NEWS OF THE DAY:
From the Washington Examiner, Daily on Energy:
US OIL DEMAND RISING: U.S. oil demand bounced back last week rising around 10% after falling the previous week, the Energy Information Administration said today in its Weekly Petroleum Status report.
Oil consumption rose to 21.5 million barrels per day from 19.5 million barrels p/d the week prior.
Jet fuel demand increased from 1.3 million barrels p/d to 1.7 million barrels p/d, while diesel consumption saw an even bigger jump.
But gasoline consumption fell and was below the average level from the prior six weeks, a possible signal that rising coronavirus cases are negatively impacting demand.
EIA also reported a crude oil inventory draw of 3.2 million barrels, pulling oil prices higher this morning.
OIL:
ConocoPhillips Puts Williston Basin Oil Assets Up For Sale
Rachel Butt, Kiel Porter, Bloomberg News, August 17, 2021
ConocoPhillips is marketing its Williston Basin oil assets for a potential sale, according to people with knowledge of the matter.
The company estimates it could fetch roughly $200 million for the assets in the Williston Basin of North Dakota and Montana, said the people, who asked not to be identified because the discussions are private.
ConocoPhillips spokesman Dennis Nuss declined to comment.
The company is constantly reviewing its portfolio to identify uncompetitive businesses and screening opportunities to both buy and sell assets, Chairman and Chief Executive Officer Ryan Lance said during an Aug. 3 second quarter earnings call.
Major oil companies are shedding assets as they focus on less carbon intensive operations. Royal Dutch Shell Plc’s portfolio of Permian Basin oil fields, which could be worth as much as $10 billion, is said to attract suitors including ConocoPhillips.
GAS:
Rare natural gas rally has industry enjoying its best season in a decade — but coal is nipping at its heels
Geoffrey Morgan, Financial Post, August 18, 2021
Venture capitalist and prospective power plant developer Erin Campbell is looking to build up to 10 net-zero natural gas-fired electric generating stations in Canada at a time when investing in natural gas is becoming more promising but at higher costs.
“This is the time to build these kinds of plants. We think it’s a really compelling value proposition,” said Campbell, vice-chair of Vancouver-based Kanata Clean Power, after announcing a partnership on Aug. 9 with the Frog Lake First Nation in Alberta to build what she hopes will be the company’s first — and Canada’s first — zero-emissions 50-megawatt, natural gas fired power plant.
Natural gas prices have risen sharply both domestically and internationally over the course of the last year with many analysts expecting gas prices to remain elevated as the commodity continues to displace coal for electric generation.
Campbell said the outlook for natural gas commodity prices has trended upwards, but not to the point where her projects’ breakeven costs would suffer. “We see natural gas remaining affordable,” she said, though perhaps not as affordable as it has been in recent years.
Across North America, in Asia and in Europe, natural gas is on a tear and there are concerns about shortages of the commodity ahead of this winter.
Bank of America Securities analysts wrote in an Aug. 12 note that natural gas prices in Europe have hit a new record while prices in Asia have hit seasonal records. “LNG explodes higher,” the bank wrote, noting a shortage of gas in storage caused the European benchmark TTF surged to US$15.50 per thousand British thermal units, which has in turn pushed the Asian LNG benchmark to US$16 per mmBtu.
“The weird thing about this natural gas bull market is it’s happening globally in a way that’s extremely rare,” said Rory Johnston, managing partner and market economist at Toronto-based information services company Price Street Inc.
In North America, natural gas liquefaction facilities are running full tilt to meet the demand, creating a draw on supply at a time when most natural gas producers have pledged not to spend their money drilling new wells, but instead repairing their balance sheets after years of low commodity prices.
In addition, the North American natural gas market has benefitted from a combination of an unusually cold winter heating season, when a polar vortex whipped through the southern U.S., and an unseasonably hot summer, when the heat dome created a huge draw on natural gas for electricity. The net effect is natural gas storage levels well below their five-year average and projected to remain below those levels heading into the winter.
Johnston said most companies are demonstrating capital discipline and have adopted an attitude of “might as well sit back and enjoy the ride of US$70 oil and US$4 gas.”
In Alberta, where producers have struggled in recent years amid sub-$1 natural gas prices at the AECO benchmark, the monthly index for August is $3.32 per gigajoules. Spot prices for gas have dipped below $2 this week, however, while TC Energy Corp. conducts scheduled maintenance on a gas pipeline system.
Scotiabank economists predict the Henry Hub natural gas benchmark will average US$3.21 per thousand cubic feet this year and US$3.10 per mcf in 2022.
Calgary-based Birchcliff Energy Ltd. is so bullish on the outlook for gas prices that the company boasts it has no hedges in place on its oil or natural gas production.
Birchcliff president and CEO Jeff Tonken said in release its unhedged production “allows all of our production to benefit from strong oil and natural gas prices and we currently have no intention of entering into any fixed-price commodity hedges.”
The company reported $45 million in net earnings in the second quarter compared with a $38 million net loss a year earlier.
“There’s been nothing like this in the last five years,” said Robert Fitzmartyn, managing director of energy institutional research at Stifel FirstEnergy in Calgary, describing the improved optimism in the Canadian natural gas sector. “It’s a more favourable dynamic than it’s been for certainly five years, maybe 10.”
As prices rise, analysts do expect gas producers to begin drilling new wells to take advantage of higher prices.
Natural gas demand, both in North America and overseas, has increased sharply in recent years as coal-fired power plants are retired and have been replaced with natural gas, which is roughly half as emissions-intensive as coal.
As regulatory scrutiny of carbon emissions continues to ramp up alongside carbon prices, Campbell and her team expect to be able to displace aging natural gas power plants with zero-emissions technology.
Kanata Clean Power has a license agreement with Durham, North Carolina-based Net Power LLC to use its patented technology that burns natural gas, which has the chemical composition CH4, in the presence of pure oxygen, to produce a combination of power, clean water and captured carbon dioxide.
Right now, the technology is being used at a 50MW power plant near Houston, Tx. and is licensed at four other under construction power plants in the U.S. and one in the U.K.
“There is a need to transition the electricity infrastructure in parts of Canada,” Campbell said, adding, “We really believe this technology is a game changer.
MINING:
USACE assigns a new review officer for Pebble appeal
Mining.Com, August 17, 2021
The US Army Corps of Engineers (USACE) has assigned a new review officer to handle Northern Dynasty Minerals’ (TSX: NDM) appeal of a negative record of decision for the massive Pebble copper-gold project in Alaska.
The new review officer comes after the previous officer was promoted out of the position. Top of Form
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The new officer is expected to set a detailed timeline for the administrative appeal process, including scheduling a potential site visit and appeal conference in the weeks ahead.
Northern Dynasty’s US subsidiary, the Pebble Limited Partnership, says it has been advised that the administrative appeal process for Pebble could take a year or more given the complexity of the case. The administrative record contains 200,000 documents to date.
The Pebble Partnership submitted a request for appeal of the federal permitting decision in January.
“We have been, and continue to be, very concerned about USACE’s schedule and timeline for advancing our administrative appeal of the Pebble permitting decision, as we believe this does not accord with regulation,” said Northern Dynasty president and CEO Ron Thiessen in a media release this week.
“The new review officer has the power to help set the US down the path of strategic metals independence, which could enable the US to produce the copper, gold and silver it needs for a successful green economy transition. They can also help ensure that these metals are mined using industry-leading technologies under some of the strictest environmental standards in the world, while helping Alaska realize its right to manage its own resources for the benefit of its population.”
The project is considered one of the world’s largest copper and gold deposits and has been through a roller coaster of regulation over the past 13 years.
The USACE in November denied a key water permit for the Pebble mine project. The lead federal regulator found Pebble’s ‘compensatory mitigation plan’ as submitted earlier this month to be ‘non-compliant’, and that the project is ‘not in the public interest’.
Northern Dynasty called the decision “politically motivated” and said it is fundamentally unsupported by the administrative record as developed by the USACE through the Environmental Impact Statement (EIS) process for the Pebble project.
With resource estimates including 6.5 billion tonnes in the measured and indicated categories containing 57 billion pounds of copper and 71 million ounces of gold, 3.4 billion pounds of molybdenum and 345 million silver ounces, if permitted, Pebble would be North America’s largest mine.
Northern Dynasty shares trading in Toronto have cratered more than 75% over the past 12 months as the Pebble project continues to lay in regulatory limbo. Shares last traded on Tuesday at C$0.475 per share, giving the company a market value of C$243.63 million.
POLITICS:
Alaska won’t seek review of campaign contribution ruling (apnews.com)
Associated Press, August 18, 2021
The state will not seek further legal review of a recent court decision that struck down several campaign contribution caps in Alaska, including a $500-a-year limit on what an individual can give a candidate, Department of Law spokesperson Grace Lee said Tuesday.
The appeals court panel ruling in the case indicated Alaska’s $500 campaign contribution limit “would not be upheld by the U.S. Supreme Court for multiple reasons, including reasons beyond dispute, such as the lack of an inflation adjustment” in state law, Lee said in an email.
“The resources and risks to pursue a rehearing of the Ninth Circuit en banc, or a further appeal, are too great,” she wrote. “We encourage the legislature to address this issue and determine what limits would be appropriate based on current constitutional precedent.”
Other limits also were struck down by the appeals court panel in the divided opinion issued in late July.
Democratic state senators wrote Gov. Mike Dunleavy earlier this month to ask that he direct Attorney General Treg Taylor to seek a review of the ruling by a larger panel of the 9th U.S. Circuit Court of Appeals. They called the dissenting opinion in the case “factually and legally sound.”