Today’s Key Takeaways: EPA revised WOTUS rule hits the streets. Major crude draw raises oil prices. Three countries began importing LNG this year – more will follow. Mining operations commence at Manh Choh. Support for wind energy in NJ plummets.
NEWS OF THE DAY:
EPA Revises Waters Rule to Align With High Court Wetlands Ruling
Bobby McGill, Bloomberg Law, August 30, 2023
- Waters rule immediately finalized without public comment
- Rule jettisons wetlands ‘significant nexus’ standard
A new rule governing federally protected waters and wetlands was issued Tuesday by the EPA to align agency regulations with a US Supreme Court ruling that will allow unpermitted development in wetlands across the country.
The rule revises the Biden administration’s earlier waters of the US, or WOTUS, definition finalized in January, removing its legal basis, which was struck down by the Supreme Court in May in Sackett v. EPA.
The January WOTUS rule expanded federal Clean Water Act protections over wetlands and waterways. But the Supreme Court in Sackett limited the waters that can be protected under the act, potentially allowing construction and pollution in vast swaths of wetlands across the country.
The new post-Sackett rule revises the January definition to remove the “significant nexus” standard that was the basis of the earlier rule. It also says wetlands protected under the Clean Water Act must have a continuous surface connection to navigable waterways as required by the Sackett ruling.
The significant nexus test allowed streams and wetlands adjacent to larger water bodies to be protected under the Clean Water Act.
The new rule implements the court’s opinion that the Clean Water Act protects only waters and wetlands that are relatively permanent and have a continuous surface connection to navigable waterways, such as the Potomac or Mississippi rivers.
Sackett v. EPA effectively eliminated the federal government’s role in regulating many wetlands nationwide, leaving wetlands that aren’t directly connected to large rivers, streams, and coastlines either unregulated or regulated only by states.
Immediately Finalized
The EPA finalized the post-Sackett rule Tuesday without issuing a draft for public comment. The agency did so using the rarely-used “good cause” exception to notice-and-comment under the Administrative Procedure Act, which allows federal agencies to forgo public comment when officials think that a rule update is sufficiently urgent.
In this case, the Sackett ruling undermined the existing WOTUS regulation, leaving no legal regulation in place to govern wetlands and waterways.
Radhika Fox, chief of the EPA’s Office of Water, said in July that the agency will answer questions from the public only after the final rule takes effect.
Industry groups making up the Waters Advocacy Coalition, including the National Mining Association, American Petroleum Institute, American Farm Bureau Federation, and dozens of others, in July offered their comments to the EPA regardless.
The coalition urged the EPA to avoid finalizing a rule that attempts to satisfy the requirements of Sackett while also retaining aspects of the old rule that would more broadly protect waters and wetlands.
A WOTUS definition that “pushes the outer limits of the Agencies’ CWA authority” would be “legally vulnerable,” the groups wrote.
OIL:
Oil Rises After EIA Confirms Major Crude Draw
Irina Slav, OilPrice.Com, August 30, 2023
Crude oil prices moved higher today after the U.S. Energy Information Administration reported an inventory decline of 10.6 million barrels for the week to August 25.
The estimate compared with a draw of 6.1 million barrels for the previous week.
A day earlier, the American Petroleum had estimated inventories had shed a massive 11.5 million barrels in the week to August 25, which prompted a spike in oil prices.
GAS:
Three countries began importing liquefied natural gas this year, and more will follow
Energy Information Administration, August 30, 2023
Global liquefied natural gas (LNG) import capacity is set to expand by 16%, or 23 billion cubic feet per day (Bcf/d), by the end of 2024 compared with 2022. Our estimate is based on trade press and data by the International Group of Liquefied Natural Gas Importers (GIIGNL). In the first seven months of 2023, three countries—Germany, the Philippines, and Vietnam—began importing LNG for the first time. By the end of next year, we expect Antigua, Australia, Cyprus, and Nicaragua to start importing LNG. Several more countries are in advanced stages of developing LNG import capacity.
Over the past 10 years (2013–22), global LNG import capacity—called regasification capacity—has grown by 49% (45.8 Bcf/d) to reach 140.0 Bcf/d across 48 countries. By the end of 2024, we expect 55 countries to have LNG regasification terminals with a combined capacity of 163 Bcf/d. Globally, available regasification capacity exceeds LNG imports. Historically, up to 39% of global regasification capacity is used every year. Spare regasification capacity, most of which is in Japan, South Korea, and China, allows countries to meet occasional demand spikes, particularly in winter. Last year, global LNG trade used 37% of available regasification capacity, or 51.7 Bcf/d.
MINING:
Contango Announces Commencement of Mining Operations at Manh Choh Mine and Re-Start of Drilling at Lucky Shot Mine
Businesswire, August 30, 2023
Contango ORE, Inc. (“Contango” or the “Company”) (NYSE American: CTGO) announced that mining operations have started at its 30% owned Manh Choh Mine (the “Project” or “Manh Choh”), located near Tok, Alaska, U.S.A. With all major contracts, bonding and permitting in place, the Project remains on track and on budget to bring Contango’s 30% interest in Manh Choh into production in the second half of 2024. Based on the Feasibility Study Technical Report Summary (“TRS”), the Manh Choh mine is expected to produce 225,000 gold equivalent ounces (“GEO”) per year over a 4.5-year mine life1. Contango’s share of production is expected to average 67,500 GEO per year. In addition, the Company has initiated a surface drilling program at its 100% owned Lucky Shot project.
Rick Van Nieuwenhuyse, President, and CEO said: “We are indeed excited to report that mining operations have commenced at Manh Choh, and that the construction phase has been achieved on budget and on schedule. The opening at the Manh Choh mine was officially celebrated with a ground-breaking ceremony on August 29th. In attendance were the Governor of Alaska, Michael Dunlevy, Tetlin Tribal Chief, Michael Sam, and Tribal Council members, as well as representatives from both Kinross and Contango. At this point, mining operations primarily consist of pre-stripping activities, with any ore encountered to be stockpiled for later transport by road haul trucks to the Fort Knox mill for processing. Meanwhile, mill modification activities continue at the Fort Knox mill with an emphasis on completing outdoor activities before winter arrives. The project continues to be on track to achieve commercial production in H2 2024.”
At the Lucky Shot project, the Company initiated a surface exploration drill program on the Coleman segment of the Lucky Shot vein. Figure 2 shows the drill pad that will be used to drill a series of 12 to 15 drill holes totaling approximately 3,000 meters (9,800 feet) in a fan pattern to in-fill and extend the Coleman Segment of the Lucky Shot vein. As previously reported on June 12, 2023, in the Technical Report Summary for the Lucky Shot project2, the Coleman Segment of the Lucky Shot vein contains an estimated 95,092 ounces of Indicated gold resource averaging 15.6 grams per metric tonne (“g/t”) (0.455 ounces per short ton (“oz/st”)) and an additional 23,642 ounces of Inferred gold resource averaging 9.9 g/t (0.289 oz/st). Figure 3 is an image of the planned drill pattern designed to in-fill and extend the mineralization down plunge and along strike of know mineralization.
Rick Van Nieuwenhuyse further commented: “We will complete as much surface drilling as we can safely accomplish from this single drill pad on top of Box Mountain before winter weather conditions shut us down. The program is designed to extend known mineralization on the Coleman Segment of the Lucky Shot vein, and upgrade resources to a measured category so that we can incorporate into a proper mine plan. Future drilling of approximately 12,000 meters (39,000 feet) from underground at Lucky Shot is expected to be undertaken in 2024 to augment resources on the Lucky Shot Segment of the vein. This program is expected to substantially expand the current resource on the Lucky Shot Segment with drill holes having approximately 15 to 20 meters (50 to 65 feet) of separation on each fan and each fan approximately 25 meters (82 feet) apart. Our objective over the next year is to complete the above-mentioned surface drill program followed by the underground drill program at Lucky Shot to identify 400,000 to 500,000 ounces of gold resource that we can then develop a mine plan around.”
POLITICS:
WIND ENERGY BACKING DECLINES IN NJ: Support for wind energy has plummeted in New Jersey, with many residents tying an uptick in whale beachings to wind farms and contending that it could hurt the state’s summer tourism economy.
In a new Monmouth University poll published today, just over half of New Jersey residents (54%) favor placing electricity-generating wind farms off the state’s coast, while 40% oppose this action. This is a change from just four years ago, when wind energy support stood at a much higher 76%, with just 15% opposing this action. And prior to that, support for offshore wind farms was at a high 80-84% from 2008 to 2011.
The decline in wind energy support has been largely partisan, with Republican support dropping 41% in the last four years and independent support dropping 25%. Democratic support has remained relatively stable over the years.
“There was a time when wind energy was not really a political issue. It consistently received widespread bipartisan support for more than a decade. That is no longer the case,” Patrick Murray, director of the independent Monmouth University Polling Institute, said in a statement.
Four in 10 residents think that wind farms could hurt the state’s summer tourism economy, with nearly half of the survey takers claiming that development of offshore wind is either definitely or probably contributing to whale strandings. Plus, there are few New Jerseyans that see wind energy development as a boon for the overall state economy, with only 22% saying that the industry would create a lot of jobs for the state.
There is little concrete evidence to show that wind farms are to blame for the recent uptick in whales washing along the shores of the U.S. Experts have been pointing to ship strikes as a more likely explanation for the occurrence. Read the poll here.
From the Washington Examiner, Daily on Energy