Today’s Key Takeaways: Time to admit that reducing oil and gas production will raise the price of energy globally. Cook Inlet gas crunch could lead to higher prices. AK Energy Metals sitting on HUGE nickel resource. The truth about the cost of IRA clean energy provisions.
NEWS OF THE DAY:
TotalEnergies: States Must Admit Transition Would Raise Energy Prices
Tsvetana Paraskova, OilPrice.Com, February 12, 2024
Governments need to admit that the transition to low-carbon solutions would raise the price of energy globally, TotalEnergies chief executive Patrick Pouyanné told the Financial Times in an interview published on Monday.
“We think that fundamentally this energy transition will mean a higher price of energy,” Pouyanné told FT, noting that policy makers would be essentially mis-selling the transition if they fail to admit it would entail higher costs for consumers.
According to TotalEnergies’s CEO, governments and environmental campaigners have been naïve to believe that the answer to lowering emissions is simply to reduce oil and gas production, especially before alternatives are ready to step up and replace part of the fossil fuels currently used to meet rising global energy demand.
GAS:
Cook Inlet gas crunch likely to push up prices as lawmakers search for solutions
Eric Stone, Alaska Public Media, February 9, 2024
Alaska lawmakers are searching for solutions to a looming shortage of natural gas that threatens power and heating for much of the state’s population. The state’s largest gas utility is warning that shortfalls could come as soon as next year – and imports are years off.
Throughout Southcentral Alaska, heaters, stoves, and, notably, electric power plants rely on gas.
“70% of the population live along the Railbelt and depend on Cook Inlet gas,” said Sen. Cathy Giessel, R-Anchorage, who chairs the Senate Energy Committee.
Lots of the state’s gas is up on the North Slope, but it’s more or less stuck there until or unless the state builds a pipeline south – which would take longer than the state has time to wait, according to Sen. Bert Stedman, R-Sitka.
“We can’t wait 10 years,” he said. “So we need to move forward.”
That means continuing to rely on gas from Cook Inlet, most of which comes from Hilcorp, the Texas-based oil and gas company that dominates gas production in the Cook Inlet basin.
And though the company says it plans to keep drilling, Hilcorp Senior Vice President Luke Saugier told a joint meeting of the House and Senate Resource Committees that they’re expecting production to decline.
“Part of the reason we’re all here is because the gas under Hilcorp’s leasehold cannot meet 100% of the demand that there is today in the Cook Inlet market,” he told the committee on Wednesday. “So we need other sources of energy.”
MINING:
Alaska Energy boosts contained nickel at Nikolai project to 8 billion lb.
Staff Writer, Battery Metals/Mining.Com, February 12, 2024
Alaska Energy Metals (TSXV: AEMC) said on Monday that its 100% owned Eureka deposit, part of its flagship Nikolai polymetallic project in Alaska, now contains one of the biggest known nickel resources in the US following an update to the NI 43-101 mineral resource estimate (MRE).
The new MRE includes 813 million tonnes of indicated material grading 0.22% nickel, plus 0.07% copper, 0.02% cobalt, 0.048 g/t platinum, 0.094 g/t palladium and 0.012 g/t gold, for a nickel-equivalent (NiEq) grade of 0.29%. The contained nickel metal is nearly 3.9 billion lb.
There are also 896 million tonnes of inferred material grading 0.27% NiEq (0.21% nickel, 0.05% copper, 0.02% cobalt, 0.039 g/t platinum, 0.068 g/t palladium and 0.009 g/t gold), containing 4.2 billion lb. of nickel. The inferred resource grew 180% in tonnage compared to the deposit’s initial resource published November 2023.
The 2024 resource estimate incorporated 35 historical drill holes, the data for which Alaska Energy purchased in August 2023, and eight diamond drill holes (totaling 4,138 metres) drilled by the company in 2023. The resource area covers three zones (EZ1, EZ2, EZ3) of sulphide mineralization spanning 4.5 kilometres of the Eureka deposit.
The highlight of recent drilling was the identification of a higher-grade core zone within EZ2 that displayed continuity along much of the strike of the deposit. This core zone alone contains an indicated resource of 211 million tonnes at 0.34% NiEq and an inferred resource of 154 million tonnes at 0.33% NiEq.
“In less than a year, we have taken an exploration concept to a substantial deposit of nickel and other critical metals,” Alaska Energy Metals CEO Gregory Beischer commented in a news release. “The update increases the nickel metal content of the deposit to over 8 billion lb. (more than 3.7 million tonnes) with only a 0.01% grade decrease and a notably lower strip ratio.”
POLITICS:
UNDERSTANDING THE NEW NUMBERS FOR THE IRA CLEAN ENERGY PROVISIONS: The Inflation Reduction Act’s clean energy provisions will cost taxpayers roughly $428 billion more in the next decade than originally projected, according to a new estimate from the Congressional Budget Office — an increase larger than the original projection for the total cost of the measures, which was $369 billion.
The update came yesterday as part of the office’s annual budget projections, which also estimated that the federal deficit will grow to $2.6 trillion in 2034, up from $1.6 trillion in fiscal 2024.
CBO director Phillip Swagel said costs of the clean energy-related tax credit costs “are much higher than the staff of the Joint Committee on Taxation originally projected,” and “reflect new emissions standards, market developments, and actions taken by the Administration to implement the tax provisions.”
Why costs are higher: One big reason is that more people and businesses have taken advantage of the law’s tax credits in a shorter time frame than anticipated.
The CBO report adds to other estimates that have similarly found that the costs of the IRA will be far higher than originally projected – in fact, it’s more conservative. Goldman Sachs, for instance, estimated that the incentives would cost roughly $1.2 trillion by 2032—three times as much as the official figures.
And another report from researchers at Penn Wharton projected that the IRA’s energy and climate costs would total around $1.05 trillion. That report projected that incentives for EV cars and trucks alone would add around $393 billion in costs in the next 10 years, as Washington Examiner alum Jeremy Beaman previously reported.
How the CBO report is different: The Goldman and Penn Wharton estimates only accounted for the higher-than-expected take-up for the credits. The CBO’s new estimate also takes into account the Biden administration’s new emissions standards for autos and its efforts to promote electric vehicles. It says that those efforts will decrease gas tax revenues and increase take-up for EV tax credits. All together, federal revenues will take an additional $224 billion hit from those factors over the next 10 years.
The higher costs for wind, solar, battery manufacturing, and other credits will account for another additional $204 billion in costs. Adding those together gives the total of $428 billion
From The Washington Examiner Daily on Energy, February 8, 2024