Today’s Key Takeaways: Alberta puts hold on renewable energy projects. Investments in new oil and gas to average $22B over next 4 years. Low-impact LNG strike. 50 mining companies negotiate with Chile for lithium deals. China’s abandoned EV cars piling up in cities.
NEWS OF THE DAY:
Canada’s Oil-Rich Alberta Province Halts Renewable-Energy Projects
Vipal Minga, The Wall Street Journal, August 19, 2023
Canada’s oil-rich province of Alberta has become the latest jurisdiction to push back against renewable-energy initiatives, declaring a seven-month moratorium on new wind and solar projects.
The pause put in place by the province’s conservative government has provoked criticism from members of the renewables industry, which says the move threatens to undermine a fast-growing sector that has been contributing a growing share of energy to Alberta’s power grid.
Alberta, which is home to Canada’s oil sands, the fourth-largest oil reserve in the world, announced earlier this month that it would pause until Feb. 29, 2024, approvals of any renewable-energy projects that produce over 1 megawatt of power. Alberta wants to study how the projects affect the power grid, their impact on the environment and what the government called “Alberta’s pristine viewscapes.” The government also wants to consider end-of-life rules for solar farms and windmill projects.
Net-Zero Goals Won’t Slow Down Oil Exploration
Irina Slav, OilPrice.Com, August 19, 2023
- WoodMac: investment in new oil and gas exploration is recovering and is set to average $22 billion annually over the next four years.
- The recovery in exploration spending is taking place amid a double-down on the transition.
- The expected rise in hydrocarbons demand and the relative importance of energy security are two reasons why oil companies are spending more on exploration.
Underinvestment in oil and gas exploration has been a scarecrow for energy security for several years now.
Various industry executives, most notably perhaps those from the Middle East oil kingdoms, have warned that unless investment in new exploration rebounds, energy security will be compromised on a global scale.
Wood Mackenzie recently had some good news for these executives: investment in new oil and gas exploration is recovering and is set to average $22 billion annually over the next four years. Despite the billions being channeled into the transition away from hydrocarbons.
At the same time, there is a connection between the transition and the rebound in new exploration spending in oil and gas. That connection has to do with the new demands that the transition has created for exploration and production companies – pressure to focus on assets with a low emissions profile, for instance, and stricter environmental requirements that would make some discoveries unviable.
Column: Australian LNG strike looms, impact likely limited for now
Clyde Russell, Reuters, August 21, 2023
The likelihood of industrial action at three Australian liquefied natural gas facilities is increasing, but the question for the market is what is the potential impact on the supply of the super-chilled fuel.
Unions at Woodside Energy Group’s (WDS.AX) North West Shelf offshore gas platforms announced plans on Aug. 20 to strike as early as Sept. 2, the latest escalation in a long-running dispute over pay and conditions.
More Than 50 Mining Companies To Negotiate Lithium Deals With Chile
Alex Kimani, OilPrice.Com, August 20, 2023
- The new public-private model of operations introduced by Chilean President Boric has attracted around 50 mining companies from over the world that are now looking to negotiate lithium deals.
- Under Boric’s plan, the government will also negotiate with Albemarle and SQM for a larger stake in their current contracts.
- Chile has also proposed to incentivize the exploration of other salt flats other than the Atacama so as to diversify the sources of lithium and expand production.
More than 50 companies from around the world are jostling to negotiate lithium deals under Chile’s new public-private model. Until now, U.S.-based Albemarle (NYSE:ALB) and Chile-based Sociedad Quimica y Minera de Chile (NYSE:SQM) have dominated the Atacama salt flat, which represents 30% of global lithium production. However, President Gabriel Boric’s new solution is a model that will see the state take a controlling stake in strategic and sensitive operations while private firms will retain control of non-strategic projects.
Under Boric’s plan, the government will also negotiate with ALB and SQM for a larger stake in their current contracts, with the negotiations to be overseen by the state-owned copper producer Codelco, a company tasked with creating a framework for establishing a new state-owned lithium company in the future. However, the president will need to seek the approval of the National Congress of Chile–where he lacks a majority–in the second half of the current year, meaning the plan is likely to undergo significant changes before approval.
China’s Abandoned, Obsolete Electric Cars Are Piling Up in Cities
Bloomberg News, August 17, 2023
A subsidy-fueled boom helped build China into an electric-car giant but left weed-infested lots across the nation brimming with unwanted battery-powered vehicles.
On the outskirts of the Chinese city of Hangzhou, a small, dilapidated temple overlooks a graveyard of sorts: a series of fields where hundreds upon hundreds of electric cars have been abandoned among weeds and garbage.
Similar pools of unwanted battery-powered vehicles have sprouted up in at least half a dozen cities across China, though a few have been cleaned up. In Hangzhou, some cars have been left for so long that plants are sprouting from their trunks. Others were discarded in such a hurry that fluffy toys still sit on their dashboards.
The scenes recall the aftermath of the nation’s bike-sharing crash in 2018, when tens of millions of bicycles ended up in rivers, ditches and disused parking lots after the rise and fall of startups backed by big tech such as Ofo and Mobike.
This time, the cars were likely deserted after the ride-hailing companies that owned them failed, or because they were about to become obsolete as automakers rolled out EV after EV with better features and longer driving ranges. They’re a striking representation of the excess and waste that can happen when capital floods into a burgeoning industry, and perhaps also an odd monument to the seismic progress in electric transportation over the last few years.