Today’s Key Takeaways: Energy transition fatigue. Hilcorp to deploy up to 4 drilling rigs in Cook Inlet. Murkowski: Alaska’s minerals are fundamental to national security and prosperity. Chugach Electric incumbents increase pay for themselves, costs for members.
NEWS OF THE DAY:
Households Wince at the Rising Price of Going Green
Stacy Meichtry, Bertrand Benoit, Phred Dvorak, The Wall Street Journal, May 9, 2024
When postal manager José Belloso put his Paris apartment up for sale this year, he was required to have an inspector grade the home for energy efficiency under strict rules designed to fight climate change.
Belloso’s building was built in the early 1900s from millstone, a porous sedimentary rock that was popular among architects of France’s Belle Époque. His apartment flunked the inspection—and under a regulation that came into force this year, the property was barred from the rental market until costly renovations are made.
Belloso was ultimately forced to knock 50,000 euros, equivalent to $54,000, off his asking price to find a buyer.
Consumers are starting to pay for the energy transition, and they aren’t happy about it.
Governments that were among the earliest in the world to adopt climate legislation tried to take the sting out of the transition by motivating consumers with subsidies. Now, however, the same capitals are cash-strapped and many are passing the bill to the consumer. Subsidies are being scaled back, taxes tied to carbon emissions are being phased in, and rules requiring expensive renovations are starting to bite.
Many consumers, including those who broadly support the energy transition, are unwilling to pay up. Farmers have laid siege to Paris and other European capitals over plans to remove diesel-fuel subsidies. German households have rebelled against requirements to replace polluting gas boilers. In California, homeowners and small businesses seeking to install solar panels are running up against new metering rules that cut by roughly three-quarters the amount of money they can get for selling electricity back into the grid.
For now, energy-transition fatigue is setting in. Three-quarters of energy consumers say they have already done as much as they can to be sustainable, according to a survey of 100,000 people in over 20 countries by the research arm of accounting firm Ernst & Young.
GAS:
OPINION: Powering Southcentral Alaska’s past, present and future
Luke Saugier, Anchorage Daily News, May 12, 2024
For more than a decade, Hilcorp Alaska has been proud to be the driving force in the Cook Inlet basin, investing significantly in Southcentral Alaska. When we entered the Alaska market, the basin was in rapid decline, and few investors were willing or able to put up the capital required to produce more oil and gas from the aging fields. Since then, we’ve invested more than $1 billion in the Cook Inlet basin, generating well over 700 billion cubic feet of natural gas to power and heat Alaska homes and businesses.
Our team of more than 1,500 Alaska employees has worked to stabilize the natural gas supply for the Railbelt. Our efforts have included drilling more than 155 new wells, implementing new technologies, and repairing aging infrastructure. And recently, Hilcorp made a long-term commitment to ensure the only jack-up drilling rig in Alaska doesn’t leave the state at this critical time.
Unfortunately, aside from Hilcorp Alaska, industry investment in the Cook Inlet basin has continued to decline, making our operations increasingly difficult. The necessary equipment is hard to source, especially on short notice, and contractor services are hard to find. In addition, the federal permitting processes are more tedious than ever. These challenges all layer on top of what is already only a six-month offshore drilling season.
Even with these headwinds making operations difficult, Hilcorp Alaska is deepening its commitment to the Cook Inlet, planning to deploy up to four drilling rigs to add 15-20 new wells annually over the next five years. This near-billion-dollar investment is crucial not only to sustain our current operations but also to meet future needs, despite the 30% year-over-year production decline that’s common in Cook Inlet wells.
We are doing what we can, where we can. During the recent cold spell in February, when the utility-owned gas storage facility faced operational issues, Hilcorp Alaska did not just meet but exceeded its contractual obligations by releasing additional gas reserves to ensure uninterrupted energy supply without increasing prices. Similarly, even as our contract with Homer Electric Association concluded in March 2024, we provided an extra year of gas supply at stable prices, smoothing their transition to other energy sources. And we are collaborating with the utilities and regulatory agencies to make our gas storage assets available for commercial use.
Hilcorp Alaska has and will continue to fully develop our Cook Inlet basin leasehold with a specific focus on delivering a reliable and affordable supply of natural gas.
MINING:
Murkowski: Alaska’s Minerals are Fundamental America’s Security and Prosperity
Fort Knox, Alaska – U.S. Senator Lisa Murkowski, R-Alaska, today released the following statement on Alaska Mining Day.
“Alaska Mining Day is an opportunity to recognize the mining industry’s importance to both our state and our nation.
“We’re fortunate to have several major mines in Alaska, from Red Dog to Usibelli to Greens Creek. Those projects support thousands of high-paying jobs, hundreds of millions of dollars in revenues each year, and local community needs through philanthropy, scholarships, and more.
“Our state also has many promising projects on the horizon, which will provide more jobs and revenues, shore up our national security, and reduce our imports by providing domestic sources of antimony, chromium, cobalt, copper, gallium, germanium, gold, graphite, lead, lithium, nickel, palladium, platinum group elements, silver, tin, and zinc, among others.
“Alaska’s mineral potential is off the charts. But what we need is for President Biden and his administration to realize that mining is not only a proud part of our past and present, but also an essential part of our future. Instead of pushing policies and agreements that will force us to import, the administration needs to approve U.S. projects. It is unacceptable for them to reject the Ambler Access Project, to close off millions of acres of Alaska, and to lock in our long-term dependence on China and Africa when we could be producing more minerals here at home.
“On Alaska Mining Day, we should all take a moment to realize how fundamental minerals are to modern life. We should thank our miners for their hard work on our behalf. And we should redouble our efforts to support good projects—especially in Alaska, where we lead the world on responsible development.”
POLITICS:
OPINION: The other election: Chugach Electric’s board race
Nathan Andrews, Anchorage Daily News, May 13, 2024
There is an election taking place in Southcentral Alaska, and it is not the one front and center on Anchorage residents’ minds. It is the annual election for the Chugach Electric Association’s (CEA) board of directors. There are four candidates running for the two available seats: two incumbents with four previous years of questionable decision-making, and two new challengers looking to bring stability to your local electric cooperative.
While the exact origins of the phrase, “what goes around comes around” has been debated, we can all agree that actions do, in fact, have consequences. This can be proven by looking back to middle school science class, where we learned Newton’s Third Law of Motion, which states that for every action there is an equal and opposite reaction. This principle can also be demonstrated less physically, by reviewing the numerous choices we make each day. As adults, we take responsibility for our choices and actions and the intended and unintended consequences of them.
Consider then, the consequences of re-electing two candidates who:
• Voted for a nearly 6% rate increase to CEA members.
• Voted to raise board member pay from $300 per day (2023) to $600 per day (2025), peaking at an astounding $750 per day in 2026.
• Voted for a Renewable Portfolio Standard (RPS) that “broadens the focus of the financial bottom line to include social and environmental responsibility” and dictates that the cost of compliance be recoverable in rates.
Elected and appointed officials will likely not be around to be held responsible for the consequences of their actions. This is particularly concerning when it comes to decisions that have long-term implications for our community, such as those related to energy infrastructure and rates. Members of the Chugach Electric Association have the power to shape the future of our cooperative through our votes in the Board of Directors election.