Today’s Key Takeaways: Alaska senators seek to open more land for mining and energy. Oil prices up on demand forecasts. Economics of Arctic mine are strong.
NEWS OF THE DAY:
Alaska senators want 28M acres open to mining, energy
Scott Streater, E & E Daily, February 14, 2023
A bill from GOP Sens. Lisa Murkowski and Dan Sullivan comes as the Bureau of Land Management continues to review actions taken by the Trump administration on the matter.
Alaska’s Republican senators are once again challenging the Biden administration’s 2021 decision to pause a series of Trump-era public land orders in the state that would open 28 million acres of federal lands to mining and energy development.
Sen. Lisa Murkowski recently introduced a bill, S. 175, that would codify into law the five public land orders signed in January 2021 by then-Interior Secretary David Bernhardt. The orders lifted land use protections for the 28 million acres overseen by the Bureau of Land Management. The bill is co-sponsored by fellow Alaska Sen. Dan Sullivan.
Murkowski’s bill would also essentially put the brakes on an ongoing BLM-led environmental impact statement (EIS), which began last year. BLM is evaluating what it has called legal deficiencies in the Bernhardt orders signed in the closing weeks of the Trump presidency (E&E News PM, Aug. 17, 2022).
The Biden administration in April 2021 placed the orders on a two-year moratorium to give it time to evaluate them (Greenwire, April 15, 2021).
But Murkowski said it’s long past time to lift the land use restrictions implemented decades ago that withdrew the 28 million acres from new mining claims and oil and gas leasing through the Alaska Native Claims Settlement Act of 1971. The law set aside large swaths of the state for conservation and other land use classifications (Greenwire, Jan. 19, 2021).
She said in a statement last week that the withdrawals “have proven to be nothing more than obsolete barriers to land access,” and that they have hampered the state’s “ability to responsibly produce and develop critical materials like oil, gas, and minerals.”
Murkowski added: “Rather than kicking the can on lifting these outdated PLOs, it’s time for the Biden administration to allow Alaskans to responsibly manage our own lands.
“Through this legislation, Secretary Bernhardt’s order to revoke the outdated PLOs — a decision informed by BLM staff, following environmental reviews — will be codified, allowing for Alaskans to rightfully access millions of acres of federal public lands.”
She and Sullivan last year sponsored an identical bill, S. 4531, that did not advance.
The current status of the EIS remains unclear. Equally unclear is when it will be completed. BLM did not respond to a request for comment.
The public land orders BLM is analyzing in the EIS collectively cover an enormous area that includes portions of the “Bay, Bering Sea-Western Interior, East Alaska, Kobuk-Seward Peninsula, and Ring of Fire planning areas,” according to the Federal Register notice announcing the start of the EIS last year.
Issues being studied include “possible failure to adequately evaluate impacts” of opening the lands to mining and drilling under the Endangered Species Act, as well as “failure to secure consent from the Department of Defense (DOD) with regard to lands under DOD administration,” and “failure to adequately analyze potential impacts on subsistence hunting and fishing,” according to the notice.
Among the potential legal issues associated with the Bernhardt orders is the fact that only one of them, PLO 7899, was published in the Federal Register, on Jan. 19, 2021. That order covered 9.7 million acres west of the National Petroleum Reserve-Alaska along the Arctic Ocean that would have been opened to mining and oil and gas development on April 19, 2021 (Greenwire, Feb. 17, 2021).
The other four orders — PLOs 7900, 7901, 7902 and 7903 — signed by Bernhardt on Jan. 15 and 16, 2021, “were never published in the Federal Register and have no effective date,” despite the potential impact to the management of nearly 20 million acres of public lands, BLM said last year.
Depending on the outcome of the environmental impact statement, BLM could fully or partially revoke the Bernhardt orders, or retain “some or all” of the Bernhardt withdrawals that would open the lands to development.
The issue has been a major sticking point for Murkowski and her relationship with BLM.
Murkowski focused almost entirely on the Biden administration’s two-year moratorium on the public land orders at a June 2021 Energy and Natural Resources Committee hearing for Tracy Stone-Manning, who at the time was President Joe Biden’s nominee for BLM director.
Murkowski peppered Stone-Manning with questions about the delay, implying that the issue would be a determining factor in her decision whether to support the nominee’s confirmation.
“I can’t emphasize enough the significance of these public lands orders,” Murkowski said. “And if you are confirmed as director to the BLM, it’s going to fall on you to rectify this wrong.”
Stone-Manning’s nomination was confirmed, but Murkowski voted against her nomination (E&E Daily, Oct. 1, 2021).
OIL:
Oil Prices Rise On Upbeat Demand Forecasts
Irina Slav, OilPrice.Com, February 16, 2023
- Oil prices were up early on Thursday morning, with Brent nearing the $86 mark and WTI trading above $79.
- Upbeat demand forecasts from both OPEC and the IEA were enough to counter the EIA’s latest inventory report.
- The primary headwind for oil prices at the moment remains concerns that the Fed might aggressively hike interest rates and hurt oil demand.
Crude oil prices rose in Asian pre-noon trade today after OPEC and the International Energy Agency raised their demand forecasts for the year, shaking off EIA’s latest weekly inventory report that estimated a large inventory build in the United States.
In its latest Monthly Oil Market Report, OPEC revised its 2023 oil demand projections up to 2.3 million barrels daily earlier this week. That represented a 100,000-bpd change from last month’s forecast.
Of this, 2 million bpd in demand growth will come from non-OECD countries, the oil group said
A day later, the International Energy Agency forecasted oil demand this year would hit a record high of 101.9 million barrels daily, rising by 2 million bpd from last year. The IEA’s upward revision was also to the tune of 100,000 bpd from last month’s projections.
In China, the IEA said, demand for crude oil will rise by some 900,000 barrels daily.
Meanwhile, the U.S. Energy Information Administration estimated crude oil inventories had added 16.3 million barrels in the week to February 10, confirming the estimate of the American Petroleum Institute, published a day earlier, but topping it substantially. The API had estimated the weekly inventory build at about 10 million barrels.
After the initial drop in prices following the release of the EIA’s report, benchmarks started climbing again, pushed by the bullish demand forecasts of OPEC and the IEA.
Analysts also noted that the massive inventory build was more the result of a data adjustment than the actual accumulation of crude in storage.
“Once everyone realized the adjustment threw off the EIA data, skepticism about the big (crude storage) build crept into the market. It’s a one-off,” John Kilduff, partner at investment advisory Again Capital, told Reuters.
At the time of writing, Brent crude was trading close to $86 per barrel and WTI was changing hands for more than $79 per barrel.
Headwinds remain, led by continued concern about Fed rate hikes that would push the dollar higher, dampening appetite for crude.
MINING:
Economics of Arctic Mine remain robust
Shane Lasley, North of 60 Mining News, February 14, 2023
Trilogy Metals Inc. Feb. 14 reports that while rising costs and challenging supply chains have weighed on the economics of building and operating a mine at Arctic, an updated feasibility study shows that an open-pit copper-zinc-lead-silver-gold mine at this Northwest Alaska project continues to produce healthy financial returns.
Arctic is a high-grade volcanogenic massive sulfide deposit that is part of the district-scale Upper Kobuk Mineral Projects being advanced by Ambler Metals LLC – an equally owned joint venture between Trilogy and Australia-based South32 Ltd.
This 448,217-acre land package made up of state and Alaska Native-owned lands also hosts Bornite, a world-class copper-cobalt deposit that is expected to be the site of a second mine at UKMP, along with more than a dozen other copper-forward targets similar to the two most advanced projects.
A feasibility study finalized in 2020 outlined plans for a financially robust mine at Arctic.
While post-pandemic inflation and supply chain issues have certainly weighed on the economics of building mines over the three years since this study was completed, the primary reason for the update is to meet the U.S. Securities and Exchange Commission’s new SK 1300 standards for mining companies listed on exchanges in the United States.
POLITICS:
From the Washington Examiner, Daily on Energy:
BATTLE IN ALASKA: Proponents of ConocoPhillips’ Willow project are stepping up their campaign for the oil field’s approval and seek to put President Joe Biden on notice about what’s at stake with the politically volatile project, especially for local Alaska native communities that would see a major financial windfall if the project is given the green light.
The message: Some Alaska native groups, and many environmentalist NGOs, are strongly opposed to the proposed expansion of oil production on the North Slope and demand the project be shot down to keep on track with Biden’s climate goals.
Its backers insist it’s outside noise and not representative of local sentiment, and they’ve sought to turn the Biden administration officials’ sympathies for giving locals more of a say in the approval of significant projects back on themselves.
“Economic development opportunities in the North Slope are limited, making prompt approval of this project invaluable to our livelihoods,” said Nagruk Harcharek, president of Voice of the Arctic Iñupiat, a nonprofit based in Alaska’s North Slope representing the interests of the Iñupiat.
“The majority consensus on the North Slope is in support of the project,” Harcharek said, recalling a resolution supporting the project that the Voice of the Arctic Iñupiat’s 24 member organizations passed unanimously.
Harcharek joined Sens. Lisa Murkowski and Dan Sullivan and other local Iñupiat leaders of the North Slope, where Conoco plans to build the project, in a briefing yesterday to make the case for Willow.
Willow could generate an estimated $1.25 billion in revenue for the North Slope Borough. Similar levies on existing oil and gas operations in the North Slope have enabled the region to fund education and provide emergency services, said Taqulik Hepa, director of the borough’s Department of Wildlife Management.
Rep. Josiah Patkotak, who represents a coastal district in the North Slope in the state legislature, said the region would need the economic engine of Willow to finance alternative energy sources, such as renewable wind and solar.
“We need that local infrastructure and that ability to bond for some of those projects and all of that comes back to the economic base which development provides for us,” he said.
Refresher on Willow: Interior and the Bureau of Land Management could make a decision to approve or block the project, which is in its fifth year of the planning and permitting stage, as soon as early next month, when the comment period for the final environmental impact statement ends.
Willow’s master development plan seeks to develop five drill sites in the National Petroleum Reserve in Alaska, as well as supporting road and bridge infrastructure, to support the ultimate production of 180,000 barrels of oil per day.
BLM’s environmental impact statement identified an alternative that provides for three drill sites vs. the proposed five, and Interior said it still has “substantial concerns” about the project and the preferred alternative.