:
Don’t write off plug-in hybrids: AAI notes that the EPA’s expected emissions rules project that 60% of all new vehicle sales in 2030 will be battery electric vehicles (BEVs)—an amount that increases to 67% by 2032. That’s a sharp uptick from the 50% of EV sales by the end of the decade that the administration had targeted in 2021—a goal that crucially also included plug-in hybrid vehicles, which were taken out of the equation under the EPA’s new rules.
From the Washington Examiner, Daily on Energy, June 29, 2023