FIRST OIL AT GMT 2! LNG Carriers beat Tankers. Flip the Script on Energy Prices?

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ConocoPhillips Alaska’s Greater Mooses Tooth #2 Produces First Oil

ANCHORAGE – ConocoPhillips (NYSE: COP) Alaska today announced that the Greater Mooses Tooth #2 (GMT2) drill site in the National Petroleum Reserve-Alaska (NPR-A) has achieved first oil production under budget and on schedule on Dec. 12.

 GMT2 is the second project in the Greater Mooses Tooth Unit, in the northeast NPR-A on Alaska’s North Slope and is located about eight miles southwest of GMT1. GMT2 is a satellite development of the Alpine field and is connected to the existing Alpine production center in the Colville River Unit (CRU) for processing via GMT1 and CD5 infrastructure.

Permit applications for drilling at GMT2 were submitted to the Bureau of Land Management (BLM) in August 2015. The BLM completed a Supplemental Environmental Impact Statement with a Record of Decision issued on Oct. 16, 2018.

The BLM, ASRC and Kuukpik Corporation share land and mineral rights for the project. GMT2 has a 14-acre drilling pad, an 8-mile gravel road, and pipeline facilities connected to the existing CRU infrastructure. The pad is planned to have 36 wells initially, with capacity for up to 48 wells. Peak production is estimated at approximately 30,000 barrels of oil equivalent per day (BOEPD) and the project costs approximately $1.4 billion gross, including construction and drilling expenses.

At peak construction during the past three winter seasons, the project created about 700 jobs resulting in more than 600,000 direct construction manhours. “The GMT2 team safely executed this project in an environmentally responsible manner marking another successful milestone for development in the NPR-A,” said Erec Isaacson, president of ConocoPhillips Alaska. “Projects like these continue to create hundreds of jobs in Alaska and contribute to a stable Alaska economy. We appreciate the collaboration with stakeholders from Kuukpik Corporation, the community of Nuiqsut, the North Slope Borough and ASRC that made it possible. Our continuous investment in projects on the North Slope benefits Alaska’s future.”

In addition to completing GMT2, ConocoPhillips Alaska continues making substantial investments in long-term projects on the North Slope. The Greater Mooses Tooth and Colville River Units are approximately 100 percent owned and operated by ConocoPhillips Alaska, Inc.


U.S. energy secretary says an oil export ban is not in the works
Ari Natter, World Oil, December 14, 2021

President Joe Biden’s energy chief extended an olive branch to the oil industry Tuesday, telling executives a crude export ban is not under consideration, while assuring them that the administration was “not a bogeyman.”

Energy Secretary Jennifer Granholm made the virtual remarks Tuesday to an outside advisory group with members including executives from such companies as Exxon Mobil Corp. and Royal Dutch Shell Plc. Her conciliatory tone comes as the administration’s policies on energy production, which included a temporary halt to oil leasing on federal lands and the termination of a permit for the Keystone XL pipeline, have drawn the ire of industry.

“I do not want to fight with any of you,” Granholm told the National Petroleum Council. “I do think it’s much more productive to work together on future-facing solutions.”

The administration, Granholm said, is not considering reinstating a ban on the export of crude oil — a tool the Biden White House had previously been considering as it sought ways to address gasoline prices that hovered around a seven-year high, setting off political alarm bells. Granholm’s comments represent the administration’s most definitive statement regarding the export ban, which had the potential to upend oil markets while discouraging domestic oil production.

“I heard you loud and clear and so has the White House,” Granholm said in her remarks. “We wanted to put that rumor to rest.”

Granholm’s address to the council follows finger pointing over the issue of high gasoline and oil prices. The industry was also angry with the administration’s decision to dramatically reduce access to oil and gas development, followed by complaints domestic producers weren’t ramping up production amid increasing energy demand as the worst of the pandemic ended.

The Biden administration has since sold oil and gas drilling rights in the Gulf of Mexico after a federal district judge in June ruled against the moratorium.

Granholm, in her comments, asked the industry to ramp up oil and gas production, while repeating previous complaints about unused permits and leases.

“While I understand you may disagree with some of our policies, it doesn’t mean the Biden administration is standing in the way of your efforts to help meet current demand,” Granholm said, while asking the industry to help partner in the administration’s battle against climate change. “I firmly believe those that embrace the change rather than fighting it will be rewarded on the other side.”


Feasibility Study Finds LNG Carriers Beat Tankers When It Comes to Carbon Capture and Storage Use
Mike Schuler, gCaptain, December 14, 2021

A feasibility study into shipping’s use of carbon capture and storage (CCS) technology shows that the LNG sector is currently better suited than tankers to benefit from the use of CCS, although tankers could also benefit as costs come down.

The study was conducted as part a partnership between tanker company Stena Bulk and the Oil and Gas Climate Initiative (OGCI) and aimed at exploring the potential of capturing carbon from the exhaust of large ships as the shipping industry races to decarbonize.

Stena Bulk provided data from three vessels of different types in its fleet, specifically a medium range (MR) oil/chemical tanker and a Suezmax crude oil tanker currently running on heavy fuel oil (HFO), and an LNG carrier fueled by LNG. Data collected included information on deck space, fuel use, and the availability of heat and energy in the exhaust stream, among other considerations.

The findings showed that the LNG carrier offered the most straightforward path to implementing viable CCS because it had the right mix of onboard infrastructure, while the Suezmax and MR tankers presented more technical challenges to implementing a CCS system.

That’s not to say tankers don’t have the potential to successfully use CCS technology. The study showed that carbon capture and storage is also technically feasible on a large tanker (in this case the suezmax benefitted over the MR tanker), but the biggest barrier is the cost of installation and operation. Upfront capex requirements of installing storage tanks, compressors, and other equipment create a barrier to entry, while operation expenses also increase because of the energy requirements for using a CCS system effectively. However, the study found that these costs could be substantially reduced if the engine was adapted for compatibility with carbon capture and storage.

The study concluded that while costs were likely to be a hurdle to deployment of CCS in the near and medium term, the technology could be a viable long-term option to meeting decarbonization targets as technology improves and costs come down. Commodity prices for captured carbon dioxide could also potentially offset some the costs to install and operate.

“We think that it’s right that the industry is honest about the challenges it faces from a technical and commercial perspective on the pathway to decarbonisation,” said Erik Hånell, President and CEO of Stena Bulk. “This study proves once again that there is no silver bullet solution to meet the IMO’s climate targets, and that we must promote and adopt a wide variety of proven and commercially sensible solutions if we are to successfully decarbonise.”

Dr. Michael Traver, Transport Workstream Chair for the Oil and Gas Climate Initiative, said: “Carbon capture and storage is expected to play a key role in meeting the ambitions of the Paris Agreement and is a familiar process for many of the member companies of OGCI. Extending and adapting the technology to marine vessels poses unique challenges, but also represents a great opportunity to reduce emissions from a difficult to abate sector within transportation. Our partnership with Stena Bulk has been a great example of the type of cross-industry collaboration that will be necessary to meet the challenges we face.”


From the Washington Examiner, Daily on Energy:

COAL BOOSTED BY ENERGY PRICE HIKES: Power generators across the globe have turned to coal this fall and winter to fuel their plants as high natural gas prices, and the intermittency of renewable energy in some places, have driven demand for a commodity whose use many governments are committed to phasing out.

That boost in global demand is helping to bring prices right along with it. In the United States, spot prices have been rising significantly across all regional coal commodities.

For the week ending Sept. 17, the spot price for a short ton of Central Appalachian coal stood at $71.05. That price rose to $92.50 last week, a more than 30% increase. Spot prices for other thermal coal products from Northern Appalachia, Powder River Basin, and the Uinta Basin are up, too.

The same supply chain factors driving up the cost of virtually everything in the economy are partly responsible for the sailing coal prices, said Michelle Bloodworth, president and CEO of coal trade group America’s Power. But the doubling of natural gas prices also plays a premier role, she said.

“A lot of coal generators buy coal based on historic consumption, but because natural gas increased pretty quickly and dramatically, we saw full demand for the first nine months of 2021, compared to 2020, go up by about 25%,” she told Jeremy.

Bloodworth assessed the tight coal supply to be a “short-term issue” but said it could be prevented going forward if the nation’s remaining coal plants maintain their ranks, thereby communicating demand signals to producers.

“The best way to avoid this problem in the future is to prevent premature coal retirements, because if you keep sending the signal to the market, and as you have less and less coal, then obviously it becomes challenging to keep the coal supply chain healthy,” she said.

Coal and resilience: The boost in demand would seem to add weight to arguments favoring maintenance of coal’s presence within the grid, but per Bloodworth’s assessment of things, the recent FERC report on the Texas grid failures last winter have done much more toward that end.

“Natural gas was mentioned about a thousand times [in the report] and coal was only mentioned about 10,” she said.

The report did make note of frozen coal equipment but emphasized that the majority of outages were natural gas-powered units and were related to fuel issues.

Those data demonstrate why coal deserves a footprint in the grid, said Bloodworth, whose group has urged FERC to more clearly define grid resilience and establish criteria for operators that illustrate the value fuel assurance — which she says coal provides.

“There’s got to be some certainty as the grid transition takes place and some recognition that we are going to need … the remaining coal fleet,” Bloodworth said.

“We believe that it’s the wrong direction to eliminate any fuel,” she went on, adding, “We’re not against the grid transition. We all know what’s occurring, but we think it needs to be gradual and deliberate so we don’t have grid emergencies.”

On the contrary: Environmental groups and a number Democratic officials, climate envoy John Kerry perhaps chief among them, have been especially hawkish on the necessity to cut emissions-heavy coal, remaining unconvinced of arguments favoring an all-of-the-above approach.

Kerry notably predicted last month that the U.S. “won’t have coal” by 2030, and indeed, the thrust of the document agreed to at COP26 was to “phase down” the fuel. The Energy Information Administration estimates that the share of U.S. energy-related CO2 emissions for which coal is responsible will increase from 19% to 21% from 2020 through 2022.


Democrats try to flip the script on energy prices
Ben Geman, Axios, December 15, 2021

The Biden administration and allied climate activists are hoping to transform today’s relatively high energy costs from a political risk into an asset as they push for passage of sweeping climate legislation.

Driving the news: Axios got the first look at a new ad buy premiering in the D.C. media market today from the group Evergreen Action.

“Want lower energy bills? Congress must pass the Build Back Better Act, a bill which invests in affordable, American-made clean energy,” the ad states.

  • It claims, citing the think tank RMI, that the measures, which include billions in tax and other incentives for renewables, would save power companies and consumers billions of dollars annually by 2030.
  • It’s part of a six-figure buy that will include video, display and search ads targeted at policymakers.

Catch up fast: It’s the latest attempt by Democrats to win huge new investments for renewable power, electric vehicles and other clean energy on a party-line vote.

  • On Dec. 11, Heather Boushey, a member of the White House Council of Economic Advisers, noted on Twitter that the latest Consumer Price Index showed energy prices account for one-third of higher costs facing working-class families.
  • She pointed to the legislation’s energy efficiency measures and policies that would result in aggressive deployment of renewable sources, in particular, as ways to “help ease energy price increases in the future.”
  • Cabinet members, including Energy Secretary Jennifer Granholm, have also noted that spending money on renewable resources, such as offshore wind, will yield cheaper electricity for consumers.

Yes, but: Republican lawmakers and energy industry groups argue that provisions in the House-passed version of the bill would raise energy costs by making it more expensive to produce and use fossil fuels.

  • In addition, the recent energy supply crunch that has hit Europe especially hard demonstrates that the transition to clean energy sources may be turbulent and could result in higher costs to consumers at times.

Threat level: Democrats also say that by cutting emissions, the bill would reduce the toll from extreme weather events.

  • Collin O’Mara, president of the National Wildlife Federation, told reporters yesterday that the cost of inaction “isn’t getting enough attention,” pointing to extreme weather costs in lives and economic damages.

Context: The ad buy and Democratic pushback on the energy price effects of Build Back Better come after the White House has been on the defensive for months over energy prices, particularly gasoline.

  • The Biden administration is undertaking the largest-ever release of oil from the Strategic Petroleum Reserve in order to try to bolster global supplies and reduce prices.
  • In a Tuesday blog post, the White House touted falling prices at the pump, a trend helped by global market conditions and COVID-related developments.


Looking back and ahead: climate tech trends in 2021 and 2022
Amy Harder, Cipher, December 15, 2021


Much like the curve of the Earth you can’t see from the ground, we’ve embarked on a curve in energy and climate history.

This year catapulted us from the tired debate of whether climate change is a problem into a fierce one about how to reach net-zero greenhouse gas emissions by 2050. The year 2022 is sure to ratchet things up even more.

Every year since 2018, I’ve looked back and ahead at the trends shaping the year coming to an end and the year ahead.

From this new(ish) perch at Cipher by Breakthrough Energy, my focus is more squarely on the technologies we need to reach net-zero emissions by 2050. With that perspective in mind, let’s keep this annual tradition going!

Five trends in 2021:
1. Net-zero bandwagon

This was the year commitments to reach net-zero emissions went mainstream. Even the most oil-dependent countries (the United Arab Emirates) and major oil companies like BP and Shell have hopped on the bandwagon.

Almost everyone’s doing it, so it must be good, right? Mostly, but we must make sure these commitments are backed up by actual near-term, money-backed tangible commitments from companies and countries. (More on that in a moment.)

2. Record-breaking U.S. federal investments in climate and clean energy tech

The U.S. federal government is keeping the same approach to energy and climate policy that it has in the past: subsidizing clean energy technologies without penalizing fossil fuels.

But this year, it’s supercharging the approach, pouring a record-shattering $100 billion into clean energy research and development with the infrastructure law. And there’s the potential for an eye-popping $500 billion for climate and energy programs in the House-passed Build Back Better Act.

3. Unprecedented venture capital pouring into climate tech

The cleantech boom of the last decade has nothing on the venture capital money pouring into climate technologies today, according to PitchBook data.

Our inaugural edition of Cipher included exclusive PitchBook data showing historic levels of venture capital investments since the Paris Climate Agreement was signed in 2015.

This latest data has a more comprehensive look, going back further and including both clean energy and climate technology investments.

4. Increased scrutiny of carbon offsets

As investor, activist and political pressures mount for companies to make investment and business plans that actually reduce emissions, the yearslong practice of relying on carbon offsets is facing heightened scrutiny.

Offsets are mechanisms that allow entities to make an investment in one place, like planting a tree or installing a wind farm, that is designed to offset emissions elsewhere.

The whole practice is relatively loosely regulated and managed, so confirming that emissions are reduced is tough. MIT Technology Review and ProPublica pursued a series this year investigating the practice in California and by one nonprofit.

“Some of the offsets are, in my view… flirting with greenwashing, to be honest with you,” said Fatih Birol, executive director of the International Energy Agency, in bonus footage from last week’s Newsmakers interview.

5. Energy crisis jolts climate debate

This year’s energy crisis isn’t the world’s first, of course. But it is the first since the Paris Climate Agreement was signed in 2015 and the world collectively decided to chart a future with cleaner energy.

Although the causes of this crisis are mostly pandemic-related, you should expect that from here on out, those wanting to forestall progress will cite the clean energy transition as the culprit of high prices.

The thing is, this transition does risk higher fossil fuel prices in the future if not managed well, but that isn’t an argument for not pursuing the transition; it’s an argument for managing it well!
Five trends for 2022:
1. More money, but hopefully not more problems

The Energy Department received nearly $40 billion—a record—for energy research and development in the infrastructure law (DOE gets a total of more than $62 billion in the law).

That’s good news for clean energy innovation, but now it’s facing the Herculean task of getting all the money out the door effectively and fast. First up: Hiring 1,000 new people, the department said last month.

“They have to be very thoughtful about how to structure programs, how to put out money and how they’re going to manage political wins and also when something bad happens with the money invested,” said Spencer Nelson, senior research director at ClearPath, a nonprofit organization focused on clean energy innovation policy.

2. First-of-their-kind projects to the start line

Efforts at both the federal and private-sector level are pouring money into ensuring new technologies can go from invention to commercialization. This could be the year we see a lot of rhetoric turn into action.

The Energy Department’s record funding will help create the supply of new technologies, but we also need demand.

The Biden administration announced the First Movers Coalition at the United Nations climate conference in November, which includes roughly three dozen companies having committed to procure new technologies in such hard-to-clean sectors like aviation and steel.

Closer to Cipher’s home, we’ll be looking at which projects get funding through Breakthrough Energy’s Catalyst program, announced in July.

The program, whose anchor partners span the corporate and government spectrum, will include direct funding for early-commercial projects in sectors that are similarly hard to clean up: sustainable aviation fuels, long-duration energy storage, direct air capture and green hydrogen.

3. Global climate and energy equity

Leaders of developing countries, particularly those in Africa and Southeast Asia, are increasingly speaking out on the importance of ensuring the technological transformation to net-zero emissions by 2050 is equitable.

Although this rift has existed for decades, the topic is taking on greater urgency as multilateral organizations in and run largely by wealthier nations cut off financing for fossil-fuel projects in the developing world (even while they continue such projects within their own borders).

We’ll be looking to see to what degree leniency is granted in some of these restrictions and how development of new clean energy technologies is done in a way that will benefit the entire world, not just the wealthier countries where they’re being invented.

4. Whether the VC market cools down

What goes up, must come down, or maybe not judging by Tesla’s share price. We’ll be looking to see if there is any cooling-off of the red-hot (or should that be green-hot?) climate tech VC space, as noted earlier.

5. Reckoning with clean energy criticism

As we enter the supercharged period of ramping up cleaner energy resources, concerns about their footprints on Earth are rising, including: appropriately handling retired wind turbines and other clean energy technologies; safely mining for clean energy minerals we need for these technologies; streamlining the permitting process for new wind and solar farms and power lines without bulldozing over community rights; and ensuring new industrial facilities (hydrogen and carbon capture) are built with environmental justice in mind.
Expect to see these concerns get louder going forward.

The only things that don’t face opposition are things that don’t matter. Everything that matters will, so we should be prepared to have constructive (not destructive) conversations about them.