Today’s Key Takeaways: Energy a key focus on last day of legislative session. Impact of AK oil on WA = 25,000 jobs and $2 billion in personal income. Permitting reform not over “until the West Virginia Democrat says it’s over.”
NEWS OF THE DAY:
Bills aimed at reducing energy costs, boosting Cook Inlet gas and carbon storage advance in Legislature’s final days
Eric Stone, Alaska Public Media, May 15, 2024
Two high-priority energy bills aimed at boosting Cook Inlet gas production, sequestering carbon dioxide and lowering consumer costs appear headed for final passage in the Alaska Legislature. Both bills were initially proposed by Gov. Mike Dunleavy and now contain a number of other proposals.
In the House, legislators greenlit a bill aimed at making it cheaper to transmit power around various communities on the Railbelt. It would also make it easier and cheaper to bring new energy sources on the grid, especially for independent power producers.
Rep. Will Stapp, R-Fairbanks, said it’s all about lowering energy costs.
“The unified transmission organization, the RTO [Railbelt Transmission Organization], is really the first step in saying, OK, let’s take a holistic look at how we can move up and down the entire Railbelt system, the cheapest electron, right, from Homer to Fairbanks, or from Fairbanks to Homer and everywhere in between, and then let’s look at where we can deploy new forms of generation,” Stapp said.
The bill would also prevent utilities from passing on the cost of building natural gas import terminals to customers through rates. It’s due for a Senate Finance Committee hearing Wednesday and is likely headed for the governor’s desk after a final Senate vote.
Meanwhile, the Senate passed a bill that would allow companies to inject carbon dioxide into underground reservoirs. Sen. Bert Stedman, R-Sitka, who presented the bill on the Senate floor, said it could be a boon for the state.
“Carbon capture, utilization and storage is an expanding industry that companies are beginning to commit billions of dollars to invest in,” Stedman said. “SB 50 will allow Alaska to take part in that.”
Stedman said the Senate Finance Committee had scrutinized the bill to ensure it would not wind up costing the state money through tax credits — and Stedman said the use of carbon dioxide injection for so-called “enhanced oil recovery” had the potential to boost state oil revenue.
The bill also includes several provisions aimed at addressing the looming gas supply crunch. One would regulate the price of natural gas storage. Another would set up a reserve-based lending program within the Alaska Industrial Development and Export Authority. That would provide state loans to small drillers in Cook Inlet who have been unable to find investors.
OIL:
Washington state benefits from Alaska oil leasing
Don Brunell, May 15, 2024, Sequim Gazette
Recently, President Biden launched the second phase of his attack on domestic oil and gas production by effectively blocking leases in Alaska’s National Petroleum Reserve (ANPR). That follows last year’s reimposed ban on exploration in the Alaska National Wildlife Refuge (ANWR).
Both actions are ill-advised.
In the Wall Street Journal, Alaska Sen. Dan Sullivan (R) quipped: “The Biden Administration has imposed more sanctions on Alaska than it has on Iran.”
The Interior Department just blocked new oil and gas leasing on 13.3 million acres in Alaska’s National Petroleum Reserve. Congress expressly set aside the region in 1923 for oil and gas development, but Biden ignores this saying drilling would disturb the Arctic’s ‘natural wonders,’ Sullivan added.
Energy development and environmental protection are not mutually exclusive. In fact, they are compatible and concurrent.
On Alaska’s North Slope, exploration and construction take place during the winter, over roads built on sheets of ice. When the ice melts, the roads disappear. Drilling and production have strong and long-standing environmental safeguards.
Washington’s five refineries provide 4% of our nation’s processing capacity. With our state accounting for 2 percent of national petroleum consumption, in-state refineries produce quantities more than sufficient for Washington’s needs. Those refineries processed crude oil into 13 million gallons of gasoline, diesel, jet fuel and finished products each day.
Alaska crude comes to our refineries in double-hulled ocean-going tankers. Since the Exxon Valdez incident Prince William Sound in March 1989, state-of-the art redundant marine safeguards are aboard ships. Tanker crews have extensive safety and response training.
The crude, which is 12,000 feet below ground, would be extracted by a widely used technique known as horizontal drilling. Production wells would be spaced a dozen feet apart yet would reach out for miles in different directions underground. The oil would then be piped to Prudhoe Bay and sent 800 miles south via the existing Trans Alaska Pipeline.
“With a multiplier of 12 percent, the total impact of our refineries was 25,000 jobs and $2 billion in personal income, according to The Washington Research Council.
GAS:
Qatar Believes The World Will Need More LNG Projects after 2030
Charles Kennedy, OilPrice.Com, May 15, 2024
Natural gas in energy supply is not going anywhere and its demand will only rise with growth in economies and global population, which will require additional LNG projects to come online after 2030, the energy minister of one of the biggest LNG exporters, Qatar, said on Wednesday.
“Everybody’s trying to get the inflation down, so if we have a reasonable economic growth going forward, I think you’ll see that all the supply and demand will catch up and you’ll need another phase of development of gas in the [2030s],” Saad Sherida Al-Kaabi, Qatar’s Energy Minister and President and CEO of QatarEnergy, said at the Qatar Economic Forum in Doha.
Qatar, which is currently working on huge LNG expansion projects, expects to sign additional long-term contracts to supply the super-chilled fuel with demand growing in Asia and Europe, Al-Kaabi said at the forum, as carried by The National.
Related: AGDC survives attempts by legislature to zero out their budget – one more year to move the project forward with signed contracts.
POLITICS:
PERMITTING REFORM LATEST: There’s still optimism from some Senate Energy Democrats that permitting reform will cross the finish line – even after Majority Leader Chuck Schumer said Monday it would be “virtually impossible” to get something done.
“Everyone who’s involved with permitting reform understands, we’ve got to have permitting reform,” Energy and Natural Resources Chairman Joe Manchin said in a brief interview with reporters yesterday. “Senator Schumer understands that, we all understand, we’ve had good conversations, and I anticipate that we will get a good permitting bill done.”
When pressed further about Schumer’s comments, he suggested, “Maybe he misspoke.”
And he’s not the only one exhibiting optimism: Democratic Rep. John Hickenlooper, a transmission booster and Manchin’s ally on permitting, advocated on Manchin’s behalf in a single sentiment: It’s not over until the West Virginian Democrat says it’s over.
“I think Joe Manchin is one of the most tenacious, persistent people in the Senate,” Hickenlooper said. “And when he tells me to give it up, then I’ll say, ‘Well, it’s over.’”
Why it matters: Manchin and ENR Ranking Member John Barrasso have been negotiating for months on a deal to streamline the approval process for energy projects. For Manchin, it’s been a yearslong battle – since the 2022 passage of the Inflation Reduction Act, the senator has been working to move forward on a permitting bill. Part of his negotiations with Schumer to get the IRA passed was to get a vote on his permitting bill – a vote that failed last December, since Republicans had little incentive to deliver a legislative win to Manchin.
Manchin and Barrasso then began negotiations with the aim of delivering permitting reforms across a wide sector of energy projects.
In an interview yesterday, Barrasso continued to point the finger at Schumer. “It’s dead because Schumer is going to kill it,” Barrasso said. “Sen. Manchin and I have been working closely together, and Sen. Schumer has other ideas – and he’s not really interested in helping permitting reform that helps all forms of energy.”
The key here: The comments from Schumer came after the release of long-awaited rules from the Federal Energy Regulatory Commission that would direct grid operators to plan new transmission infrastructure to deliver more renewable energy across the country. This gave a win to Democrats who were hoping to advance renewable energy projects without ceding to Republican demands to streamline fossil fuel projects by amending environmental laws, like the National Environmental Policy Act.
The release of the transmission rules weakens Republicans’ bargaining position by addressing Democratic priorities to advance renewable projects. Furthermore, Schumer mentioned in Monday’s call with reporters that any legislative measure addressing transmission was likely to get pushback from House Republicans.
Still, Hickenlooper called the FERC rule a “band-aid on Congress’ inaction” and called for legislation to pass in a statement yesterday, arguing that his transmission bills – the BIG WIRES Act and the SPEED and Reliability Act – would do more to reform the permitting process than the rule.
What remains to be seen: If a permitting deal will emerge from the Senate Energy Committee duo.
From the Washington Examiner, Daily on Energy, May 15, 2024