Graphite One On the Move. Americans Want Fossil Fuels. Shell Speeds Things Up.

In News by wp_sysadmin


Pew Research Poll Shows Majority of U.S. Opposes Phasing Out Fossil Fuels
Pew Research, Pipeline and Gas Journal, June 4, 2021

The Pew Research Center released a new poll which found that nearly two-thirds of the U.S. public opposes phasing out fossil fuels as a means of addressing climate change.

In the poll, nearly two-thirds of Americans (64%) say the U.S. should use a mix of energy sources going forward – including oil, coal, and natural gas, along with renewables. Only about a third (33%) of Americans support phasing out fossil fuels entirely.

Credit Pew Research

“Even as Americans identify a number of pressing national problems, majorities see an array of actors, from government to business, as doing too little to reduce the effects of climate change and are broadly supportive of a range of policy approaches that would help address climate change, including moving toward renewable energy sources, developing infrastructure for electric vehicles, and increasing taxes and restrictions on carbon emissions,” the Pew Research Center stated in its report.

“Still, most Americans favor using a mix of energy sources to meet the country’s needs – including renewables as well as oil, coal and natural gas. There is limited support for phasing out the use of fossil fuels altogether.”

Other findings in the poll include:

  • A majority (60%) of Americans say that increasing job and economic growth is a very important consideration to them personally when it comes to proposals to reduce the effects of climate change.
  • As Americans think about proposals to address climate change, Black (68%) and Hispanic adults (55%) stand out for the high shares who say it is very important to them that such proposals help lower-income communities.


The Retreat of Exxon and the Oil Majors Won’t Stop Fossil Fuel
Rachel Adams-Heard, Laura Hurst, Kevin Crowley, Yahoo! Finance, June 8, 2021

When Exxon Mobil Corp. decided to get out of a big oil field in Iraq, the government took on the unusual role of salesman. Iraqi officials pitched West Qurna-1 to likely buyers from among Exxon’s supermajor peers, including arch-rival Chevron Corp. There weren’t any takers.

That left Iraq with narrowed options: sell to one of China’s state-backed oil majors, or else buy back Exxon’s stake itself. The sale process remains unresolved but either outcome would stand as a powerful indicator of what’s become of the global oil market. With supermajors from the U.S. and Europe in retreat around the world, national oil champions are set to fill the void.

The supermajors — a group that, in addition to Exxon and Chevron, includes BP Plc, Royal Dutch Shell Plc, TotalEnergies SE, and Eni SpA — are shrinking even while fossil-fuel demand holds strong. These companies are under growing pressure to pay down debt while cutting greenhouse gas and, for some, transitioning to renewable energy. Recent weeks saw Exxon and Chevron rebuked by their own shareholders over climate concerns, while Shell lost a lawsuit in the Hague over the pace of its shift away from oil and gas.

National oil companies, or NOCs, are largely shielded from those pressures. When the owners are governments, not shareholders, there aren’t dissident board members like those now sitting inside Exxon. That means state oil producers like those who populate OPEC+ can be the buyers of last resort for fossil-fuel projects cast off by the shrinking supermajors.

State companies can also gobble market share by simply producing oil that their private-sector rivals won’t. Saudi Aramco and Abu Dhabi National Oil Co. are spending billions to boost their respective output capacities by a million barrels per day each, and Qatar Petroleum is spending more than $30 billion to increase its liquefied natural gas exports by more than 50%. (Aramco and Abu Dhabi National Oil declined to comment.)

Taken together, NOCs make up just over half of today’s worldwide oil supply. By 2050, Rystad Energy sees that share growing to 65%.

It’s an unmistakable trend that’s drawing heightened attention to some of the largest and most secretive entities in the world. Many government leaders are seeking to lower planet-warming emissions, with nine of the 10 biggest economies staked to net-zero goals. At the same time, these opaque government-sponsored oil producers — insulated in most cases from both investors and environmentalists, and under little obligation to disclose climate data — are taking over the job of filling the millions of barrels consumed each day.

“We hear government officials and NOC officials say, ‘We look at the divestment of international oil companies from some projects as an opportunity for us to grow,’” said Patrick Heller, an adviser at the Natural Resource Governance Institute. “And I do think that’s potentially really risky.”

Some observers worry that campaigns by activists to have oil majors divest from fossil fuels could end up accelerating a shift to government owners who operate with less transparency and, occasionally, worse environmental records. Jason Bordoff, director of the Center on Global Energy Policy at Columbia University’s School of International and Public Affairs, argued in a recent essay that such efforts could result in a “pyrrhic victory.”

For all the focus on companies like Exxon and Shell, the majors recently accounted for only 15% of the world’s supply of oil, according to the International Energy Agency. Some of them are set to see their production drop, too, in part due to selling off chunks of their existing businesses.

BP has spent the past two years pursuing divestment deals partly to help meet its net-zero goal, and next it plans to sell a stake in an Omani gas block to Thailand’s national energy firm for $2.6 billion. Shell, with its own pledge to zero-out emissions, recently said it would hand back leases to the Tunisian government instead of producing more oil from them. Such deals reach beyond oil and gas extraction: Mexico’s Pemex is set to buy a Texas refinery from Shell. (Pemex declined to comment.)

While state-sponsored oil companies vary greatly — from Norway’s climate-conscious Equinor to Russia’s Gazprom, a top three emitter for decades — overall NOCs make an outsized contribution to global emissions. Consider methane, a greenhouse gas that’s far more potent than carbon dioxide in the short term. Countries where state-owned entities dominate energy supply make up three-quarters of all methane emissions from oil and gas, according to the IEA. The vast majority of those methane emissions are attributable to just 15 countries, including Russia, Saudi Arabia, and Iraq.

Pressure driving supermajors to shrink isn’t coming solely from climate activists. The IEA drew widespread attention last month when it released its first report laying out a roadmap for a global net-zero economy by 2050. In that scenario, demand for fossil fuels plummets and investment in new oil and gas fields needs to stop. Methane emissions from fossil fuel, meanwhile, would fall 75% by 2030.

In the near-term, the majors have “ample spare capacity,” Bordoff said in an email interview. “But if investment by the majors remains depressed and oil demand continues on its current trajectory, markets will tighten.” As oil prices rise, he sees state-owned or smaller, private players stepping in to fill the gap. “A shift in production to major nationally owned companies — such as in Latin America or the Gulf or Russia — carries geopolitical supply risks,” Bordoff said, “while smaller independents have often demonstrated poorer safety and environmental practices.”

Divestments and reduced spending on exploration means oil majors will simply run out of proved reserves — the quantity of hydrocarbons that they can produce — within 15 years, Rystad said in a recent report, “unless the group makes more commercial discoveries, and fast.”

Even Exxon, which hasn’t set a net-zero target, has severely curtailed its ambitious growth plans to save money and reduce debt. The company is keeping production at the lowest level in two decades through 2025, a drop of 25% compared to pre-pandemic estimates. Exxon’s asset sales are “financial transactions, not an effort to reduce emissions from our portfolio,” the company said in a statement. “Our business plans call for reduced emissions intensity, which emphasizes improved operational efficiencies and emissions performance, rather than the divestment of individual assets.”

Chevron has also backed away from new megaprojects in favor of more flexible U.S. shale. Both companies forecast flat output this year compared to last. BP will cut its oil and gas production by 40% by the end of this decade, while Shell sees a gradual decline in oil output of around 1% to 2% each year.

As a group, the majors are holding spending at 2% lower than last year, the IEA reported last week, despite overall capital expenditures on exploration and production rising 8% in 2021. Spending on new oil and gas fields “has traditionally been well above the levels from their peers in the Middle East, Russia and China,” the IEA said. “This is no longer the case.”

But global demand isn’t falling as rapidly, at least according to current projections. In fact, it’s expected to rise over the next 15 years based on recent estimates from clean-energy researchers at BloombergNEF. That leaves about 55 million barrels of oil a day of new supply needed by 2050, BloombergNEF says, equivalent to global demand in the middle of the 1980s.

State-owned oil companies see this as an opportunity. “A lot of oil and gas host governments and NOCs believe that the industry is underinvesting in exploration and production, and some believe they can step up and fill the gap,” said Ben Cahill, a senior fellow in the Energy Security and Climate Change Program at the Center for Strategic and International Studies.

Not all will be able to do so. Cahill said companies like Pemex, Venezuela’s PDVSA, and Algeria’s Sonatrach will struggle just to maintain their output. But that leaves giants like Aramco, Russia’s Rosneft and Qatar Petroleum in a position to double down on their core business.

Iraq’s oil ministry said in a statement it’s committed to attracting new investments with international oil companies. This year Iraq has been discussing a $7 billion energy deal with Total, for example, even as Exxon has sought to shed its stake in an oil field. “Everyone knows that many international companies have changed their strategies,” said Asim Jihad, an oil ministry spokesman. “Iraq respects the will of the companies operating in Iraq.”

It’s hard to glean a complete picture of what that will mean for emissions, in large part because many state-owned companies don’t disclose greenhouse-gas data. Aramco recently revamped its disclosures and still doesn’t report data from join ventures or the emissions from customers burning its fuels. Overall, disclosure from state-owned oil companies are highly variable and lack the transparency of the majors.

But what little is known indicates there’s low-hanging fruit on greenhouse gas from NOCs. In some cases it would cost nothing for petrostates to slash methane emissions, according to a previous IEA report.

“NOCs are sort of the biggest keys when it comes to looking at country-level emissions,” said Ratnika Prasad, director of energy strategy at the Environmental Defense Fund, which recently commissioned a report by Carbon Limits on methane emissions by state-owned oil companies. “It’s easy to see how taking action on NOC emissions, especially methane, will yield pretty quick and more effective climate results.”

Pressuring government-run entities to take action introduces new, daunting hurdles. After years of campaigning, there’s a playbook of sorts for forcing change at the Western supermajors. Activist groups such as Follow This and As You Sow encourage climate-conscious citizens to buy stock in publicly traded companies like Exxon or Shell. Then shareholder activists push climate-friendly proxy measures during annual shareholder meetings.

Strategic pivots by Shell and BP toward low-carbon fuels came after years of intensifying shareholder pressure, and the same process appears to be playing out inside Exxon right now. The Texas oil giant lost an unprecedented battle with an activist investor Engine No. 1 at its annual meeting this year. With just 0.02% of Exxon’s shares, the previously unknown group won backing from large institutional investors and placed three of its own candidates on Exxon’s board.

State-owned entities lack an equivalent mechanism unless a significant portion of their shares is listed on a stock exchange. Any drive to lower emissions is tied to the ambitions of the countries that own them. “NOCs are at the core of economic life in a lot of oil producing countries,” said Heller. “The health of the NOC is in some cases seen as synonymous with the health of the economy overall. So that does contribute to status-quo thinking.”

There’s some cause for optimism. Countries with the most prolific state-backed oil companies have signed on to the Paris Agreement, with some taking their commitment a step further and participating in voluntary coalitions aimed at reducing emissions. The Oil and Gas Climate Initiative counts five national oil companies, including Aramco and China National Petroleum Corp., among its members. That organization requires a target to reduce the average methane emissions per barrel of oil produced by 2025, although this doesn’t ensure that absolute emissions will fall.

To some degree, this is a phenomenon that Exxon has been warning against for years. As BP and Shell have sold off assets in a pivot to renewables, Exxon has said such moves only work to move production — and emissions — elsewhere. Exxon CEO Darren Woods drew criticism from climate activists last year for labeling rivals’ asset sales to lower emissions nothing more than a “beauty competition.” His wider point underscores the long path ahead for the world as it grapples with climate change.

“This is not a company challenge, this is a global challenge,” Woods said in March 2020. “This idea of moving things in and out of the portfolio from one company to the other actually isn’t getting us any closer to a solution.”

But Mark van Baal, founder of Follow This, said that by pressuring the majors it’s still possible to drive an overall reduction in emissions—even without directly challenging the NOCs. State-owned entities will follow if majors push ahead on investment in renewable energy, he said, lowering the costs for everyone. “We need the most innovative oil and gas companies to change and put their full weight behind renewables to speed up the energy transition,” van Baal said. “Others will follow.”


First-ever fueling of cruise ship in North America with liquefied natural gas occurs at Port Canaveral
Dave Berman, Florida Today, June 8, 2021

Port Canaveral on Tuesday hosted the first-ever fueling in North America of a cruise ship with liquefied natural gas.

“I think it’s very significant” as a milestone for the cruise industry, said Chad Verret, president of New Orleans-based Q-LNQ Transport LLC, the company that coordinated the fueling of Carnival Cruise Line’s new Mardi Gras cruise ship.

The Mardi Gras will be home-ported at Port Canaveral when it begins sailing with passengers, possibly as early as this summer, offering seven-night cruises to the eastern and western Caribbean.

It is the first LNG-powered Carnival ship and the first LNG-powered cruise ship of any brand to be based in the Americas.  


Graphite One advances US supply vision
Shane Lasley, North of 60 Mining News, June 4, 2021

After raising C$10 million earlier this year, Graphite One Inc. is collecting the final bits of data needed for a prefeasibility study that details the company’s vision to establish a United States supply chain for the coated spherical graphite used as an anode material in the lithium-ion batteries that power electric vehicles and store intermittent renewable energy.

The first segment of this supply chain is the world-class Graphite Creek mine project about 35 miles north of Nome, the famed gold mining town in western Alaska.

According to the most recent calculation, the Graphite Creek deposit hosts 10.95 million metric tons of measured and indicated resources averaging 7.8% (850,534 metric tons) graphitic carbon; and 91.89 million metric tons of inferred resource averaging 8% (7.34 million metric tons) graphitic carbon.

As large as these resources outlined with drilling are, they only represent a small fraction of the thick lenses of graphite surfacing along an 11-mile-long stretch of the Kigluaik Mountains running across the Graphite Creek property.

The second and perhaps most important segment of the Graphite One supply chain is a processing facility capable of upgrading Graphite Creek concentrates into the anode material that goes into lithium-ion batteries and other industrial graphite products.

A 2017 preliminary economic assessment that offered a first glimpse of what this supply chain might look like investigated the economic and engineering parameters of a mine at Graphite Creek that would produce roughly 60,000 metric tons of 95% graphite concentrate per year and a processing facility to upgrade these annual concentrates into 41,850 metric tons of the coated spherical graphite and 13,500 metric tons of purified graphite powders annually.

A PFS slated for completion by the end of this year will provide a more detailed and definitive look at this potential North American supply of the graphite demanded by a transition to e-mobility plugged into power grids increasingly energized by renewable electricity.

“While the 2017 preliminary economic analysis indicated excellent economics, we are very excited about the potential for the PFS to show a clear path for further development,” said Graphite One President and CEO Anthony Huston.

Alaska mine segment

Much of Graphite One‘s 2021 fieldwork will focus on collecting the data needed for designing and permitting a mine at the Graphite Creek project in Alaska.

A program scheduled to begin in July is expected to include 3,000 meters of infill drilling to upgrade a portion of the inferred resource to the higher confidence measured and indicated categories, as well as prepare to elevate these world-class resources to reserves with the completion of the PFS before the end of the year.

In preparation for this PFS and a feasibility study to follow, this summer’s field work will also include geotechnical drilling at the proposed open-pit mine and supporting infrastructure sites, as well as engineering and environmental baseline studies.

“The 2021 drilling program will provide the additional information required to continue advancing the design and engineering for the proposed mine, the flotation process facility, the secondary treatment plant for producing coated spherical graphite and other graphite products, and all associated infrastructure,” said Stan Foo, chief operating officer of Graphite One (Alaska), a subsidiary developing Graphite Creek. “These investigations will allow Graphite One to firm up our understanding of the project as we unlock the full value of this unique large-flake graphite deposit.”

The company is seeking to unlock Graphite Creek’s value at a time when the global transition to electric vehicles and renewable energy is demanding massive quantities of the graphite that is found in abundance at the western Alaska project.

The World Bank forecasts that low-carbon energy technologies, primarily lithium-ion batteries, will require 4.5 million metric tons of graphite per year by 2050, which is nearly a 500% increase over 2018 levels and a 310% increase over the total graphite mined worldwide during 2020.

And there are currently no domestic graphite mines to help supply the United States’ share of this skyrocketing demand.

“With the growing demand for graphite in electric vehicle batteries and other energy storage applications – and recent actions by the Biden administration to secure U.S. supply chains for critical minerals – we see Graphite One‘s aim to produce a U.S.-based supply chain solution becoming increasingly significant as a new potential source of advanced graphite products for decades to come,” said Huston.

Critical processing segment

Arguably the most important segment of the supply chain Graphite One hopes to establish is the processing plant that upgrades graphite concentrates into advanced products.

This is especially true for coated spherical graphite, which serves as the primary anode material in most EV lithium-ion batteries.

Benchmark Mineral Intelligence, a global leader in lithium-ion battery supply chains analysis, calculates that a 30 gigawatt-hour-per-year lithium-ion battery factory needs roughly 33,000 metric tons of graphite anode material per year.

According to Benchmark’s most recent data, 12 battery megafactories are being developed or are planned to be built in the U.S. This list includes Tesla’s Texas Terafactory, a massive facility that is expected to have an annual battery production topping 1 terawatt-hours, or 1,000 gigawatt-hours, when fully built out. At current battery chemistries, this single plant would need more than 1 million metric tons of graphite anode material per year.

Nearly all the coated spherical graphite is currently produced in China.

Looking to fill a portion of U.S. need for this lithium-ion battery anode material with its advanced graphite processing facility, Graphite One recently hired Zhengli (Andrew) Tan as director of graphite products manufacturing. In this role, Tan will focus on the company’s plans to manufacture high-grade coated spherical graphite and other value-added products.

While the planned Graphite One processing facility that Tan is helping to design may not churn out enough graphite for a terafactory, it certainly could supply enough coated spherical graphite to move the U.S. away from nearly 100% dependence on others for this critical ingredient to realizing government and automaker aspirations to transition to e-mobility powered by renewable energy.


Biden admin asks judge to toss challenge to oil, gas leasing pause
Sebastian Malo, Reuters, June 8, 2021

President Joe Biden’s administration has asked a Lake Charles, Louisiana judge to toss the bulk of a lawsuit by a dozen Louisiana-led Republican attorneys general who challenged his pause on new oil and gas leasing on federal lands and waters.

In a new court filing on Monday, the administration urges Magistrate Judge Kathleen Kay to dismiss all but one count the states have advanced as they seek to restore regular federal drilling auctions. The administration argues, among other things, the plaintiffs fail to plausibly allege that Biden exceeded his legal powers when he signed a January executive order putting the leasing program on hold pending its review.

“The President is harming tens of thousands of American jobs using legal strategies he knows will fail all in an attempt to satisfy his political base,” said Louisiana Attorney General Jeff Landry in a statement.

Department of Justice spokesperson Danielle Nichols declined to comment.

The states who joined Louisiana’s March lawsuit include Texas, Oklahoma, Missouri, and Alaska. They claim the administration’s leasing pause violates the Mineral Leasing Act (MLA), which they say requires quarterly lease sales. The Department of the Interior has canceled planned offshore, quarterly lease sales in the Gulf of Mexico and off Alaska’s southern coast. It has also postponed onshore sales including in Colorado, Montana, and Wyoming.

In its Monday motion to dismiss, the Biden administration says the plaintiffs’ claims the president acted beyond his authority when they say he imposed a “moratorium” fails on its face because his January executive order does not call for one.

Rather, Executive Order 14008 directs the Secretary of the Interior to conduct a review of federal oil and gas leasing while pausing new ones “to preserve the status quo,” the filing says.

The administration also says claims that the executive order violates the Outer Continental Shelf Lands Act should be tossed because the plaintiffs sued two days after issuing a notice of their intent to sue, rather than after a statutorily-required 60 days.

An exception that allows plaintiffs to bypass the 60-day notice requirement, when they face immediate threats to a “legal interest”, does not apply because the economic harm the plaintiffs allege does not amount to a legal interest, the motion says.

The administration’s motion to dismiss does not challenge the plaintiffs’ count that claims the leasing pause unreasonably delays the MLA’s “quarterly land-sale requirement.”

The DOI expects to release in early summer an interim report as part of its review of the federal oil and gas leasing program. Its review includes an assessment of royalty rates, Monday’s filing says.

The program has faced widespread criticism for not yielding adequate public revenue.

The Biden administration last week said it would suspend oil and gas leases that were sold in the Arctic National Wildlife Refuge during the final days of the Trump administration pending an environmental review.

The case is Louisiana v Biden, U.S. District Court for the Western District of Louisiana, No. 2:21-cv-00778.


Shell vows faster climate push after Dutch court ruling
Ben Geman, Axios, June 9, 2021

Shell said Wednesday it would accelerate its clean energy and climate efforts following a major Dutch court ruling last month that ordered faster greenhouse gas emissions cuts.

Why it matters: CEO Ben van Beurden’s announcement signals how the landmark court ruling could tangibly affect one of the world’s most powerful oil giants, even though Shell plans to appeal the decision.

What they’re saying: His post this morning criticizes the ruling but adds that Shell feels “a determination to rise to the challenge.”

  • “[W]e will seek ways to reduce emissions even further in a way that remains purposeful and profitable,” he said while touting and defending the company’s existing climate strategy and targets.
  • “[T]his ruling does not mean a change, but rather an acceleration of our strategy,” van Beurden said.

Catch up fast: In late May, the Dutch district court in The Hague ordered Shell to cut its carbon emissions by 45% by 2030 relative to 2019 levels, which is considerably more aggressive than Shell’s current plans.

The big picture: The court ruling was a major win for environmentalists, who are using a mix of legal efforts, investor activism and public pressure to push Big Oil on climate.

  • However, some analysts warn that absent more aggressive global efforts to curb demand and speed clean energy deployment, the campaigns against Big Oil will just shift production toward state-owned producers in OPEC producers and elsewhere.
  • Van Beurden’s post argues that “Shell is being singled out by a ruling that I believe does not help reduce global CO2 emissions.”
  • He also notes that if Shell hypothetically quit selling gasoline and diesel today, it would cut Shell’s emissions but “demand for fuel would not change.”

Go deeper: Big Oil’s climate earthquake