Today’s Key Takeaways: ANWR escapes drilling ban in new energy bill. Oil price steady ahead of Wednesday OPEC meeting. WV pipeline project could get accelerated approval. Globally, more money spent on coal than copper. Sullivan puts a hold on 3, DOD employees over delay in Ambler Road.
NEWS OF THE DAY:
Senate climate package keeps Arctic refuge drilling alive
Heather Richards, Energywire, August 2, 2022
The energy and climate spending bill negotiated by Democratic Sen. Joe Manchin and Senate Majority Leader Chuck Schumer last week may be the biggest of its kind in history, but some conservationists are zeroing in on what they believe is a key missing piece: a drilling ban in the Arctic National Wildlife Refuge.
The omission is a significant blow to efforts to overturn a mandate approved by Congress during the Trump administration to allow oil and gas exploration and development in the refuge’s coastal plain, given midterm elections this fall that could upend the Democrats’ majority on Capitol Hill.
“That’s it for the legislative fix,” said Kevin Book, a managing director of ClearView Energy Partners, of an ANWR repeal anytime soon. “Is there any scenario in which Chairman Manchin would deliberately … put back in the provision he took out? Not a very strong one, no.”
A repeal of the ANWR drilling program — originally created via a rider to the 2017 Tax Cuts and Jobs Act written by Sen. Lisa Murkowski (R-Alaska) — was included in the House-passed version of the “Build Back Better Act,” which Manchin (D-W.Va.) eventually rejected before crafting the new proposal with Schumer (D.N.Y.). Protecting the refuge from oil wells is also a longtime rallying point for conservationists, climate lobbyists and many Democrats. A repeal of the 2017 program was also a campaign promise of President Joe Biden, who has frozen oil activity in the refuge for now but could be hard pressed to continually rebuff the congressional mandate to hold sales.
Several conservation groups say they will continue to fight for an amendment to the final climate spending deal that would end the ANWR oil program for good.
“It’s not over until it’s over,” said Jenny Rowland-Shea, deputy director for public lands at the left-leaning Center for American Progress.
Bernadette Demientieff, executive director of the Gwich’in Steering Committee, an Alaska Native nonprofit organization, said a climate bill isn’t complete without action to protect ANWR.
The Gwich’in in Alaska are fiercely opposed to oil development in the refuge’s coastal plain because it’s the calving ground for caribou herds both sacred to the community and are important as a source of food.
“Congress has the power right now to repeal that destructive mandate and prevent the carbon pollution it would cause, and instead protect Arctic health, sacred lands, the Porcupine caribou, and our way of life,” she said in a statement.
One of the key organizers around ANWR protections, the Alaska Wilderness League, applauded the climate actions in the bill but also committed to fighting to the bitter end for an ANWR oil program repeal.
“We were surprised it wasn’t included, and plan to work with our champions in Congress to explore every avenue possible to add it back in,” said Aileo Weinmann, a spokesperson for the league.
“Alaska shouldn’t be an exception for work to address climate and clean energy,” Weinmann said.
But several observers predicted that prospects for getting ANWR back on the table are grim, given the number of times talks over this reconciliation package have fallen apart.
Frank Maisano, a founding partner of Bracewell LLP’s Policy Resolution Group, said Democrats are probably unwilling to force the ANWR issue after winning significant provisions that they had wanted on climate and energy policy — if they are even thinking about ANWR at all.
“If specific Democrats tried to bring that up, it would upset the apple cart,” he said. “It would just be bad karma.”
Manchin has stressed that if the bill falls apart, it will be due to partisanship, implying that the compromises in the bill gave both Democrats and Republicans plenty of what they wanted. In addition to cutting the ANWR language, the bill mandates oil and gas lease sales offshore — including in Alaska’s Cook Inlet — and onshore on public lands. In fact, it pairs oil and gas leasing to renewable approvals, such as offshore wind leasing. Additionally, Manchin secured a compromise that Democrats will act in separate legislation to streamline federal permitting — a sweetener for the pro-fossil fuel Democrat and a longtime ask of GOP supporters of fossil fuel projects, pipelines, and other energy projects.
“In normal times, this would be a bipartisan bill, but I understand the toxic atmosphere we are in,” Manchin said on “Fox News Sunday.”
Oil on ice
The status of the ANWR oil program, which according to the 2017 language mandated two oil and gas auctions in the 1.5-million-acre coastal plain by 2024, is that it’s officially on hold.
Biden’s Interior Department hasn’t advanced next steps for nearly a year after the announcement last August that it would begin a supplemental environmental review of the ANWR leasing program (Greenwire, Aug. 3, 2021).
That review was expected following an order from Interior Secretary Deb Haaland, also last summer.
Haaland suspended the leases sold by the Trump administration in a January 2021 sale and promised to redo the environment and climate study that was done, due to the “inadequacy” of the existing review and “alleged legal deficiencies underlying the program.”
The Bureau of Land Management did not comment about the review status by deadline.
Book, with ClearView, noted that the Biden administration does have tremendous leeway in terms of how the oil program moves forward. The slow walking of the program and layering of additional environmental reviews are an example of that approach in action. But the “bitter pill to swallow” for this White House is that another oil lease auction is mandated until Congress reverses it, he said.
“It is the law. They are obliged to sell more leases,” Book said. “But they also get to do a lot to determine how quickly winners of those leases can advance development decisions.”
While extended review timelines may be key to the Biden administration strategy in blocking oil in ANWR, they could fit neatly into industry’s own timeline for the refuge.
The refuge is 15 to 20 years away from being a significant producer of oil, even if drilling were allowed during this administration and oil companies sought permits to explore and drill, said Brett Watson, an assistant professor of natural resource economics at the University of Alaska, Anchorage.
That lead time makes the refuge potentially important for Alaska’s oily future, but not as much in the near term, he said.
“ANWR, obviously, has been a political football in this state, in this country, for a long, long time,” he said.
Kara Moriarty, president of the Alaska Oil and Gas Association, said the industry’s position has not been shaken in the wake of the climate spending bill negotiations: The federal government should want to produce on its own lands to ensure that oil and gas aren’t coming from other countries instead.
“It doesn’t matter if the Democrats are in control, Republicans are in control. That is a fundamental reality, that Americans want and deserve energy independence,” she said.
Powerful politics
If there is a midnight push to get ANWR language back in the reconciliation deal, there are powerful political forces likely pushing back — and pushing Manchin to hold the line, as well.
Both Murkowski and Sen. Dan Sullivan (R-Alaska) have worked to protect the ANWR oil program, which state Republicans fought for years to bring about against environmental and Democratic opposition.
“Obviously, I’m very concerned that our efforts to advance ANWR, as we’ve been able to do, could be really thwarted if reconciliation is advanced,” Murkowski said last year, noting “conversations” with the West Virginia Democrat (E&E Daily, Sept. 23, 2021).
Murkowski has consistently slammed the Biden administration for not allowing energy development on public lands and waters in Alaska.
“Why would we go abroad when we have the resources here?” Murkowski said in a speech on the Senate floor last month. “What we need is for common sense to prevail over wishful thinking. We need resource development here at home in places like Alaska.”
The senators’ offices did not provide comment on the Manchin deal by press time.
But in a statement released last week on the United States’ second quarter of contracted economic growth, Murkowski appeared to nod to the bill that had been released the day before, indicating she may be unlikely to support the measure, even without an ANWR ban. “This is not the time to spend or tax hundreds of billions more,” she said.
OIL:
Oil steady ahead of OPEC+ meeting as global demand concerns weigh
Scott DiSavino, Reuters, August 2, 2022
Oil futures were little changed on Tuesday ahead of a meeting of OPEC+ producers this week that may not lead to a further boost in crude supply amid concerns a possible global recession could limit energy demand.
The Organization of the Petroleum Exporting Countries and allies including Russia, known as OPEC+, meet on Wednesday. Two of eight sources said a modest output hike would be discussed, while the rest said a boost was unlikely.
OPEC+ sees this year’s oil market as slightly less supplied than previously thought.
Brent futures rose 25 cents, or 0.3%, to $100.28 a barrel by 10:07 a.m. EDT (1407 GMT), while U.S. West Texas Intermediate (WTI) crude rose 19 cents, or 0.2%, to $94.08.
“There’s a lot more uncertainty this time around,” said Craig Erlam of brokerage OANDA of the OPEC+ meeting. “The decision this week will tell us just how unified the group still is.”
Oil soared earlier in 2022, with Brent in March coming close to its all-time high of $147.50 a barrel after Russia’s invasion of Ukraine in February added to supply concerns. Worries about slowing growth have since eclipsed tight supply.
Surveys showed factories across the United States, Europe and Asia struggled for momentum in July as flagging global demand and China’s strict COVID-19 restrictions slowed production. read more
GAS:
Approval For Battered Mountain Valley Gas Pipeline Could Be Accelerated
Charles Kennedy, OilPrice.Com, August 2, 2022
The Mountain Valley natural gas pipeline project in West Virginia and Virginia could get an accelerated approval timeline under a side-deal between West Virginia Senator Joe Manchin and Senate Majority Leader Chuck Schumer separate from the climate bill, Bloomberg reported on Tuesday, citing a summary of the agreement it had obtained.
Last week, in a U-turn, Senator Joe Manchin agreed to back the Democrats’ plans to pass legislation cementing hundreds of billions in climate change spending. Manchin sealed a deal with Majority Leader Chuck Schumer on a bill involving $370 billion in climate spending.
The move to back the climate and tax bill came after Senator Manchin, who holds a swing vote in a 50-50 Senate, said earlier in July that he would not support President Joe Biden’s energy and climate investments bill. Senator Manchin declined to back the energy and climate provisions, as well as the tax provisions, in the reconciliation bill on which the Senate Democrats have been working. But two weeks later, he agreed to back the bill after all.
Separately, Manchin and Schumer have now agreed to pursue reform on permitting that would “require the relevant agencies to take all necessary actions to permit the construction and operation of the Mountain Valley Pipeline and give the DC Circuit jurisdiction over any further litigation,” according to the summary of the agreement seen by Bloomberg.
The Mountain Valley Pipeline (MVP) project is a natural gas pipeline system that would span approximately 303 miles from northwestern West Virginia to southern Virginia and would bring natural gas from Marcellus and Utica shale basins to markets in the Mid- and South Atlantic regions of the United States.
Early this year, however, a U.S. Court of Appeals vacated the federal permits for the Mountain Valley Pipeline, stalling the project.
Several natural gas pipeline projects haven’t seen the light of day in recent years, including the $8-billion Atlantic Coast Gas Pipeline, which was canceled by developers Dominion Energy and Duke Energy in mid-2020 in view of ongoing delays and major cost overruns.
MINING:
Globally more is being spent on coal than copper mining
Frik Els, Battery Metals Intelligence, Mining.Com, August 1, 2022
New data from Industrial Info Resources show 4,790 metals and minerals capital projects (including mining, processing and refining) with a combined investment value of $443 billion are currently under construction around the world. A further 10,586 projects are under active planning and engineering – for a combined total of $1.11 trillion.
Joe Govreau, VP of Research at Industrial Info Resources, says that is an 8% increase from the preceding period as projects delayed by the pandemic are being restarted. Mining projects – from early exploration through to construction – make up half the global total.
The top seven miners have now upped capital outlays by more than 50% from the depths of the industry downturn in 2017. Govreau sees “no reason why expenditures won’t continue to be elevated for the next several years or more as companies look to increase production to meet expected demand growth from the energy transition.”
Red metal goes green
The decarbonisation revolution is not off to a great start though, not if you compare investments in the worst of the fossil fuels in terms of emissions – coal – with that of copper, without which there simply is no green energy transition.
Copper’s metal intensity – kilograms required per MW produced – of renewable energy sources like solar and wind is nowhere near that of coal or gas. To generate 1MW of offshore wind energy around 8.2 tonnes of copper have to be installed. The same figure for coal is 882kg.
According to one study, in order to reach net-zero by 2050, 19 million tonnes of additional copper need to be delivered. That implies a new La Escondida – the world’s largest copper operation by a wide margin – must be discovered and enter production every year for the next 20 years.
IIR tracks 708 active copper projects with construction kickoff in 2022/2023 around the globe. The combined value of these projects, which includes mining, processing, and smelting, is $68.5 billion.
Unsurprisingly, Chile, the world’s largest copper producer and reserves holder, leads the way with 123 projects worth $18.3 billion followed by China boasting 119 projects with a combined value of $13 billion and Russia which is spending $12.7 billion on 24 new copper projects.
In contrast, the US is spending $3.8 billion while Canadian spending on new copper ventures is a paltry $484 million, behind Iran and Vietnam. Govreau also points to Peru, the world’s number two producer, which is spending only $602 million after pandemic lockdowns and social unrest brought development to a standstill.
Back in black
In contrast to copper, coal has a pipeline of 1,863 projects around the globe with a value of $80.8 billion.
Govreau says coal consumption and production jumped over the past year on the back of increased demand for power generation and steelmaking. Consumption of metallurgical coal is expected to be strong again this year.
The Chinese ban on Australian coal is a boost for swing suppliers – US coal exports were up 26% last year, says Govreau. Asian nations are also upping investment in coal mining, and in contrast to Europe and the US, more coal-fired plants are being built than are being retired.
China derives 65% of its electricity from coal, has vast amounts of reserves and is heavily investing in consolidating and automating its coal mines to supply its massive power generation fleet. Coal mining is also attracting investment in the near term because soaring gas prices makes it a cheaper alternative for electricity generation.
POLITICS:
Sen. Sullivan Holds Three Biden Nominees In Response To Interior Department Stalling Ambler Project
Anthony Moore, KSRM, August 1, 2022
U.S. Sen. Dan Sullivan, a member of the Senate Armed Services Committee, recently announced that he intends to hold three senior Biden Administration Defense Department nominees in response to the administration’s decision to stall the Ambler Mining District Industrial Access Road project. The nominees will be tasked with handling the country’s defense industrial base, including the domestic supply chain of critical minerals.
The Ambler Mining District is known for having a sizeable amount of untapped critical minerals and, according to the office of Sen. Dan Sullivan, the United States is reliant on other countries for 14 critical minerals and more than 75% reliant for an additional ten critical minerals. Sen. Sullivan argued that the Interior Department’s action to block the Ambler project is reckless and limits the supply of critical minerals, especially when tensions are high with China.
The three nominees are Dr. Radha Plumb, nominated to be deputy undersecretary of defense for acquisition and sustainment, Dr. Laura Taylor-Kale, nominated to be assistant secretary of defense for industrial base policy, and Brendan Owens, nominated to be assistant secretary of defense for energy, installations, and environment.
The Ambler Road project began permitting during the Obama administration and received final federal approval in July 2020. In February 2022, the Interior Department filed to reopen the Record of Decision for the project.