Today’s Key Takeaways: One hour clash between U.S. Navy and Iran in Strait of Hormuz. Big oil planning world’s biggest floating wind farm. Biden asks congress for 3-month federal gas tax suspension. Nova Minerals begins drilling program for gold at Estelle project. Environmentalists hamstring building efforts to address climate change.
NEWS OF THE DAY:
USA Navy and Iran Corps Clash in Strait of Hormuz
Andreas Exarheas, Rigzone, June 22, 2022
The full interaction among all vessels lasted one hour.
U.S. Naval Forces Central Command Public Affairs announced Tuesday that three vessels from Iran’s Islamic Revolutionary Guard Corps Navy (IRGCN) interacted in an “unsafe and unprofessional manner” as U.S. Navy ships transited the Strait of Hormuz on June 20.
Patrol coastal ship USS Sirocco (PC 6) and expeditionary fast transport ship USNS Choctaw County (T-EPF 2) were conducting a routine transit in international waters when three Iranian fast inshore attack craft approached, the U.S. Navy noted. One of the IRGCN vessels approached Sirocco head-on at a “dangerously high” speed and only altered course after the U.S. patrol coastal ship issued audible warning signals to avoid collision, according to the U.S. Navy, which added that the Iranian vessel came within 50 yards of the U.S. Navy ship during the interaction and that Sirocco responded by deploying a warning flare.
“The full interaction among all vessels lasted one hour and ended when the IRGCN craft departed the area. U.S. Navy ships continued their transit without further incident,” the U.S. Navy stated.
“The IRGCN’s actions did not meet international standards of professional or safe maritime behavior, increasing the risk of miscalculation and collision,” the U.S. Navy added.
“U.S. naval forces remain vigilant and will continue to fly, sail and operate anywhere international law allows while promoting regional maritime security,” the U.S. Navy continued.
Earlier this month, the U.S. Navy revealed that naval forces from the United Arab Emirates and United States had begun a 10-day maritime exercise on June 13 in the Arabian Gulf. The exercise is an annual bilateral training event between U.S. Naval Forces Central Command and forces from the United Arab Emirates, the U.S. Navy outlined, adding that the exercise focuses on maritime security operations, mine countermeasures and harbor defense.
According to an update in April this year by Statista, which describes itself as a leading provider of market and consumer data, around 18 million barrels of oil passed through the Strait of Hormuz every day in 2020.
An article published on the U.S. Energy Information Administration’s (EIA) website in June 2019 labeled the Strait of Hormuz as the world’s most important oil transit chokepoint.
Oil majors plan world’s largest floating offshore wind farm
Camille Bond, Climatewire, June 21, 2022
Equinor ASA is partnering with TotalEnergies SE, Shell PLC and ConocoPhillips to assess a 1-gigawatt project off the coast of Norway.
Equinor ASA announced Friday that it is studying the possibility of constructing the world’s largest floating offshore wind farm off the coast of Bergen, Norway.
The company said that the “Trollvind” floating wind farm would have an installed capacity of about 1 gigawatt and would produce 4.3 terawatt-hours annually.
Norwegian state-owned energy company Petoro and oil majors TotalEnergies SE, Shell PLC and ConocoPhillips will partner on the project, Equinor said. The companies are aiming to make the installation economically feasible by buying as much energy as it produces and are targeting a final investment decision next year to bring the installation online in 2027.
The project would have national significance for Norway, according to Anders Opedal, chief executive officer of Equinor.
“A full-scale floating offshore wind farm like Trollvind could boost momentum towards realising the Norwegian authorities’ ambition to position Norway as an offshore wind nation,” Opedal said in a statement, adding the project builds “on expertise from the oil and gas industry.”
Equinor’s announcement comes as oil industry suppliers increasingly turn their sights to offshore wind, which is poised to develop rapidly through the end of the decade (Energywire, March 12, 2021).
Offshore wind turbines are typically fixed to the bottom of the sea, but many optimal wind areas are by deep waters. Floating offshore wind installations — where the turbines are fixed to floating platforms — offer a potential solution to open new areas for development.
The Global Wind Energy Council (GWEC) forecasts that floating offshore wind capacity will reach 16.5 GW by 2030, according to a recent report published by GWEC and sponsored by Shell.
Floating offshore wind technology is in the early commercialization phase, according to the report. Nascent markets in France, Japan, South Korea, Taiwan, and the U.K. are helping to drive growth.
Currently, the largest floating installation has a capacity of 50 megawatts and is located off the coast of Scotland, according to the report.
Equinor’s announcement “shows that floating wind is poised to reach utility scale in the near future, vastly expand the amount of ocean available for offshore wind development and allow offshore wind to serve as an even greater economic driver and piece of the climate solution,” according to Josh Kaplowitz, vice president of offshore wind at the American Clean Power Association.
The Trollvind project would “help build expertise and global capacity,” Kaplowitz added. He said it could accelerate floating wind’s progress toward utility-scale development and inform plans in the U.S. to build similar projects.
Sam Salustro, director of coalitions and strategic partnerships at the Business Network for Offshore Wind, said the Trollvind project should be a call to action to the U.S. floating offshore wind market.
In an email, Salustro called the Biden administration’s openness to granting leases in deep waters that would require floating technology “encouraging.”
“This continued advancement begins unlocking the technology and supply chain to build the new industry,” Salustro said, adding “there is still a need for coordination between the states and federal government to ensure we have the infrastructure to support floating [wind] and can support our suppliers.”
In the U.S., states on the West Coast are leading floating wind development. In April, a Washington company submitted a lease request to the Interior Department’s Bureau of Ocean Energy Management for a 2,000-MW project (Energywire, April 12).
Biden calls on Congress to suspend federal gas tax
Hans Nichols, Axios, June 22, 2022
President Biden will on Wednesday call on Congress to suspend the federal gas tax for three months, ask states to do the same and demand that oil and gas companies boost production and pass on any savings directly to consumers, according to administration officials.
- Temporarily eliminating the federal gas tax is one of the few available options that Biden and Congress have to address gas prices, which have risen approximately $2 dollar-a-gallon since Russia began massing troops on Ukraine’s border last year.
- Convincing Saudi Arabia to pump more oil is another prong in the White House strategy to bring down prices, driving Biden’s visit to the kingdom next month.
- But economists from both parties have been deeply skeptical for years that suspending the tax can actually lower prices at the pump.
By the numbers: Biden officials claim that eliminating state and federal taxes, as well as convincing oil and gas companies to pass on any savings to consumers, can lower the price of gas by about $1-per-gallon.
- A three-month suspension of the 18.4 cent-a-gallon tax on gas (24.4 cents for diesel) will cost the government approximately $10 billion. Revenue from the tax is dedicated to the Highway Trust Fund to help build federal roads and bridges.
- Biden wants Congress to divert other revenue towards the trust fund to ensure that long-term infrastructure projects are funded.
The big picture: In addition to blaming Vladimir Putin, Biden has been suggesting that the oil and gas industry is also responsible.
- “We’re going to make sure everyone knows Exxon’s profits,” Biden said at the Port of Los Angeles last month. “Exxon made more money than God last year.”
- Biden has summoned the leaders of seven major oil and gas companies — Marathon Petroleum, Valero Energy, ExxonMobil, Phillips 66, Chevron, BP and Shell — to Washington on Thursday to meet with Energy Secretary Jennifer Granholm.
What we’re watching: Biden seems comfortable antagonizing the very industry leaders he needs to increase domestic oil production.
- On Tuesday, Michael Wirth, the CEO of Chevron, wrote to Biden to request he take a more collaborative approach and offer less “political rhetoric.”
- Asked about Wirth’s letter, Biden was dismissive: “He’s mildly sensitive. I didn’t know they’d get their feelings hurt that quickly,” he told reporters.
What they’re saying: “A federal gas tax holiday is basically a tax cut,” said Justin Wolfers, a professor of public policy and economics at the University of Michigan, who derided the idea in 2008 when Sen. John McCain called for one. “And is a tax cut what you want to do when you’re facing inflation this high?”
- “Cutting the federal gas tax is something every administration faced with high gasoline prices has considered but none has done before,” said Bob McNally, the president of Rapidan Energy Group. “Little bang for the buck.”
The other side: “Having a federal gas tax holiday along with states following suit could be a 10% savings for hard-working Americans,” said Robert Wolf, former CEO of UBS Americas, and an Obama economic adviser.
- “While many economists call it a gimmick, if President Biden aligns the timetable to the heightened driving months like this summer, then it can truly help offset some of the direct rise caused from the Ukraine-Russia crisis.”
Nova begins drilling at RPM gold deposit
Shane Lasley, North of 60 Mining News, June 17, 2022
Nova Minerals Ltd. June 16 announced the start of the 2022 drill program at the high-grade RPM gold deposit on the Australia-based company’s Estelle project in Alaska.
Based on one hole drilled in 2012 and six completed by Nova last year, RPM North hosts 23.1 million metric tons of JORC-compliant inferred resource averaging 2 grams per metric ton (1.5 million oz) gold.
Nova plans to drill more than 40 holes focused on expanding and upgrading this resource.
This drilling starts with holes near RPM-005, which cut an incredible 132 meters averaging 10.5 g/t gold. What is exciting for Nova is this is the westernmost hole drilled at RPM North and a magnetic anomaly associated with the highest-grade zone in RPM-005 extends for roughly another 1,000 meters to the west.
The top priority targets for this year’s program at RPM are testing the area immediately surrounding RPM-005, as well as a fan of six holes at RPM South.
Rock samples collected by Nova geologists from RPM South, which lies about 600 meters southeast of RPM-005, returned assays with as much as 103 g/t gold. RPM South also hosts a magnetic geophysical anomaly that is similar but smaller than the one found at RPM North.
Priority two and three RPM targets include step-out holes along the roughly 1,400-meter magnetic anomaly at RPM North and testing another similar anomaly about 60 meters northwest of RPM-005.
The first drill rig is now turning at RPM, with two more expected to begin drilling there by the end of June.
“We are extremely excited to recommence drilling at the high-grade RPM deposit, which continues to amaze us,” said Nova Minerals CEO Christopher Gerteisen. “It is very gratifying to start from scratch in a new frontier doing what we do best and make such a significant discovery as we already have at the RPM deposit. With RPM showing all the signatures for over 1.4km (0.9 miles) in strike length we expect to rapidly increase both the size and confidence of the deposit in the current drill campaign.”
While drills target the expansion and upgrade of the 1.5-million-oz gold deposit at RPM, various mine and process optimization, material haulage, and environmental studies for a phase-two Estelle scoping study, including both the Korbel and RPM deposits, are underway.
It is currently envisioned that a central mill and other facilities will be established at Korbel, a larger but lower-grade deposit about 16 miles north of RPM.
A phase-one scoping study, which was released by Nova in February, provided a first look at establishing an operation at Korbel.
This “snapshot in time” study was based on 286 metric tons of Australian Joint Ore Reserves Committee-compliant indicated resources in the Korbel Main deposit averaging 0.3 g/t (3 million oz) gold, plus 583 million metric tons of inferred resource averaging 0.3 g/t (5.1 million oz) gold.
Nova began its 2022 resource expansion and upgrade drilling at Korbel in May.
It is expected that upgraded resources for both RPM and Korbel will be incorporated in the phase-two scoping study later this year and a prefeasibility study slated for 2023.
The 125-square-mile (324 square kilometers) Estelle gold property also hosts several other targets Nova is eager to explore.
“Nova is in an ideal position to achieve our goal of progressing both Korbel Main and RPM into production, whilst concurrently unlocking the Estelle Gold Trend,” said Gerteisen. “By implementing our dual exploration and development strategy, we will seek to maximise our ability to create value for shareholders through both resource growth and project development.”
If we can’t build things, we can’t tackle climate change: the problem
Amy Harder, Cipher, June 22, 2022
Local opposition convoluted permitting processes and backlogged bureaucracies are hamstringing our attempts to tackle climate change.
Cipher scrutinizes the technological transformations we need to reach net-zero emissions by 2050. Technologies can’t be transformative if we can’t build them at scale. We’ve covered this topic before, but it’s so massive and important that we’re going to keep coming back to it. This article seeks to put the hurdles in context. Next week, we’ll examine potential solutions. Though this story focuses on the obstacles to a clean energy transition in the United States, other Western democracies from Europe to Australia face similar challenges.
Numerous factors are at play, but let’s boil it down to three big challenges:
• Community and stakeholder opposition.
• Long and often outdated permitting processes at the local and federal level.
• Backlogged submissions from new energy projects connecting to electricity grids. Let’s tackle each in that order, beginning with opposition.
A peer-reviewed study published this month in Energy Policy presents a first-of-its-kind review of the scope and reach of opposition—and it’s alarming.
The study analyzed 53 renewable energy and power line projects proposed between 2008 and 2021 in 28 states that were delayed or blocked and found that nearly half were ultimately canceled. Nearly 80% of those projects had more than one source of opposition.
The most significant opposition was about land value and environmental impact, the study found. Tribal concerns about lack of proper consultation also featured prominently.
Although the focus was on opposition, researchers found permitting and regulatory processes were a core hurdle.
“Our analysis raises a fundamental question about whether the regulatory systems in place in the U.S. are suited to reviewing the rapidly growing number of new utility-scale renewable energy projects,” the study concluded.
Proponents and opponents alike of several projects found conflicting state and federal permitting regulations, which end up feeding opposition.
“Overlapping and inconsistent rules and regulations amplify local controversies that emerge for other reasons,” the study states.
The country’s shift to clean energy is also creating an influx of projects seeking permission to connect to the grid, according to a study by the Energy Department’s Lawrence Berkeley National Laboratory (LBNL).
This process, called the interconnection queue, has a Rubik’s Cube problem, which is creating yearslong approval delays.
Each time a project applies to connect to the grid, it must conduct studies and cost estimates based partly on existing power plants and those also in the queue.
Those conclusions affect to what degree any given proposal moves forward, so developers often submit several applications to see which version of a given project has the best chance to win approval.
Like scrambling the faces of a Rubik’s Cube, any action on one project in the queue affects the path forward for every other project in line.
Every time applications are submitted, withdrawn, or accepted, “that can trigger cascading effects of others in the queue having to do re-studies,” said Joe Rand, an electricity expert at the lab who co-wrote the LBNL study.
The very nature of renewable energy and storage projects—smaller in size and greater in number than coal and natural gas plants—makes this Rubik’s Cube massive.
“The interconnection queue process as it exists today was not designed for this volume of new projects we’re seeing. It was designed around centralized, large-scale fossil-fuel projects. Now, we have thousands of projects.”
-Joe Rand, senior scientific engineering associate, Lawrence Berkeley National Lab
As a result of these challenges, a troubling inverse trend is underway: renewable electricity is growing while the number of power lines constructed to move it around is slowing.
See our double dose of Data Dives below for more.
To be sure, wind and solar electricity are still growing rapidly in the U.S., indicating that despite the challenges many projects are still being built.
But these interconnected problems are poised to grow as the U.S. seeks to further increase the amount of zero-carbon electricity—all while keeping the lights on with aging grid infrastructure (a related, but distinct, challenge).
Measuring the impact of delays and projects not built is an imperfect exercise, but the effect could be significant.
The Energy Policy study determined that the 53 projects blocked or delayed over the last decade amounted to 9,586 megawatts of potential power capacity in the 28 states examined.
That capacity equals about 10% of the renewable electricity those states would need to produce by 2030 via their renewable electricity mandate laws.
Next week, we’ll delve into potential solutions for this triangle of problems—opposition, permitting and grid delays—including recent actions by the Federal Energy Regulatory Commission.
Importantly, we’ll need more than renewable energy and power lines to fight climate change. We’ll also need to scale-up other kinds of cleantech infrastructure, including carbon dioxide pipelines and hydrogen plants.
Wind and solar are the most popular forms of clean energy, and power lines are comparatively minor pieces of infrastructure.
How challenging it is to build the popular and easy stuff does not bode well for the less popular, harder stuff.