Today’s Key Takeaways: Interior creates executive team to provide direction and decide on funding for orphan well cleanup – Alaska plans to submit a request for funding. Exxon CEO Darren Woods anticipates lower oil prices moving forward. European gas slumps as China prepares to flood market. 55% of unaffiliated voters say Biden’s first year in office has been Very Unsuccessful.
NEWS OF THE DAY:
Interior reveals plans for orphan well cleanup
Heather Richards, E & E News, January 18, 2022
The Interior Department has signed an agreement with several other federal agencies to organize its nationwide effort to clean up orphaned oil and gas wells.
Congress directed a historic $4.7 billion toward plugging abandoned wells on federal, tribal, and private lands when it passed the bipartisan infrastructure package in November.
The law directs Interior to take the lead in carrying out the program on public lands and distributing funding to states and tribes.
A memorandum of understanding (MOU) signed by Interior Deputy Secretary Tommy Beaudreau last week, and disclosed publicly today, also details the agency’s planned collaboration with the departments of Energy and Agriculture, as well as EPA and the Interstate Oil and Gas Compact Commission.
Energy Secretary Jennifer Granholm said the orphan well efforts will help curb “highly polluting” sources of methane.
“Capping unplugged oil and gas wells is a win-win, helping to revitalize rural economies and providing opportunity to the fossil fuel workers who have powered our nation for over a century to land skills-matched jobs that will protect the health of their communities,” she said in a statement.
The MOU signed last week creates an executive team to provide high-level direction, decide on funding and prepare annual reports on the orphan well cleanup efforts to Congress. The team will be made up of the five Interior assistant secretaries, the director of the Bureau of Land Management and undersecretary for natural resources and environment at the USDA.
Most of the orphan well cleanup efforts will be headquartered at BLM, an Interior agency that oversees its oil and gas program.
BLM will head a technical working group responsible for managing the orphan well program on federal lands, ranking orphan wells for cleanup operations, and developing a way to track and measure the methane pollution coming from abandoned wells. It will also rely on experts at the U.S. Geological Survey, the Bureau of Indian Affairs, EPA, and DOE.
The group is responsible for making recommendations to the executive team, according to the MOU.
On state and tribal lands, the MOU notes that Interior’s Office of Environmental Policy and Compliance is leading the rollout of funding.
Interior Secretary Deb Haaland said that making “critical investments” in legacy oil and gas cleanup will demand an “all of government approach.”
“I have seen firsthand how the orphaned oil and gas wells left behind by extractive industries lead to hazardous pollution, water contamination, and safety hazards for our communities,” she said in a statement. “I am proud to join our sister agencies in this effort.”
Nearly every state with documented orphaned wells has indicated that it will apply for federal funds, according to Interior. Preliminary reports from those state expressions of interest place the number of documented orphaned wells as more than double previous estimates (E&E News PM, Jan. 5).
EPA has estimated the number of unknown orphan wells across the country could run into the millions.
Oil prices are at a 7-year high, but Exxon CEO Darren Woods is confident they will trend lower.
Pippa Stevens, CNBC Business News, January 18, 2022
- Oil prices rose to a seven-year high Tuesday amid ongoing supply concerns and escalating tensions in the Middle East.
- Exxon Mobil CEO Darren Woods, however, is confident prices will trend lower.
- ″[W]e anticipated higher prices. We also anticipate a lot of volatility. And frankly we’re anticipating lower prices as we go forward,” he said.
Oil prices rose to a seven-year high Tuesday amid ongoing supply concerns and escalating tensions in the Middle East, but Exxon Mobil CEO Darren Woods is confident they will trend lower.
In the immediate future, however, the oil executive said the market should expect volatile prices as the industry’s recovery from Covid-19 continues.
“As you get supply and demand tighter, events that happen around the world … lead to a lot more volatility because there’s less of a buffer, and I think we’re going to see that for some time now,” he said Tuesday on CNBC’s “Squawk Box.” “Until industry begins to ramp up productions and increase the level of supply to meet this growing demand, or in turn demand starts to come down a little bit … you’re going to see a lot more volatility until we get better stability.”
Woods added that it’s hard to predict when the market might balance out given the many players involved.
West Texas Intermediate crude futures, the U.S. oil benchmark, traded as high as $85.74 per barrel on Tuesday, a price last seen in October 2014. The price marks a blistering recovery after the contract briefly traded in negative territory in April 2020, as the pandemic sapped demand for petroleum products.
International benchmark Brent crude broke above $88 per barrel, also hitting the highest level since 2014. As producers continue to keep a lid on production while demand recovers, some observers have called for oil to top $100 per barrel this year.
But Woods said he doesn’t get “overly enamored” with today’s high prices. When looking at new investments the company focuses on ensuring operations can be competitive across a wide range of price environments, he said.
″[W]e anticipated higher prices. We also anticipate a lot of volatility. And frankly we’re anticipating lower prices as we go forward,” he said.
Exxon said Tuesday it’s targeting net-zero greenhouse gas emissions for its operated assets by 2050. The announcement follows similar targets from competitors and comes as Exxon faces board pressure to act on climate change. In 2021, upstart activist firm Engine No. 1 successfully placed three of its candidates on the oil giant’s board.
Exxon’s target does not include so-called Scope 3 emissions — the environmental footprint from the products a company generates — or the company’s supply chain. Scope 3 emissions are typically the highest, and the hardest, to quantify.
Tuesday’s climate-focused pledge builds on prior announcements from Exxon on how it plans to cut its emissions. The company has also pledged billions of dollars to develop emissions-reducing technologies like carbon capture.
Woods said the target is “more than just a pledge” and that the company has a “line of sight” for how it plans to slash its emissions.
“We have road maps that we’re developing in each of our facilities around the world to deliver those reductions,” Woods said. “There are plans behind this ambition that takes us clearly through 2030 and then beyond that. I think that should give folks some confidence. This is more than just out there positioning on something; this is actually work that we’re doing.”
The company said in a statement that it identified more than 150 potential steps and modifications that can cut emissions across its operations, including electrifying equipment and reducing emissions leaks.
Woods said that further down the line, technological advancements and market incentives will help drive down the cost of more expensive decarbonization efforts.
Exxon is the latest in a growing list of companies pledging to slash emissions. But critics note that with no enforcement mechanism some of these promises could potentially be without merit.
Shares of Exxon advanced more than 1% on Tuesday to their highest level in more than two years.
European Gas Slumps as China Readies to Flood Market With LNG
Elena Nazneva, Bloomberg, January 18, 2022
- Offers from Sinopec trading unit signal China is well stocked
- Norwegian shipments gradually recover after unplanned outages
European natural gas slumped as a top LNG importer in China prepares to flood the market with fuel that could further ease supply concerns in the continent.
Benchmark futures fell as much as 8.9%, tracking weaker prices in Asia. The trading arm of Sinopec is offering to sell dozens of spot liquefied natural gas cargoes this year, according to traders with knowledge of the matter. The move indicates China is well stocked and more gas could come to Europe, helping to ease pressure from its abnormally low inventories and curtailed supplies from top exporter Russia.
Increased LNG arrivals, coupled with milder weather forecasts and recovering Norwegian shipments, are bringing some relief for European consumers from prices that more than tripled last year.
LNG WRAP: Asian Sentiment Softens as China Becomes Seller
“Gas market sentiment is cautiously bearish this week, driven by tepid demand in Asia and robust LNG imports into Europe,” consultant Rystad Energy AS wrote in a note. “Though the U.S. has eyes on potential weather-related shutdowns in the coming days.”
Dutch front-month gas fell 6.4% to 73.32 euros per megawatt-hour as of 3:53 p.m. in Amsterdam. The equivalent U.K. contract dropped 6.3% to 175.70 pence a therm.
Gas prices in Europe and Asia “have likely peaked already this winter,” Citigroup Inc. analysts wrote in a report this week. That’s “unless a severe cold shot were to hit sometime in the next two months, or geopolitical tensions involving Russia were to escalate substantially.”
Tensions over Ukraine and the new Nord Stream 2 pipeline from Russia to Germany remain on traders’ radar. Germany said the controversial project would be a target for retaliation if Russia uses energy as a weapon, while Moscow reiterated it has no plan to strike at Ukraine.
As much as 30 billion cubic meters of additional gas from Russia may be available to Europe this year, Rystad says, however there is a risk “of almost none of that materializing” if the tensions escalate to military conflict.
For now, Russia’s exporter Gazprom PJSC is withholding spot gas offers, while supplies under its long-term contracts dropped sharply. The company says that’s because of lower requests from European buyers. Gas flows through Russia’s Yamal-Europe pipeline to Germany have been reversed for the past four weeks, while deliveries through Ukraine remain far below normal.
Interior residents urge mining company to reconsider plan to truck ore from Tetlin to Fairbanks
Tim Ellis, KUAC, January 18, 2022
Members of an ad-hoc group called Advocates for Safe Alaska Highways say a mining company’s trucking plan will endanger the lives of people who live along and drive the 240-mile route from the Manh Choh mine near Tetlin to Fort Knox.
Kinross Gold will hold two public meetings this week to talk about its plans to develop the mine near Tetlin and haul ore from there by truck to the mill at its Fort Knox mine north of Fairbanks. Opponents of the trucking plan say they’ll voice their concerns about the plans during those meetings.
“Our group is focused on two things,” saidGary Wilken, a Fairbanks resident and one of the organizers of group. “One is safety.”
The group hopes to convince company officials to reconsider their plan to run up to 192 trucks a day along the route, each of which will be up to 120 feet long pulling two trailers and weighing some 70 tons.
“Secondly,” Wilken said, “and most importantly, we want to try to (convey) the sense that there must be alternative to this extraordinary 500-mile round trip hauling rock from Tetlin to Fort Knox.”
Members of the group propose three alternatives in a document they’ve produced and begun to circulate. They include Kinross building a mill at the mine, developing a rail link, or building an industrial road to keep the trucks off the highways.
Wilken says the group looks forward to talking to Kinross officials about their proposals
“We haven’t really been able to sit down and have a critical analysis of what their plan may or may not be,” he said.
Wilken says the group wants to know more about the company’s plan for the last segment of the route, from Fairbanks to Fort Knox. They say the state transportation department restricts trucks pulling double trailers on the Steese Highway. And that means Kinross will have to decouple the trailers and haul them one at a time to the mill, which they say will require up to 384 single-trailer truck trips daily on that segment.
A Kinross Gold spokesperson said in an email Monday that company officials haven’t made final decisions on the trucking plan. And that they strongly prefer to run the double trailers along the whole route.
Wilken says members of the group also believe the trucking plan will require more and ongoing maintenance to repair damage to the roads inflicted by trucks. And they’re concerned about the impacts on Alaska Highway bridges that were built in the 1940s. They say the highways are already heavily trafficked by trucks hauling fuel and supplies, as well as slow-moving Army convoys and recreational vehicles.
The Kinross spokesperson said in a follow-up email Thursday that the document compiled by Advocates for Safe Alaska Highways has “scenarios that are intended to generate fear.”
The spokesperson added that during Tuesday’s meeting in Fairbanks, company officials “will be sharing more details about our plan and correcting and clarifying much of the misinformation included in the document.”
Tuesday’s meeting is scheduled to begin at 5:30 p.m. at the Pioneer Park Civic Center in Fairbanks. Wednesday’s meeting, in Tok, will begin at 5 p.m. at Fast Eddy’s Restaurant.
Kinross officials announced Monday that the public also can attend the meetings by phone or online. The company posted that information to its Facebook page, along with the telephone number to call and a link to connect to the meeting online via Zoom.
50% of Voters Rate Biden’s First Year ‘Very Unsuccessful’ – Rasmussen Reports®
President Joe Biden’s first year in office has been a failure, according to a majority of voters who say the Democrat has left the country more divided than when he was inaugurated.
A new national telephone and online survey by Rasmussen Reports finds that just 12% of Likely U.S. voters rate Biden’s first year in office Very Successful, while another 26% say his first year as president has been Somewhat Successful. Ten percent (10%) believe Biden has been Somewhat Unsuccessful during his first year in office, while 50% rate his first year Very Unsuccessful. (To see survey question wording, click here.)
Biden campaigned on a promised to unite America, but 57% of voters say the country has become more divided since he took office. Only 12% think the country has become more united during Biden’s first year as president, while 30% believe it has remained about the same.
While 68% of Democratic voters rate Biden’s first year as president at least somewhat successful, that view is shared by only 13% of Republicans and 30% of voters not affiliated with either major party. Seventy-five percent (75%) of Republicans and 55% unaffiliated voters say Biden’s first year in office has been Very Unsuccessful, as do 23% of Democrats.
The survey of 1,000 U.S. Likely Voters was conducted on January 12-13, 2022, by Rasmussen Reports. The margin of sampling error is +/- 3 percentage points with a 95% level of confidence. Field work for all Rasmussen Reports surveys is conducted by Pulse Opinion Research, LLC. See methodology.
Even most Democrats don’t credit Biden with uniting the country. Just 24% of Democrats say America has become more united since Biden became president, a view shared by only five percent (5%) of Republicans and six percent (6%) of unaffiliated voters. Thirty-six percent (36%) of Democrats believe the country has become more divided since Biden took office, as do 78% of Republicans and 58% of unaffiliated voters. Forty percent (40%) of Democrats, 16% of Republicans and 34% of unaffiliated voters think the level of division in the country has remained about the same.
While 52% of Black voters believe Biden’s first year as president has been at least somewhat successful, only 38% of whites and 32% of other minorities agree. Fifty-four percent (54%) of whites, 38% of Black voters and 46% of other minorities say Biden’s first year has been Very Unsuccessful. Fifty-nine percent (59%) of whites, 48% of Black voters and 55% of other minorities think America has become more divided during the first year of Biden’s presidency.
A solid majority of voters 40 and older say Biden has been Very Unsuccessful in his first year, an opinion shared by 39% of voters under 40. Majorities in every age group believe America has become more divided since Biden took office.
Those with graduate degrees and annual incomes of $100,000 or more are more likely to believe Biden’s first year in office was a success.
More government workers (53%) than private sector employees (35%) think Biden’s first year as president was at least somewhat successful.
From the Washington Examiner, Daily on Energy:
CCUS NEEDED FOR DEVELOPING WORLD: The Carbon Capture Coalition is out in front making the case for carbon management technologies following a Government Accountability Office audit showing that only two of 11 government-funded carbon capture, utilization, and storage projects operate today.
CCC public policy manager Jessie Stolark maintains that CCUS needs to be a major part of the global decarbonization strategy, especially in developing nations, whose reliance on coal is generally projected to be higher in the coming decades than that of OECD countries.
“If we look toward the developing world, they have a relatively young coal fleet. It’s pretty unlikely that they’re going to turn on a dime, as it were, and turn off these coal fleets,” Stolark told Jeremy ahead of a media briefing the coalition did today responding to the GAO’s findings, as well as discussing what CCUS stands to gain from the bipartisan infrastructure law and the Democrats’ stalled Build Back Better Act proposal.
Stolark also maintains, as we covered last week, that industrial implementation of carbon capture is proven and is vitally important, especially if carbon-intensive industries are to cut emissions.
“Unless we come up with new ways to make these materials, we will have — no matter the fuel source — we will have CO2 emissions. And so, in those sectors it’s absolutely critical that we deploy carbon capture technologies,” she said.
A recently updated International Energy Agency review hailed carbon capture as “one of few solutions to tackle emissions from heavy industry and to remove carbon from the atmosphere.”
IEA data shows the number of commercial CCUS facilities operating and in development around the world doubled last year, but IEA says the world is well short of the 1.7 billion tons of CO2 capture capacity needed by 2030 in the agency’s Net Zero by 2050 scenario.