Today’s Key Takeaways: Oil & Gas jobs still lagging all industries in recovering pandemic job losses. AKLNG an answer to Japan’s energy crisis. Will Big Oil take the opportunity to drill in Alaska? Aspirations vs. reality in the race to reduce emissions – supply meet demand. AK house members predict it will be weeks, or months, before they organize.
NEWS OF THE DAY:
USA Oil and Gas Jobs Are Still in Short Supply
Sophia Caronello, Bloomberg/Rigzone, December 4, 2022
The short supply of labor in the US oil patch has plagued exploration and production companies all year, and the tightness continues.
While the sector’s unemployment rate jumped to 3.1% in November from 0.8% in the prior month on an unadjusted basis, it’s still well below the long-term average, according to a Labor Department report released Friday. A year-ago, the jobless rate was 8.6% as many workers were sidelined due to the pandemic stalling output amid very weak oil demand.
Labor shortages in US shale have been one of the biggest hurdles holding back production growth this year. Explorers, who have faced repeated calls from the Biden administration to boost production amid rising energy costs, routinely cite their inability to find enough workers to drill new wells.
The number of workers employed in US oil and gas jobs totaled 135,700 in November, climbing modestly for a third straight month, but still down from this year’s peak in July.
The tightness in the energy labor markets replicates trends in the wider economy. But the broader mining and logging industry — which includes oil and gas, according to the Labor Department’s classification — is the farthest behind of any sector in recovering its pandemic job losses, down 6.9% from February 2020.
Will Big Oil Jump At The Opportunity To Drill More In Alaska?
Haley Zaremba, OilPrice.Com, December 3, 2022
- In May, the Biden administration canceled three major oil and gas auctions in the Cook Inlet.
- This week, the Interior Department announced the planned auction of more than 958,000 acres in Alaska’s Cook Inlet.
- It seems uncertain whether the Cook Inlet leases included in the December 30th auction will ever actually result in drilling.
- Environmental groups: drilling in the allotted waters would harm a number of species.
It seems like the Inflation Reduction Act does just about everything – everything, that is, but curbing inflation. In order to pass the Act the Biden administration had to appeal to a broad base of supporters, from staunch climate advocates to hardcore coal country representatives. In particular, the Act had to appeal to holdout West Virginia Senator Joe Manchin.
Though Manchin is a democrat he represents a constituency that depends on fossil fuels for their livelihoods and prioritizes coal country jobs over climate measures. So while the Act includes huge incentives for clean technologies, it also promised a massive oil and gas drilling auction.
Now, the time has come for the federal government to make good on that promise. This week, the Interior Department announced the planned auction of more than 958,000 acres – an area larger than the entire state of Rhode Island – in Alaska’s Cook Inlet next month.
The sale includes a stretch of federal waters starting around Kalgin Island all the way to Augustine Island in the south. Department estimates say that the area being auctioned has the potential to produce nearly 200 million barrels of crude and 300 billion cubic feet of natural gas over the lifetime of the lease sales.
Set to be held on December 30, the lease sale is actually the renewal of one of several previously canceled auctions. In May, the Biden administration canceled three major oil and gas auctions in the Cook Inlet (“due to lack of industry interest in leasing in the area”) and the Gulf of Mexico (due to “conflicting court rulings”).
Such leases have been the subject of serious legal battles, with some rulings forcing cancellations due to insufficient consideration of the auctions’ impact on climate change, and other rulings ordering the resumption of such auctions.
While citing “lack of industry interest in leasing in the area” as a reason to cancel Cook Inlet auctions might be a convenient simplification of a larger context of political and geopolitical complications, there is also a core truth to the federal government’s statements. A controversial sale of oil and gas leases in the Arctic National Wildlife Refuge under the Trump administration fell far short of its revenue goals.
How Japan Can Avoid Europe’s Energy Mistakes:
The U.S. is ready to help Tokyo on innovation, efficiency, nuclear power, and natural gas.
Rahm Emanuel, The Wall Street Journal, December 4, 2022
Europe’s energy dependence on Russia has been a long-simmering problem. Russia’s invasion of Ukraine transformed it into a crisis. As European countries have tried to counter this unjust war, Vladimir Putin has waged another assault on the Continent’s home front with abrupt cuts to energy supply, risking significant disruptions to European economies.
All of this teaches the dangers of relying on despotic leaders determined to upend the global order. While the struggle for energy may not come to Japan in the same way, Japanese policy makers can learn from Europe’s energy vulnerability. Tokyo can avoid Europe’s predicament, but it must move quickly. The Dec. 1 launch of the U.S.-Japan Energy Security Dialogue offers an excellent opportunity for our two countries to reinforce our shared energy-security goals.
European countries are in a mad dash to reduce their reliance on Russian energy by two-thirds this year—by diversifying gas supplies, accelerating renewable-energy deployment and improving energy efficiency. It’s a monumental undertaking made harder by decades of deteriorating energy infrastructure. Their work has been nothing short of heroic.
A similar task awaits the Japanese. For Japan to achieve energy security and meet its climate goals, it must activate its well-developed nuclear-power industry. Japan has the deep technical know-how for this, but every day its nuclear plants are offline, that know-how is diluted. Prime Minister Fumio Kishida’s pledge to restart some of the country’s nuclear-power plants took courage, and he knows better than anyone the domestic political challenges of embracing nuclear power, especially after the nuclear-leak crisis caused by a tsunami in March 2011. Governing is about making these difficult choices, and the sooner Japan restarts its nuclear plants, the closer it is to energy security and climate stability.
While the existing plants can be restarted, the U.S. and Japan are also looking to the future of nuclear power: advancing small modular reactor capabilities. Our two countries are in the lead on this cutting-edge technology, and we’re already working together to support its use in such countries as Romania and Ghana.
Japan can also use its ingenuity and engineering skills to advance the use of hydrogen. Japan had invested many years in pioneering hydrogen supply chains, leaving it with a 20-year head start on hydrogen technology, which was once seen as impractical. Japanese companies such as Mitsubishi Heavy Industries, Kawasaki Heavy and Iwatani are leading the way on clean hydrogen, and Japan’s natural abundance of freshwater is a major asset for deploying this energy source. Hydrogen has a chance to become a clean and stable energy alternative for heavy industry.
Japan can likewise become a leader in new battery technologies. The world’s top three holders of electric-vehicle patents are all Japanese. Japan has the real potential to transform these skills into a driving force that would reduce its energy insecurity while leading the energy transition internationally.
Another lesson from Europe is that countries should import natural gas from their friends, not their enemies. Last year Russia supplied about 9% of Japan’s liquefied natural gas. Australia supplied the most, over 36%. The U.S. already supplies Japan with 10% of its LNG, and we are ready to do more. Planned expansions in states such as Alaska could, based on private-sector studies, supply Japan’s current and future demand at a reasonable cost with much lower methane emissions than alternative LNG. Alaska LNG can travel to Japan in six days without any strategic chokepoints and can make Japan the energy export hub for the Indo-Pacific to reduce its coal dependency. If America, Australia, and other friends can supply the majority of Japan’s LNG needs, why would Japan need to rely on its adversaries?
Japan should also deploy more renewable energy and improve energy efficiency. Domestic resources such as solar and wind are already powering communities from Hokkaido to Okinawa, and geothermal and tidal energy could further improve the mix, helping Japan reach its goal of meeting 24% of its electricity needs with renewable energy by 2030. Retrofitting buildings and lighting, heating, and cooling systems will make offices and homes more energy efficient. And given Japan’s commercial building stock, this could significantly reduce Japan’s energy needs.
Japan isn’t as resource-poor as commonly portrayed. While it may not have oil and gas, it does have other valuable domestic resources and technological know-how on which to draw. Energy is the lifeblood of industrial economies, and great democracies like ours can’t rely on capricious dictators for their security. Japan has the benefit of being able to learn from Europe’s example—and it should act accordingly.
A wise man once said, “Never allow a good crisis to go to waste.” Japan’s energy crisis is Japan’s energy opportunity. America’s security commitment to Japan is more than just weapons. It is also our energy resources and technology.
Mr. Emanuel is U.S. ambassador to Japan.
“Energy Transition or Reset?”
Mark Mills, Senior Fellow, Manhattan Institute
It was an eye-opener to listen to Mark Mills several weeks ago at the Resource Development Council of Alaska annual conference. His presentation about “aspirations vs. reality” with regard to a clean energy future and mining clearly laid out why the world will NOT achieve the emission reductions goals they have set. Supply meet Demand. Two pictures worth more than a thousand words.
“Stalemate:” Prepare to wait weeks, or even months, before Alaska’s House forms a majority.
Nathaniel Herz, Northern Journal, December 4, 2022
After last month’s elections, the Alaska Capitol, so far, is split between two different political ideologies. Voters re-elected Republican Gov. Mike Dunleavy, and a centrist, bipartisan coalition is set to take control of the state Senate.
A longtime principle at the Alaska Capitol holds that of the building’s three power centers — the House, Senate, and governor — at least two must be aligned to set the state’s political agenda. Which means that the makeup of the House’s new majority will likely decide whose agenda will advance over the next two years.
But interviews with nine current and newly elected House members indicate that it will almost certainly be weeks — if not months — before the chamber coalesces into a new majority of 21 or more legislators.
Election results that evenly split the House between two different factions, plus a high-profile lawsuit that could unseat a far-right Republican, have left legislators in a deadlock that shows no sign of a quick resolution.
“We are at a stalemate,” said Anchorage Republican Rep. Laddie Shaw.
The stakes for Alaskans are high.