NEWS OF THE DAY:
State development agency may test Interior Department on suspension of lease activity in ANWR
Tim Bradner, The Frontiersman, July 13, 2021
Alaska’s state development authority will be testing the Department of the Interior’s action to suspend lease activities in the Arctic National Wildlife Refuge.
The Alaska Industrial Development Authority, or AIDEA, is proceeding with plans to market its leases to industry and has started preparations to apply for permits for a winter seismic survey, the authority’s board was told June 23 by Alan Wietzner, the authority’s executive director.
Federal leases in ANWR were purchased last January by AIDEA in a lease sale held days before President Joe Biden was sworn into office to take over from outgoing President Donald Trump.
Biden opposes ANWR exploration and his Interior Secretary, Deb Haaland, announced on early June that lease actions in the refuge would be suspended by the department.
AIDEA feels Interior may be on weak legal ground on its suspension, however.
“The Department of the Interior has not identified any statutory or regulatory basis for the suspension,” AIDEA’s staff wrote in a memorandum to the authority’s board.
“AIDEA holds valid and enforceable leases in compliance with the (BLM) lease program’s statutory directive,” in the 2017 tax act,” the memorandum said.
The authority asked the Interior Department about authority in a June 11 letter.
As of July 12, “we have still not received any response to our letter of June 11th requesting that the DOI provide the statutory or regulatory basis underlying the purported suspension.” Weitzer wrote Monday in an email.
Interior has also said, however, that it would suspend lease rental payments and the “tolling,” or time counted against the 10-year terms of leases, while the suspension is in effects.
Meanwhile, the state agency will budget $1.5 million to hire consultants to prepare the seismic application.
“Planning and permitting work is necessary to proceed with what we are currently planning to be multi-phased, multi-year seismic surveying of AIDEA’s leases for exploration,” Wietzner said.
The application will test the Interior Department’s policy of allowing no lease activity. Interior turned down a similar application earlier this year from Kaktovik Inupiat Corp., an Alaska Native corporation that owns a 91,000-private enclave within the refuge.
AIDEA holds eight leases covering 365,775 acres acquired in the January sale held by the U.S. Bureau of Land Management under the Trump administration.
BLM issued the eight leases to the state authority along with two other leases won by private companies, on Jan. 19, one day before President Trump left office.
On his first day in office, President Joe Biden announced he would review last-minute actions by Trump, including in ANWR. This was followed by Haaland’s announcement that lease activities would be suspended pending a review of BLM’s assessment of environmental impacts under Trump.
Interior declined to approve Kaktovik’s seismic application on the ground that the corporation failed to do adequate surveys of possible polar bear dens that might be affected by its seismic activity.
AIDEA’s leases are adjacent to the Kaktovik lands, and it is possible that the private lands may be included. Weitzner said the state authority is open to that but has not discussed the possibility with the Native corporation, which is owned by residents of Kaktovik, an Inupiat village on Barter Island at the northern coastal boundary of the refuge.
The private lands were obtained through the Alaska Native Claims Settlement Act of 1971, an act passed by Congress allowing Native communities in Alaska like Kaktovik to select public lands to settle original claims to public lands.
Kaktovik’s lands are in the northern central part of ANWR’s coastal plain, while AIDEA’s leases extend west to near the Canning River, the refuge boundary with State of Alaska lands.
The region is felt by geologists to have potential for major discoveries, but it has only been lightly explored with one test well drilled in the early 1980s on the Kaktovik lands, the results which are still confidential, and a seismic survey done in the mid-1980s using older geophysical technology.
One reason why geologists see potential in the refuge’s north-central region is that oil and gas has already been discovered on state lands just west of the Canning River boundary, including the 8-tcf Point Thomson gas and condensate field as well as Sourdough, a 50 million barrel-plus known deposit that appears to straddle the state/refuge border.
Sourdough, which is undeveloped, was discovered years ago by BP and is now being explored by an Alaska-based independent, Jade Energy.
To date AIDEA has spent $12.8 million on its ANWR leases including the first-year rental of $3.65 million, according to documents presented to the authority’s board June 23.
OIL:
OPEC+ impasse means tight oil market now, volatility ahead, says IEA
Noah Brown, Reuters, July 13, 2021
- Oil market faces volatility amid OPEC+ uncertainty
- OPEC+ dispute halts plan to pump more oil by December
- Risk, albeit remote, remains that OPEC+ scraps output deal
LONDON, July 13 (Reuters) – The oil market will see tighter supply for now amid a dispute inside OPEC+ about how to ease production curbs but it still faces the risk of a dash for market share if disagreement persists, the International Energy Agency (IEA) said on Tuesday.
The Paris-based agency said oil prices would be volatile until differences were resolved among members of OPEC+, which groups the Organization of the Petroleum Exporting Countries, Russia, and other oil producers. read more
“The OPEC+ stalemate means that until a compromise can be reached, production quotas will remain at July’s levels. In that case, oil markets will tighten significantly as demand rebounds from last year’s COVID-induced plunge,” an IEA report said.
OPEC+ has been slowly unwinding record output curbs agreed last year to cope with the pandemic. But a dispute over policy between Saudi Arabia and United Arab Emirates this month meant plans to pump more oil by the end of 2021 were put on hold.
If differences persist, analysts say the group could even abandon their pact, prompting them to open the taps in a race for market share, adding uncertainty to a market that has seen prices surge to 2-1/2-year highs and slide back again.
“The possibility of a market share battle, even if remote, is hanging over markets, as is the potential for high fuel prices to stoke inflation and damage a fragile economic recovery,” the IEA said in its monthly report.
“Oil markets are likely to remain volatile until there is clarity on OPEC+ production policy. And volatility does not help ensure orderly and secure energy transitions – nor is it in the interest of either producers or consumers,” the IEA said.
The IEA said in a report in May that investors should not fund new oil, gas, or coal projects if the world wanted to reach net zero emissions by mid-century. read more
Rising coronavirus cases in some countries remained a key economic downside risk, the IEA said, although oil storage levels in most developed countries had fallen below historical averages and the current economic recovery meant this autumn was set to see the biggest draw on stocks in at least a decade.
It said refineries were working hard to meet demand pent up by lockdown restrictions as “drivers frustrated by confinement and travel restrictions take to the road en masse”.
GAS:
Gas Line, Q2 2021
Nikos Tsafos, Center For Strategic and International Studies, July 1, 2021
Gas Line is a quarterly publication that looks at major news stories in global gas—ranging from project development to markets and geopolitics. My goal is not to cover every story but to draw connections between stories across time and space in order to shed light on the major themes that will drive global gas markets in the years ahead. My main takeaways from this quarter:
Natural Gas in a Net Zero World
The bottom line: The role of natural gas in a deeply decarbonized world remains difficult to forecast. But a roadmap developed by the International Energy Agency (IEA) provides one of the most complete and comprehensive looks at natural gas in 2050 if the world achieves its net-zero targets. It is a world where gas demand and trade are cut sharply. But gas also serves different ends, removed from final consumers, and used largely in industrial centers, either directly or to produce hydrogen. It is a very different map from what we see today.
The backstory: In May 2021, the IEA released its long-awaited roadmap for a net-zero world by 2050. Several conclusions made headlines, including the observation that, in a net-zero trajectory, there would be no need for investment in new oil and gas supply (investment to sustain production in existing fields would still be needed). By 2050, global demand for natural gas would shrink by 55 percent (compared to 2020 and shown in Figure 3.2 in the report). Exports of liquefied natural gas (LNG) rise through 2025 but then fall; by 2050, the LNG market is 62 percent smaller than in 2020 (Figure 4.17).
The gas system changes dramatically in a net-zero world (Figure 2.7). Gas use in buildings all but disappears: less than 1 exajoule (EJ) is consumed in buildings in 2050, from around 32 EJ in 2018. Gas makes no inroads in transportation, and demand is less than a tenth of an EJ. More than half of the gas used in 2050 is for “energy production,” meaning hydrogen, paired with carbon capture utilization and storage (CCUS). There is some gas use in industry and as a feedstock, while 11 percent goes to electricity, where gas plays a modest role in balancing the system (Figure 4.18).
The grid evolves too. By 2050, the grid carries as much hydrogen to final consumers as it does natural gas. Biomethane and synthetic methane grow to 12 EJ (Table A.2), a fraction of the 67 EJ of natural gas transported in 2020. But the grid also serves different end markets. Gaseous fuels, including hydrogen and biomethane, meet just 7 percent of the demand for energy in buildings, down from 22 percent for natural gas in 2020. Electricity replaces gas. Gaseous fuels, mostly hydrogen, meet 19 percent of the demand for transportation, a market where gaseous fuels are marginal today. Gas retains a role in industry, meeting around 18 percent of total demand (with CCUS).
By 2050, in other words, the consumer no longer interfaces with natural gas—gas is not used for space or water heating or for cooking. Natural gas becomes an industrial fuel: around 70 percent of the gas used in 2050 is combined with CCUS, while another 13 percent is used as feedstock (Figure 2.7). For the most part, the world uses natural gas in 2050 to produce hydrogen and for the applications where alternatives are not competitive. The hydrogen is then carried, together with biomethane and synthetic methane, to industrial centers, to power generation facilities, and to transportation re-fueling hubs. But gas rarely goes into homes or commercial businesses directly—and thus, by 2050, most of us are unlikely to come into contact with gas on a daily basis. However, there will still be byproducts of gas use in hydrogen in the industrial and agricultural sectors and in the power systems.
Clearer Signals on U.S. Gas Demand
The bottom line: As the Biden administration advances its climate agenda, the role of gas in the U.S. economy begins to emerge more clearly. At this stage, the pressure is greatest on gas use in power, where the president’s plan to double the share of carbon-free electricity is bound to affect gas use. But the power sector consumed just 38 percent of the country’s gas in 2020—the strategy to decarbonize industry and buildings is far less developed so far, and thus the pressure on gas is far lower.
The backstory: In April, the Biden administration pledged to cut greenhouse gas emissions in 2030 by 50 to 52 percent relative to 2005 levels. The initial plan did not articulate which sectors or fuels would adjust and by how much. But together with the American Jobs Plan, released in late March, and subsequent deliberations, some of the specifics are starting to become clearer.
In the power sector, the Biden administration wants to implement a Clean Electricity Standard (CES) to regulate emissions. The CES will be paired with other initiatives: an extension to investment or production credits for low-carbon electricity; additional money for transmission projects to unlock investment in renewables; a new Grid Authority to expedite permitting for transmission; and technology-specific pushes, like the ones for offshore wind, solar, geothermal, advanced nuclear, and others. All these are aimed to meet the president’s goal for the country to generate 80 percent of its electricity from carbon-free sources in 2030 (from 40 percent in 2020).
Given that gas produced 40 percent of the country’s electricity in 2020, meeting the 80 percent target would involve a sharp curtailment in gas use. Even if gas provides all the carbon-based electricity in 2030—which would mean a complete phaseout of coal and oil from electricity—the impact on demand would be significant, as gas goes from 40 percent to 20 percent (with demand, however, being higher due to increased electrification). The power sector has accounted for two-thirds of the growth in gas demand between 2005 and 2020. That run must now come to an end.
Even in 2020, however, only 38 percent of the country’s gas consumption was in electricity—the rest was in industry and buildings. In industry, there is bipartisan support to accelerate CCUS and to expand the credits to help make this business viable—moves that are generally supported by private industry. Hydrogen has been elevated too, but the ambitious target for lowering the cost of hydrogen set by the Department of Energy was for “clean hydrogen.” At the same time, the strategy for industrial decarbonization is largely carrots and no sticks; there is still little appetite for a carbon price or other regulations to affect big industrial users. The pressure on gas is small in industry.
In buildings, there is even less pressure on gas. There is, of course, an ever-present push to improve energy efficiency, but most of the initiatives articulated in the American Jobs Plan relate to public and government buildings, while there is a passing reference to the need for more heat pumps. The administration has also shied away from commenting on local initiatives that seek to ban gas use from new buildings or state efforts that seek to stop these local bans from being enacted. In other words, a clearly articulated strategy is yet to be seen for around 140 million housing units or the 97 billion square feet of commercial real estate that exist in this country. Therefore, it is hard to understand what the impacts might be on gas use going forward.
MINING:
Four Minerals Key to an Advanced Energy Future
Minerals Make Life Blog, July 7, 2021
The global demand for minerals is growing exponentially as governments commit to advancing energy technologies capable of addressing the climate challenge. Electric vehicles (EVs), solar arrays, wind turbines and transmission lines are all driving demand higher and faster than ever before.
The International Energy Agency recently issued a stark warning about the future energy transition: Fail to develop the mineral supply chains that are the building blocks for advanced energy technologies and risk undercutting deployment at the speed and scale needed to meet emission reduction goals.
To date, the U.S. has mostly ignored our rich domestic reserves and the need for a national strategy to shore up our domestic supply chains, looking instead to imported minerals from foreign producers. Instead, we should be ramping up domestic minerals production under world-class environmental standards to win the energy transition, utilizing our more than $6.2 trillion in mineral reserves that exist here in the U.S. Minerals such as copper, lithium, antimony, and tellurium are available on American soil and are essential to our energy transition.
Copper
Copper is an irreplaceable element for advanced energy technology, including EVs, wind turbines and solar panels. According to the IEA, copper, which provides the arteries and veins of an electrified world, will see its demand double in the coming years. EVs require four times more copper in the manufacturing process than gas-powered vehicles. A single wind turbine requires 4.7 tons of copper, and the growth of offshore wind is expected to account for nearly 40 percent of future copper demand. As solar technology advances, the IEA expects solar will require 68 times the amount of copper it currently uses by 2040. To deliver the future of advanced energy, the U.S. needs a strong and stable supply of copper.
Freeport-McMoRan is a company ready to support this need and continues to produce copper across seven domestic mines, with its newest project on track to exceed 200 million pounds of copper a year in 2021. Taseko’s Florence Copper has developed a copper recovery process that is expected to produce an average of 85 million pounds of copper per year over 20 years, all with minimal environmental impact. Rio Tinto’s Resolution Copper Mine and Hudbay’s Rosemont Copper Mine are two proposed copper mines that have been tied up in permitting delays but stand ready to supply future copper needs.
Lithium
Lithium is essential for producing the lithium-ion batteries used in EVs. So essential, that by 2040, lithium demand could grow to more than 40 times what it is today. Despite an estimated 7.9 million tons of lithium on U.S. soil, approximately 87 percent of all lithium is sourced from Australia, Chile, and China. The U.S. is currently home to only one large-scale lithium mine, Silver Peak, in Nevada. To produce EV batteries at scale, we need to stand up more lithium projects here at home. In Nevada, Lithium Americas’ Thacker Pass project could produce an estimated 60,000 tonnes of battery-grade lithium per year. And in Arkansas, Standard Lithium’s Lanxess project could produce 29,000 tonnes of lithium carbonate per year. These are just two of a number of exciting projects advancing across the country.
Antimony
While the importance of its role in various technologies is not as well-known as copper and lithium, antimony is among the most important inputs to our economic progress and future energy applications. This critical mineral has applications in everything from EV batteries, wind turbines and solar panels to semi-conductor chips, iPhone screens and energy-efficient windows. As of 2020, the U.S. had zero domestic producers of antimony, while China and Russia dominated the global market. Currently, only one proposed mining project, Perpetua Resources’ Stibnite Gold Project, in central Idaho, offers hope for decreasing America’s foreign reliance on antimony. Once approved, Perpetua Resources’ mine could rank in the top 10 antimony producing mines globally, and supply 35 percent of U.S. demand within six years.
Tellurium
Another unsung hero of advanced energy technologies is tellurium, which is essential to solar panels. The rare mineral feeds into semiconductor chips and is a key element of solar photovoltaic cells that convert sunlight into electricity. The U.S. currently imports more than 95 percent of its tellurium supply from countries including China and Canada, but Rio Tinto plans to extract the metal from its copper processing at its Kennecott mine in Utah. Rio Tinto says the mine will produce 20 tonnes of tellurium a year, creating a new North American supply chain.
Across the U.S., mining companies are harnessing innovation to deliver minerals more efficiently and sustainably, but their ability to meet our soaring mineral demands is being undercut by a legislative environment defined by cumbersome permitting timelines and the threat of excessive fees. To address the climate challenge and secure our mineral supply chains, policymakers must enact the right policies to encourage investment in America’s minerals and resources.
POLITICS:
Judge hears case challenging new Alaska election system
Becky Bohrer, Associated Press, July 13, 2021
A lawsuit challenging a voter-approved initiative that would end party primaries and institute ranked-choice voting for general elections in Alaska is alleging constitutional violations but the accusations are actually policy objections, an attorney for the state argued Monday.
Assistant Attorney General Margaret Paton Walsh said the initiative setting out the new system does not violate constitutional rights.
Political parties previously have used primaries to advance a nominee to the general election. Under the new system, the top four voter-getters in each race would advance to the general election, regardless of party.
Superior Court Judge Gregory Miller did not immediately rule Monday after hearing arguments from Paton Walsh, attorneys for the plaintiffs and the group behind the initiative.
Changes under the initiative that voters narrowly approved in November are set to take effect for next year’s elections, which will decide races for offices including U.S. Senate, U.S. House, governor, and lieutenant governor.
The lawsuit was filed late last year by Scott Kohlhaas, who unsuccessfully ran for state House as a Libertarian; Bob Bird, chairman of the Alaskan Independence Party; Bird’s party; and Anchorage attorney Kenneth P. Jacobus. In court documents, they have called the new system a “political experiment” and said the judge must decide if ranked-choice voting “negatively impacts the right of Alaskans to free political association.”
“Marginalizing political parties, as this system does, harms the right of Alaskans to free political association, and allows those with money to take control,” Jacobus argued in a recent court filing.
He said Monday that he expected the case would go to the Alaska Supreme Court.
In court documents, attorneys for the state have maintained the system set out by the initiative creates a more accessible primary and said parties remain free to endorse whomever they choose.
Paton Walsh and Thomas Flynn, another assistant attorney general, also said in court documents that ranked-choice voting does not violate constitutional rights because each voter would have the same opportunity to rank candidates.
Scott Kendall, an attorney for the group behind the initiative, said the plaintiffs in this lawsuit misunderstand how ranked-choice voting works.
Some major U.S. cities use ranked-choice voting, including New York City, and Maine uses it for federal races.
CLIMATE CHANGE:
From the Washington Examiner, Daily on Energy:
DRILLING UPTICK: The Interior Department approved 2,500 requests to drill for oil and gas on public land in the first six months of this year — meaning the Biden administration is on pace for the highest level of permit approvals since George W. Bush, according to an analysis from the Associated Press this morning.
While that might seem surprising, it shouldn’t be. Interior officials have repeatedly sought to assure lawmakers from oil and gas states that the agency continues to approve permits to drill on existing leases at a steady pace even as it has suspended the issuance of new leases.
The pause on new lease sales does not stop companies from obtaining permits to drill and develop oil and gas on existing leases, and many companies “banked” leases and permits before President Joe Biden came into office, protecting against his campaign promises.
“As I have said many times, gas and oil production will continue well into the future. We believe that is the reality of our economy and the world we are living in,” Interior Secretary Deb Haaland said in testimony before Congress last month.
Future more uncertain: We’re awaiting a report any day now from Interior on the future of the oil and gas leasing program, in which the agency is expected to propose reforms that could make it harder to produce fossil fuels on public lands.