Today’s Key Takeaways: End of Nord Stream 2? AK LNG well positioned. Mining matters: Hecla Greens Creek Mine donated $300,000 to UAS’ Environmental Science program. Biden’s top science adviser resigns after reports of his bullying and mistreatment of subordinates. Governor Dunleavy introduces new legislation requiring 80% of Railbelt’s electricity to come from renewable sources by 2040.
NEWS OF THE DAY:
Biden Threatens End Of Nord Stream 2 If Ukraine Situation Escalates
Irina Slav, OilPrice.Com, February 8, 2022
President Joe Biden issued a threat for the Nord Stream natural gas project if Russia were to invade Ukraine, although he did not elaborate on how such a move would be made.
“If Russia invades — that means tanks or troops crossing the border of Ukraine, again, then there will be no longer a Nord Stream 2,” the U.S. President said at a joint press conference with German Chancellor Olaf Scholz, as quoted by CNBC. “We will bring an end to it.”
In response to a question from a Reuters journalist on how exactly this would be done, Biden declined to elaborate, saying only “We will, I promise you, we’ll be able to do it.”
Yet the effect of the declaration may well have been a little spoiled by the statement of the German Chancellor, who did not appear nearly as enthusiastic about punitive action against Nord Stream 2 as his U.S. counterpart.
“We have intensively prepared everything to be ready with the necessary sanctions if there is a military aggression against Ukraine,” Scholz said. “It is part of the process that we do not spell out everything in public, because Russia should understand that there might be even more to come.”
In response to Reuters’ Andrea Shalal’s question on whether he would “commit to pulling the plug on Nord Stream 2”, Sholtz declined to do so.
The Nord Stream 2 pipeline is seen as a key supply channel for Germany, whose gas needs are about to rise further after it closes all of its nuclear power plants and moves ahead with the retirement of its coal power plants.
This is the reason Germany is a lot more reluctant than the United States to make threats against the project or, indeed, the Russian state amid the current geopolitical tensions.
OIL:
Oil giant BP reports highest profit in 8 years on soaring commodity prices
Sam Meredith, CNBC, February 8, 2022
- It has been another good quarter for the company,” BP CEO Bernard Looney told CNBC’s “Squawk Box Europe” on Tuesday.
- A surge in global gas markets through the final months of 2021, coupled with an oil price rally to seven-year highs, has seen the world’s largest fossil fuel giants rake in bumper revenues.
- It comes at a time when millions of U.K. households are facing a record-breaking increase in their energy bills amid a cost-of-living crisis.
Oil and gas giant BP on Tuesday reported a massive upswing in full-year net profit, its highest in eight years, supported by soaring commodity prices.
The British energy major posted underlying replacement cost profit, used as a proxy for net profit, of $12.8 billion for 2021. That compared with a net loss of $5.7 billion the previous year. Analysts polled by Refinitiv had expected full-year net profit of $12.5 billion.
BP also posted fourth-quarter net profit of $4.1 billion, beating analyst expectations of $3.9 billion.
“It has been another good quarter for the company,” BP CEO Bernard Looney told CNBC’s “Squawk Box Europe” on Tuesday.
“We call it performing while transforming,” Looney said. “I know I sound like a broken record but that is what we are doing. We are performing and delivering for our shareholders today, while at the same time leaning into the future and transforming the company.”
BP said it intends to deliver a further $1.5 billion in share buybacks and maintained its dividend at 5.46 cents per share.
GAS:
| Alaska Governor says LNG may be back on track after positive report and with possible Fed loan LNG Journal, February 8, 2022 Alaska Governor Mike Dunleavy says a new analysis of the Alaska LNG export project by energy consultants Wood Mackenzie comes up with gas pricing that would by lower than some other US projects and financing could be underpinned by Federal loan guarantees offered by President Joe Biden’s $1.2-trillion Infrastructure Bill. “The Alaska LNG project is well positioned for Alaska to realize the decades-old dream of bringing our natural gas off the North Slope for the benefit of Alaskans and worldwide markets,” said Dunleavy. Permits and loans “With key permits and federal loan guarantees in place, the Alaska gasline is moving forward,” he stated. The project would build an 800-mile pipeline to transport natural gas from the North Slope to Southcentral Alaska for export. “The recently passed Infrastructure Investment and Jobs Act reaffirmed the availability of an estimated $25 billion in federal loan guarantees for an Alaska liquefied natural gas project, which will increase the attractiveness of this energy project for investors,” said Dunleavy. The LNG project developer, the state’s Alaska Gasline Development Corp. (AGDC), has released the report by Wood Mackenzie for interested parties to access. The report analyses reduced project construction costs, a new project finance structure and an estimated reduced natural gas purchase cost amounting to a reduction in LNG pricing. In this updated version of a report first written in 2016, Wood Mackenzie forecasts LNG demand growth to last through 2050, driving LNG prices higher. The strong LNG demand is expected to create a gap in supply starting in 2028, which new projects are required to fill, and Alaska LNG is competing to fill the supply gap, according to the report. “Alaska has ample gas supply. The North Slope Basin in Alaska holds more than 45 trillion cubic feet (Tcf) of combined contingent natural gas resource and reserves, an estimated 299 Tcf of undiscovered, technically recoverable conventional natural gas resource, and an additional 100 Tcf of unconventional resources,” explained Dunleavy, citing the report. Wood Mackenzie had presented the previous report to AGDC together with BP and ExxonMobil and which established the base cost of supply for the project and defined the target range for a competitive Alaska LNG. “Cost of supply is now 43 percent lower versus 2016 due to lower CAPEX and feed-gas price and the use of a non-recourse debt funded third-party tolling structure,” said the updated Wood Mackenzie report. The new optimized cost of supply is estimated to be $6.70 per million British thermal units. Guarantee “A federal loan guarantee provides additional assurances and may be expected to de-risk the project for both lenders and participants,” said the report. |
MINING:
Hecla Greens Creek Invests $300,000 in UAS Environmental Science Program
KINY, February 7, 2022
Hecla Greens Creek Mine has donated $300,000 to create an endowment to provide support for UAS’ Environmental Science program located at the Juneau Campus.
UAS Chancellor Karen Carey commented on the impact of the gift saying, “This is an unqualified demonstration of Hecla Greens Creek’s commitment to understanding and protecting the environment of Southeast Alaska. UAS’ Environmental Science program provides vital research that helps inform today’s decision making while working to train Alaska’s next generation of scientists, researchers and field technicians.”
Brian Erickson, Hecla Vice President & General Manager of the Greens Creek Mine, added, “Safeguarding the environment through responsible mining is a fundamental principle of how we operate. Hecla Greens Creek is proud to support the University of Alaska Southeast’s Environmental Science program and by creating this fund as an endowment, it means that the support will last in perpetuity – long past the life of the mine. We consider this gift as an investment in Juneau and all of Southeast, Alaska.”
A release from the university said the fund will provide monies for faculty and undergraduate research, paid summer internships, field courses and other student experiential learning opportunities.
POLITICS:
Biden’s top science adviser, Eric Lander, resigns amid reports of bullying
Alex Thompson, Politico, February 7, 2022
President Joe Biden’s top science adviser, Eric Lander, resigned on Monday evening following reports of his bullying and mistreatment of subordinates.
The resignation came despite initial insistence from the White House that Lander would remain in his post while corrective actions and remediations were applied to assure a better workplace environment at the Office of Science and Technology Policy.
“It has been a great honor to serve as your Science Advisor and to work with the extraordinarily talented career and non-career colleagues at the Office of Science and Technology Policy,” Lander wrote in a letter to the president. “I am writing to submit my resignation, to be effective no later than February 18 in order to permit an orderly transfer.”
“I am devastated that I caused hurt to past and present colleagues by the way in which I have spoken to them,” he added.
Lander’s resignation constitutes the highest-profile departure from the president’s team to date — his office has Cabinet-level status — and a black eye for Biden, who had pledged early on that he would have a zero-tolerance policy when it came to bullying.
“The President accepted Dr. Eric Lander’s resignation letter this evening, with gratitude for his work at OSTP on the pandemic, the cancer moonshot, climate change, and other key priorities,” said White House press secretary Jen Psaki. “He knows that Dr. Lander will continue to make important contributions to the scientific community in the years ahead.”
POLITICO was first to report that the White House had launched a two month investigation into Lander that found “credible evidence” that he bullied his then-general counsel, Rachel Wallace. The investigation also concluded that there was “credible evidence of disrespectful interactions with staff by Dr. Lander and OSTP leadership,” according to a recording of a January White House briefing on the investigation’s findings. In addition, 14 current and former OSTP staffers shared descriptions of a toxic work environment under Lander where they say Lander frequently bullied, cut off and dismissed subordinates. Several shared specific accusations that he belittled and demeaned women subordinates in particular.
On Monday, Psaki told reporters the administration was implementing changes to assure a better workplace culture at OSTP and that they’d be monitoring Lander’s conduct more closely.
“The president has been crystal clear with all of us about his high expectations of how he and his staff should be creating a respectful work environment,” Psaki said.
But behind the scenes, senior staff at OSTP were struggling with how to move forward after the news of the internal White House investigation and litany of complaints from fellow staffers became public. The office’s chief of staff, Marc Aidinoff, kicked off a Monday morning meeting with other senior OSTP officials by addressing the POLITICO article.
CLIMATE CHANGE:
Alaska Gov. Mike Dunleavy calls for 80% of Railbelt power to be renewable by 2040
James Brooks, Anchorage Daily News, February 7, 2022
Alaska Gov. Mike Dunleavy has introduced new legislation that would require 80% of the Railbelt’s electricity to come from renewable sources by 2040, with penalties for electric companies that fail to meet the requirement.
An analysis ordered by the governor and published by the National Renewable Energy Laboratory in December says meeting the goal would require millions of dollars of investment in hydroelectric, solar, wind, tidal and geothermal power, as well as transmission lines and batteries. Reaching the 80% standard could save $500 million per year in fuel costs, the report said.
The governor’s plan calls for a gradual implementation: Utilities would be required to generate 20% of their power from renewable sources by December 31, 2025, 55% by the end of 2035, and 80% by the end of 2040.
In the governor’s state of the state address last month, he said he envisions “an Alaska that is energy independent and a leader in renewable energy, whether it be hydro, tidal, geothermal, wind, solar, or other.”
“We have abundant renewable resource potential, and we can turn that potential into a reality that will lower costs for all Alaskans and invite industries to invest in our great state as well,” he said at the time.
Chris Rose is the executive director of the Renewable Energy Alaska Project, a nonprofit that worked for months to draft a plan that formed the basis for the governor’s legislation.
Electricity prices in the Railbelt are about 50% higher than they are in the Lower 48, in large part because of the cost of Cook Inlet natural gas, he said, and that makes it difficult to attract business investment.
Jenny-Marie Stryker is the director of the Alaska Center, a nonprofit that regularly criticizes the governor for inaction on environmental and social issues, but Dunleavy’s new legislation is undeniably good, she said.
“I think it’s achievable. I think it’s necessary. And I totally think it’s realistic,” she said.
It’s an election year, and Dunleavy is campaigning for reelection, but Stryker said she doesn’t think Dunleavy introduced the bill simply to win votes.
“I think that the governor is serious about this. We see this introduced in good faith, we’re taking it in good faith,” she said.
The law would be stronger than legislation passed under the administration of former Gov. Sarah Palin that set an unenforced goal of 50% renewable power statewide by 2025. The state is almost certain to miss that goal.
Under existing law, the Railbelt utilities are required to work together in an organization that sets standards for reliability and long-term planning.
If passed by the House, Senate and signed into law, the governor’s legislation would put that organization in charge of implementing the new standard, with fines for utilities that fail to comply. The state’s utility regulator would be allowed to waive the fines in case of extenuating circumstances, like a disaster.
The National Renewable Energy Laboratory suggested five ways that Alaska could meet the 80% standard by 2040:
• The state could build the vast Susitna-Watana hydroelectric project and bring the Bradley Lake hydroelectric dam to full capacity;
• It could expand Bradley Lake, build dams at Grant Lake near Moose Pass and Snow River north of Seward, then add some wind and solar power;
• It could expand Bradley Lake but add additional wind and solar;
• It could use geothermal power and tidal power, as well as wind, solar and a Bradley Lake expansion;
• Or it could do a smaller Bradley Lake expansion with bigger investments in geothermal, tidal, wind and solar power.
All five scenarios also require the installation of battery banks to balance the ebb and flow of wind power, upgrades to the electrical intertie between Fairbanks and Anchorage, and a small new hydroelectric plant somewhere in Southcentral Alaska.
The report doesn’t suggest where the initial funding for these projects would come from, but it does say that building them would save hundreds of millions of dollars in fuel costs.
Stryker said she’s hopeful that the legislation doesn’t encounter significant opposition and that it has the potential to create large numbers of high-paying, unionized jobs.
Rose agreed, saying that it would also encourage independent power-plant operators to come to Alaska and build projects, because they know there will be a market for their power. He thinks existing utilities may have the most concerns.