More investment please! Most LNG projects won’t be built? AK Budget Holes.

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From the Washington Examiner, Daily on Energy:

SENATE CONFIRMS BEAUDREAU AS INTERIOR’S NO. 2: The Senate confirmed Tommy Beaudreau to be deputy secretary of the Interior Department today by a wide 88-9 margin with plenty of Republican votes, given his moderate reputation from his prior stints at Interior in the Obama administration.

“He can serve as a voice of reason in an administration that is waging a war on American energy workers,” said Sen. John Barrasso of Wyoming, top Republican on the Energy Committee, in a floor speech yesterday, adding that Beaudreau understands “America’s need for an all of the above energy strategy,” including fossil fuels.

Beaudreau, however, committed in his confirmation hearing to carrying out the Biden administration’s agenda on “modernizing” the oil and gas leasing program to “address the climate crisis and achieve full value for taxpayers.”

Beadreau is best known for implementing reforms to the offshore and gas drilling program after the Deepwater Horizon spill in the Gulf of Mexico, and later oversaw onshore leasing at Interior. He was most recently an attorney representing clients in the energy industry, including renewable and oil and gas companies.


OPEC Secretary Urges Member Countries To Continue Oil Investments
Tsvetana Paraskova, OilPrice.Com, Jun 17, 2021

The energy transition should not crowd out any source of energy as all energy sources of today will be required for the foreseeable future, OPEC Secretary General Mohammad Barkindo said.

“We continue to urge all our member countries and the international industry to continue to invest in all sources of energy, including oil and gas, in particular using technology to mitigate against these emissions,” the head of OPEC added.

“For the industry, for OPEC, and all our member countries, and the global economy, all the energy sources of today will be required for the foreseeable future,” Barkindo told Amena Bakr, Chief Opec Correspondent at Energy Intelligence, in a The Conversation of the Century debate on the future of energy.  

“For us in OPEC, and in the industry, and in the mainstream of the global conversation, the energy transition is not a transition from once source of energy to another,” Barkindo noted.

Transition is moving away from greenhouse gas emissions in the exploration, production, transportation, and consumption of fuels across the board to more sustainable sources of energy that would address the emissions issue, OPEC’s chief said, adding that the definition of ‘energy transition’ should not crowd out any source of energy.

Commenting on the Net-Zero report of the International Energy Agency (IEA), which suggested that a net-zero pathway would not need any new investment in oil and gas, Barkindo said that “you can invest as much as you want in renewables, but if the emissions problem is not addressed, net-zero goals would not be achieved.”

In the report, the IEA “punctured many holes themselves” because it was the Paris-based agency itself that was one of the first to raise red flags about a supply deficit after the 2014-2016 downturn, urging for more investment in oil and gas, Barkindo said.  

Last month, an internal OPEC report, seen by Reuters, found that the IEA’s suggestion of no new investment in oil and gas ever could further raise the volatility in oil markets if investors heed the call.  


Report: Most LNG projects won’t get built
Joe Bosquin, Construction Dive, June 15, 2021

Dive Brief:

  • There are so many proposed liquefied natural gas projects around the world that building them all would triple current global LNG capacity. But most of them will never get built due to a lack of investor demand in the wake of the COVID-19 crisis, according to the latest report from the International Gas Union.
  • More than half of the proposed new facilities are in the United States and Canada, due to the growth of shale gas output in North America over the past few years, according to IGU. The report found that there was only a 4.6% increase in global liquefaction capacity in 2020, as just three new plants came online, all in the U.S. Only one proposed plant, the Energia Costa Azul facility in Mexico, was commercially sanctioned and cleared for new construction, marking the slowest pace of greenlighted projects in the sector since 2008.
  • “Global liquefaction capacity would increase three-fold if all these projects materialize, although this is highly unlikely,” the IGU said in its report. “The COVID-19 pandemic, which inflicted further price shocks on gas markets, has forced cash-strapped developers to hold back on capital-intensive… liquefaction projects.”

Dive Insight:

The report wasn’t all bad news for construction companies in the U.S. that focus on gas projects. For example, while large-scale projects have increasingly been shunned by investors who are still uncertain about the lasting impacts of the pandemic, smaller projects have in turn become more attractive.

“This puts small-scale LNG in the spotlight, as it remains a growing segment within the wider LNG sector, thanks to significant commercial potential and lower investment costs,” the report stated.

Many of the possible projects in the U.S. are of that smaller scale variety, the report said.

“The currently proposed U.S. LNG projects are mainly greenfield projects that consist of multiple small- to mid-scale LNG trains delivered in a phased manner,” the report said. “This provides flexibility in securing long-term off-takers and increases competitiveness in project economics through modular construction.”

The report highlighted several examples of those types of projects, including Elba Island LNG in Georgia, and Plaquemines LNG and Driftwood LNG in Louisiana.

2020 was an exceedingly tough year for gas-related construction. While the impacts of the worldwide pandemic were felt by all sectors, those factors were compounded in the gas industry by an already increasing supply glut that ran headlong into diminished demand as global commerce slowed. At the same time, environmental backlash intensified against the sector in general.

In the U.S., for example, the high-profile Keystone XL pipeline that would have brought petroleum from Canada to the Gulf of Mexico suffered an inauspicious end last week, when TC Energy said it was pulling the plug on the embattled project.

That followed the cancellation of the Atlantic Coast Pipeline in July 2020, and the continuing controversy over Enbridge’s Line 5 pipeline under the Great Lakes through the Straits of Mackinac, against which local indigenous tribes and environmental groups are fighting.

Enbridge’s Line 3 pipeline, which is slated to carry oil-sands crude from Alberta, Canada, to Wisconsin, did have a rare win Monday when the Minnesota Court of Appeals upheld its permit, even as protestors continued to clash with police over the project.


Blackwolf explores Golden Triangle Alaska
A.J. Roan, North of 60 Mining News, June 11, 2021

Blackwolf Copper and Gold Ltd. June 10 reported that it has staked mining claims over numerous historic, high-grade gold-silver prospects and mines in Southeast Alaska.

Situated near the mining towns of Hyder, Alaska and Stewart, British Columbia, these properties – Texas Creek and Cantoo – are immediately west of the Premier gold project and south of past-producing Scottie gold and Granduc copper mines in BC’s famed Golden Triangle.

According to Blackwolf, very limited modern exploration has been performed in the area, with virtually none in the past 25 years and the majority of historical exploration and production occurring in the 1920s to 1950s.

Of the multiple known mineral showings on the properties, Blackwolf has determined its priority targets as:

Solo Mine on the Texas Creek property, where miners tunneled under glacial ice to explore for the source of electrum stringers identified in glacial transported boulders. Since then, significant glacial melt has occurred in the area.

Cantoo Mountain, which is underlain by a synvolcanic intrusive that is potentially the metallogenic feeder to the Premier and Big Missouri epithermal gold-silver deposits just across the border in BC. Numerous high-grade gold and silver values were returned by US government geologists collected during the early and mid-1990s.

“The Hyder area properties cover some of the last unexplored areas of the Golden Triangle, with minimal modern exploration since an access road and bridges to the Texas Creek area were wiped out by the cataclysmic draining of a glacially dammed lake (jökulhlaup) in 1961,” said Blackwolf Copper and Gold President and CEO Rob McLeod. “Veins of native electrum, a naturally occurring alloy of gold and silver, that were identified at the margin of an icefield in the 1920s are of the same nature as the Brucejack and Premier mines and there has been obvious extensive glacial retreat since that time.”

A total of 389 federal claims were staked, covering 9,116 acres (3,689 hectares). Initial reconnaissance exploration work, including mapping, prospecting and rock and soil sampling is expected to start in the coming weeks.

“Adding these properties to our exploration pipeline is accretive to the value of our company, particularly with our team’s experience in the Golden Triangle and are complementary to our advanced-stage Niblack copper-gold-silver-zinc project in Southeast Alaska. Assays from recent underground drilling at Niblack are pending and are expected to be received shortly,” added McLeod.


Alaska Legislature passes budget with funding holes
Becky Bohrer, Associated Press, June 17, 2021

The Alaska Legislature approved a state spending package following a series of dramatic votes in the Senate on Wednesday and impassioned speeches highlighting the tensions over the annual dividend paid to residents and the frayed nerves after five months in session.

The budget would result in a $525 dividend this year and leave in doubt funding for other programs and projects after the Senate, like the House before it on Tuesday night, failed to garner sufficient support for a key vote.

But Senate leaders insisted work would continue toward trying to win the support needed for at least a $1,100 dividend and to keep funding for things such student scholarships, rural electric costs and other programs and projects intact.

“Those things being out there force these four sides to work together better,” Senate President Peter Micciche, a Soldotna Republican, said of the four caucuses involved. “I don’t think that’s a negative thing.”

It’s uncertain whether that can happen in the current special session, which is due to expire Friday unless lawmakers end it early.

Gov. Mike Dunleavy, in a statement before the Senate vote, called the spending plan that passed the House incomplete and urged lawmakers “to reengage” and “craft a solution, including all the necessary components, that can pass” both chambers by Friday.

The special session was preceded by a four-month regular session, and frustration was evident in floor debate on both sides.

It was noteworthy particularly in the Senate, where the 14-member, Republican-led majority was not bound to vote for the budget, a departure from a long-running legislative practice.

Several Republicans spoke against the strings attached to budget items, including to a higher dividend, with Sen. Roger Holland, an Anchorage Republican, calling the budget proposal a “Dumpster fire.”

Senate Majority Leader Shelley Hughes, a Palmer Republican, said funding for the dividend didn’t need to be cobbled together from various sources and that she had problems with that approach.

Dividends traditionally have been paid using earnings from the nest-egg Alaska Permanent Fund. But the budget proposal that advanced from a conference committee cobbled together money for dividends of about $1,100 from sources including the constitutional budget reserve fund that requires three-fourths support in each the House and Senate to access. The Legislative Finance Division said a failure to reach the three-quarter threshold would mean $525 dividend checks this year. Both the House and Senate failed to win three-quarters support.

Lawmakers have for years relied on the constitutional budget reserve to help cover expenses. Under the state constitution, money taken from the account is to be repaid. The three-quarter vote also was needed to prevent accounts used for such things as student scholarships, rural electric costs and, in this budget, a significant chunk of dividend funding from being swept into the constitutional budget reserve.

Sen. Natasha von Imhof, an Anchorage Republican, gave a fiery speech outlining potential fallout if a budget were not passed with the start of the new fiscal year looming July 1. She noted the dividend amounts contemplated in the budget and said Alaskans also have received federal aid checks over the last year to help ease the financial impacts of the pandemic.

A focus should be on reinvigorating the economy through year-round jobs, she said.

“But, no, here we are … debating a dividend. The greed and the entitlement is astounding to me. I just don’t fathom it,” she said. “My father is at home dying of cancer, and I am here, listening to the biggest crock of crap I’ve ever heard.”

Sen. Bert Stedman, a Sitka Republican and one of the budget negotiators, said the proposed $1,100 dividend reflected what the state could afford. He is among those who has balked at exceeding a withdrawal limit from permanent fund earnings for dividends and government costs.

In retrospect, he said, he wished funding for the dividend wasn’t structured as it was, but he said efforts to “unwind” that as part of negotiation efforts weren’t successful. Stedman said funding for an $1,100 dividend could be addressed with a special session later this year.

The budget was dramatically voted down Wednesday before it was brought back for another vote later and narrowly passed, with Sen. Lyman Hoffman, the lone Democrat in the majority, switching from “no” on the initial vote to “yes” after moving to rescind the action.

Hoffman didn’t speak to his vote on the floor, and when asked by a reporter why he voted no initially, he said: “Because I could.”

Micciche said he thought “like the rest of us” Hoffman “is impatient with the fact that we have not moved the needle on executing a sustainable plan.”

Micciche said he’d like to see lawmakers call themselves into special session later this year in an effort to resolve the long-running debate over the dividend. He said that will require the majorities working with the minority caucuses and making sure they feel their concerns are being heard.

Dunleavy has called another special session for August. But Micciche said if lawmakers call themselves in, they can set the agenda and take up pieces they want to consider.

“I’m more hopeful today than I have been all session in spite of this very difficult session that you just witnessed,” Micciche said, adding later: “What I’ve seen in the last few days is people saying, this has to be better.”


BlackRock beefs up its climate modeling
Andrew Freedman, Axios, June 17, 2021

BlackRock, the world’s largest asset manager, said Thursday it’s acquiring a London-based consulting firm’s climate modeling system.

What’s next: BlackRock plans to integrate the model into its proprietary tools to help clients reduce their portfolios’ climate risk exposure.

Why it matters: Its purchase of Baringa Partners’ climate change scenario model is part of a broader climate modeling war.

  • Asset managers and investment firms are looking to in-house teams or outside firms to gauge their risks of climate impacts, such as sea level rise.
  • In addition, companies including BlackRock want to help clients profit off the transition to a clean energy economy — which Baringa’s model is designed for.

Driving the news: BlackRock already has a set of tools called Aladdin Climate to evaluate climate risks and opportunities as the company boosts sustainability efforts.

  • It intends to blend Baringa’s model with Aladdin to create broader, more accurate tools and metrics for investment managers to minimize risk exposure.
  • The model would bring to BlackRock new capacity to analyze risks of a transition to a net-zero carbon economy, which many big nations including the U.S. hope to achieve by 2050.
  • This could include, for instance, financial ramifications of oil and gas assets that can no longer be burned due to new greenhouse gas emissions limits.

The big picture: The announcement comes as U.S. financial regulators move toward mandating that companies disclose climate risk exposure, and consulting firms pop up offering their own models.

  • BlackRock has sought to make its modeling more accurate by recently partnering with or piping in data from the Rhodium Group, Sustainalytics, Refinitiv and Clarity AI, a spokesperson said.

Between the lines: The new acquisition boosts the chances that an ecosystem will develop in which more companies plug climate models into their financial planning systems — but without fully revealing what lies under their hood.

  • Earlier this week, scientists at the Woodwell Climate Research Center warned the Securities and Exchange Commission against fostering the development of just such a risk modeling ecosystem, instead advocating for more transparency.
  • Methods and assumptions in private sector models are often kept hidden from investors and the public, something that scientists have warned the SEC about as part of their likely rule-making process.

Our thought bubble: Simply by virtue of its size and wide use of its Aladdin platform, BlackRock’s investment in Baringa’s modeling vaults that system to the top of the list of widely used tools to help investors manage the transition to a low carbon future.

Go deeper: Prominent investors jump into the climate risk space