Today’s Key Takeaways: Empowering private citizens to police oil wells and pipelines– what could go wrong? OPEC encourages more global investment in oil and gas. India discovers 5.9m tons of Lithium. What’s behind potential gas shortages in Cook Inlet?
NEWS OF THE DAY:
Biden Wants Citizens to Police Oil Wells for Methane
Jennifer A. Dlouhy, Rigzone, February 14, 2023
A Biden administration plan to empower private citizens to police oil wells and pipelines for methane leaks is being blasted by industry leaders who say it sets a dangerous precedent.
Under the Super-Emitter Response Program proposed by the Environmental Protection Agency, individuals who have agency-approved expertise and equipment would be authorized to monitor oil industry operations for emissions of the potent greenhouse gas and notify companies of any high-volume leaks. Operators would have five days to analyze any credible third-party methane reports and 10 days to fix most leaks.
Environmental activists have cheered the proposal, saying it boosts the incentive for oil and gas companies to stifle methane leaks. But the oil industry’s main lobbying body lashed out against it, saying it raises a raft of legal, logistical, commercial and safety risks, in addition to potentially setting a precedent of tapping private citizens to do the government’s job.
It’s “essentially delegating duties that are appropriate for a regulatory agency out to third parties,” American Petroleum Institute senior vice president Frank Macchiarola said on a conference call Monday. The plan could also “have a chilling effect on companies’ ability to work with the EPA and work with third parties” to reduce methane emissions,” he said.
OIL & GAS:
OPEC chief asks climate negotiators to look at ‘big picture’
Bloomberg, February 13, 2023
Prices for oil, natural gas and coal surged after Russia’s invasion of Ukraine last February, pushing energy security to the top of the agenda for many leaders.
OPEC’s top official urged countries to invest much more in oil to meet the world’s future energy needs and said climate policies need to be more “balanced and fair.”
“It is imperative that all parties involved in the ongoing climate negotiations pause for a moment; look at the big picture,” Haitham Al-Ghais, secretary-general of the Organization of the Petroleum Exporting Countries, said Sunday at an energy conference in Cairo. They must “work towards an energy transition that is orderly, inclusive and helps ensure energy security for all.”
His comments came amid a shift among some Western governments and companies regarding fossil fuels. Prices for oil, natural gas and coal surged after Russia’s invasion of Ukraine last February, pushing energy security to the top of the agenda for many leaders.
U.S. President Joe Biden went off-script during his State of the Union speech last week and said: “We’re going to need oil for at least another decade.” In Europe, Shell PLC signaled it will stop accelerating spending on renewable energy, while BP PLC slowed its planned reduction of oil and gas output.
OPEC’s Al-Ghais said the oil industry had been “plagued by several years of chronic underinvestment.” It needs $500 billion of investment annually until 2045, he said.
The United Arab Emirates’ hosting of the COP 28 climate summit in late 2023 will “serve as a fresh opportunity to explore inclusive, sustainable and consensus-based solutions to climate change,” said the secretary-general, who’s from OPEC member Kuwait.
The UAE, also part of OPEC, has appointed Sultan Al Jaber, head of national oil and gas firm Adnoc, as president for the summit. While that’s caused some controversy, Al Jaber has said that hydrocarbon producers must be at the forefront of climate talks if the world is to transition to cleaner energy while also ensuring that fuel prices remain affordable.
Al Ghais reiterated that OPEC and its partners — known as OPEC+, the 23-nation alliance is led by Saudi Arabia and Russia — are committed to keeping the oil market stable.
Saudi Arabia and other core OPEC members are unlikely to respond to Russia’s announcement Friday of a production cut by pumping more, Bloomberg reported.
MINING:
India announces discovery of 5.9 million tonnes of lithium
Florence Jones, Mining Technology, February 13, 2023
The Indian Ministry of Mines reported the discovery of 5.9 million tonnes of inferred lithium ore on their Twitter on Thursday.
This deposit alone makes India the country with the fifth-largest lithium reserves in the world. The deposit lies in the Reasi district in the provinces of Jammu and Kashmir.
Lithium is used in the production of batteries for electronic vehicles (EVs), solar panels and electronic devices. Production of minerals necessary for the clean energy transition could increase by as much as 500% between 2020 and 2050 according to the World Bank.
According to the International Lithium Association, demand is set to increase 6-fold between 2021 and 2040, due to growing interest in EVs and renewable technologies.
This is the first major discovery of lithium in India with the only other being a small deposit of 1600 tonnes found in Karnataka two years ago.
As India seeks to become a major competitor in the development of EVs this discovery could improve their standing.
India is currently reliant on imports of lithium for its manufacturing sector, principally from Argentina, Chile and Australia. Imported lithium forms around 80% of the total lithium used in the country.
Discovery could break open the “lithium triangle.”
This discovery could draw dominance away from the “lithium triangle”, made up of Chile, Argentina and Bolivia. Approximately, 75% of the world’s lithium supply lies beneath the salt flats of these three nations.
The Indian government has celebrated the discovery as part of president Modi’s movement towards “aatmanirbhar”, a slogan roughly translating to “self-reliance”.
While lithium is associated with efforts towards carbon neutrality, experts have cautioned against the environmental impacts of the mine itself. The Himalayan region between Jammu and Kashmir is an eco-sensitive region, mining could lead to a loss of biodiversity. Ecologically sensitive zones are designated by the Ministry of Environment Forests and Climate Change in India. In these areas, often surrounding national parks, commercial activities are restricted to ensure their protection.
POLITICS:
Railbelt utilities again scramble to fill expected Cook Inlet gas shortages
Sean McGuire, Anchorage Daily News, February 13, 2023
The Alaska Department of Natural Resources has forecast that under current conditions, there will be supply shortfalls of Cook Inlet gas starting around 2027. Railbelt utilities are increasingly looking at alternative options to bridge supply gaps, such as importing gas from outside Alaska.
As of 2018, more than 70% of power generated across the Railbelt came from Cook Inlet natural gas; it was also used to heat over 140,000 homes and businesses. But production from 60-year-old fields has steadily declined.
The largest Cook Inlet gas producer is Hilcorp. The Texas-based operator has indicated to the state that it would not automatically extend contracts to provide gas to Railbelt utilities as it has done in the past.
In recent years, there has been little incentive for producers to increase their output. Alaska has not exported LNG from Cook Inlet since 2015, meaning the market has been effectively fixed. Increased production means depressed prices.