Today’s Key Takeaways: Nuclear in space. Does bull market in oil rigs mean slower transition? The folks who have championed gas stoves versus induction stoves in the culture wars voted against Gas Stove Protection Act. “Yawning” gap between copper mine profits and capital spending. New Alaska office director in DC.
NEWS OF THE DAY:
| If it works on Earth, why not in space?The Breakthrough Institute, June 8, 2023 |
| Westinghouse is developing the 5-megawatt eVinci reactor, for use in remote communities, mining operations, or places with grid connections but where uninterruptible power is required. Now it has signed a memorandum of understanding with Astrobotic, a company developing a system called LunaGrid, which is described as “a commercial power service designed for the lunar south pole.” EVinci can produce anywhere from a few kilowatts to five megawatts and is designed to run for eight years without refueling. NASA believes that small-scale reactors are essential for bases on the Moon or Mars. |
OIL:
Does the bull market in oil rigs signal a slower transition?
Simon Flowers, Anne Latham, Leslie Cook, Wood Mac, June 8, 2023
Deepwater hot spots drive up demand for drilling.
The offshore drilling rig market fell into a prolonged slump a decade ago, with overcapacity compounded by falling oil and gas prices and a collapse in upstream investment. The Paris Agreement in the early stages of the downturn, signaled a shift to a low-carbon future and seemed to reinforce the perception that drilling offshore exploration and development wells was a business in terminal decline. Rig owners were losing money hand over fist and with demand at a low ebb, hundreds of rigs and drillships were put into ‘cold stack’ or scrapped.
Yet today, demand for deepwater rigs is booming again, the market for the best ones all but sold out. Leslie Cook, Principal Analyst, went against the prevailing wisdom in 2019, predicting a strong recovery. She and Dr Andrew Latham, SVP Energy, took me through what’s driving the resurgence.
First, the medium-term outlook for oil and global LNG prices is rosier, while the upstream industry is generating huge amounts of discretionary cash flow and starting to spend more. Critically, the war in Ukraine has underlined how much the global economy depends on oil and gas – demand isn’t going to fall off a cliff this decade at least. New discoveries and developments will be needed to offset natural decline and meet growing demand.
GAS:
Far-right House Republicans just sent gas stove bills up in flames — and it’s a warning shot at Kevin McCarthy
Sarah Gray, Business Insider, June 8, 2023
The humble gas stove is again being dragged into a political spat; it was in the middle of an intraparty squabble between the far-right Freedom Caucus and House Speaker Kevin McCarthy on Tuesday.
Eleven conservative GOP members nuked McCarthy’s bills to block a gas stove ban, sending his plans up in flames.
The Gas Stove Protection and Freedom Act would have barred the Consumer Product Safety Commission from using federal funds to regulate gas stoves or issue safety guidance that would ban them or make them more expensive. Meanwhile, The Save Our Stoves Act would have blocked the US Department of Energy from issuing standards for cooking products like stoves.
The Speaker’s right flank is unhappy with McCarthy’s deal with the Biden White House to avoid a default and raise the debt ceiling and is revolting again as the compromise with Democrats did not make deep spending cuts.
MINING:
CHARTS: Copper mining profits top $100 billion a year, but where are the new mines?
Erik Els, Mining.Com, June 8, 2023
A recent presentation by S&P Global Market Intelligence mining and metals team featured a couple of graphs that crystalize the fundamental challenges facing copper mine supply.
Mitzi Sumangil, associate analyst at the US-based research firm, presented a graph showing the yawning gap between copper mining companies’ profits and capital spending.
Despite two consecutive years of bumper topline earnings north of $100 billion, expansion budgets haven’t budged, hovering in the early double-digit billions. Barely more than 12% of ebitda, versus a long-term average of more than double that.
Expansion capital is also focused on brownfield projects with the number of new mines over the last four years adding up to 15 compared to 32 over the same period a decade ago when profits were below $60 and on a clear downward trend.
In 2015 when copper mining profits barely reached above $30 billion across the industry 12 mines went into production thanks to robust spending in the years preceding the bottom of the cycle.
POLITICS:
Governor Dunleavy Welcomes Jerry Moses as Alaska’s Washington DC Office Director
Alaska Native News, June 8, 2023
Alaska Governor Mike Dunleavy announced Jerry Moses has joined the Dunleavy administration as director of the State of Alaska’s Washington DC Office.
As the DC Office Director, Moses will work with federal agencies and Congress to ensure Alaska’s interests are represented.
“It is a pleasure to welcome Jerry Moses to this administration. I know that Jerry’s knowledge and experience will prove to be an invaluable asset for Alaska in our nation’s capital,” said Governor Mike Dunleavy.
Moses brings 15 years of experience working in DC to the position. Prior to joining the Dunleavy administration, Moses served as the Vice President of Intergovernmental Affairs for the Alaska Native Tribal Health Consortium. He also previously worked as Senior Counsel to the Senate Committee on Indian Affairs.
Moses was born at Mt. Edgecumbe and was raised in Fairbanks. He is a graduate of the University of Alaska Fairbanks and also earned a law degree from the University of Arizona James E. Rogers College of Law and a Master of Public Health degree from the Harvard University TH Chang School of Public Health.
Moses started in the position this week.