NEWS OF THE DAY:
Oil prices plunge on coronavirus threats, OPEC’s pledge to add barrels
Rakteem Katakey, Saket Sundria, World Oil, July 19, 2021
-Oil in London sank to the lowest level in almost six weeks after OPEC+ agreed to boost supply into 2022, while a surge of the delta coronavirus variant threatened the rebound in the global economy.
Brent futures lost as much as 3.7%. OPEC and its allies will add 400,000 barrels a day each month from August until all halted output is revived. A jump in virus cases from Asia to the U.S. drove down equities, with stocks in Europe hitting a seven-week low. The dollar climbed, making commodities such as oil that are priced in the U.S. currency less appealing.
The OPEC+ deal, announced over the weekend after Saudi Arabia and the United Arab Emirates resolved their differences, gives traders a better view of how quickly the cartel will restore the 5.8 million barrels a day it’s still withholding. Saudi Arabia, the UAE, Iraq, Kuwait, and Russia all got higher baselines against which cuts will be measured from May 2022.
“Oil will probably dance to the tune of supply-side developments in the foreseeable future,” said Tamas Varga, an analyst at PVM Oil Associates Ltd. in London. The delta variant’s spread is raising economic growth concerns, and “fears of inflation and therefore of interest-rates rise have resurfaced.”
While oil supply is set to rise, some countries are reimposing restrictions on movement to control the virus. Indonesia, Thailand, South Korea, Vietnam, and Singapore are all dealing with outbreaks. U.S. infections are outpacing the global rate of increase, and the U.K. on Saturday reported the most cases since January.
- Brent for September settlement fell 3.6% to $70.96 a barrel at 1:40 p.m. in London
- West Texas Intermediate for August delivery dropped 3.7% to $69.13 a barrel
The delta strain may make oil volatile in the near term, but the deal between the Organization of Petroleum Exporting Countries and its allies would support a “constructive” view on prices, Goldman Sachs Group Inc. said. OPEC+’s planned supply increase is “moderate,” keeping the market in deficit, the bank said.
The agreement spans more than a year and covers millions of barrels of production, but it also remains flexible. The alliance will continue to hold talks every month from September, including a review of the market in December. It could adjust the schedule if required, according to Saudi Energy Minister Prince Abdulaziz bin Salman. The next gathering is scheduled for Sept. 1.
Alaska project uncertain as Oil Search executive resigns
Larry Persily, Oil and Gas News Briefs, July 1, 2021
(Australian Financial Review; July 19) – Australia-based Oil Search has been thrown into crisis after managing director Keiran Wulff resigned suddenly due to a deterioration in long-term health issues that coincided with an investigation into a whistleblower complaint about his overbearing behavior. The company said, “Wulff had behaved in a manner inconsistent with the standards expected by the board in relation to his management style.” Analysts said the news puts the company’s A$4.1 billion oil project in Alaska in doubt and has raised speculation Oil Search will become a takeover target.
Wulff, who took up the role in February 2020, replacing long-term incumbent Peter Botten, said it had become “increasingly difficult for me to perform at the level required of the position.” He explained in a statement: “After considerable reflection and consultation with my family and others including my medical advisers, it is an appropriate time to leave to focus on my health.”
Equity analysts grilled chief financial officer Peter Fredricson on the prospects now for Oil Search’s Pikka project in Alaska, where a process is under way to bring in a third partner. That process had been expected to conclude ahead of a final investment decision targeted for late this year, but for which Fredricson on July 19 said there was now no targeted timing, with the decision to hinge on resolving funding for the venture.
Credit Suisse analyst Saul Kavonic questioned whether the Alaska project would still proceed amid the leadership turmoil. “The Alaska project may not survive this new executive musical chairs mess at Oil Search, as it will be a tough ask to find a new CEO willing to champion that challenged project,” he said.
Cities Try to Phase Out Gas Stoves—but Cooks Are Pushing Back
Elena Shaeo, The Wall Street Journal, July 17, 2017
Gas-fired stoves are emerging as a burning issue as American cities consider phasing out natural-gas hookups to homes and businesses to reduce carbon emissions.
Many restaurant and home chefs prefer cooking on gas-burning ranges, and persuading some to switch to electric stovetops is proving to be a hard sell—a sentiment the natural-gas industry has seized on to rally opposition to new local ordinances.
Several cities, including San Francisco and Seattle, have given ground on the issue by exempting stoves from natural-gas bans, or providing pathways for restaurants to secure waivers in an attempt to minimize blowback.
The pushback on stoves demonstrates one of the challenges of reducing the emissions linked to climate change: Consumers may have to make personal sacrifices by giving up things they use and enjoy in favor of less familiar technologies.
George Chen, executive chef, and founder of San Francisco restaurant China Live, said he was concerned about cities restricting a cooking technique that contributes to the texture and flavor of good Chinese cuisine that he said can’t be achieved on an electric stove.
“I have respect for the environment, and I drive an electric car and am happy to pay the extra costs because the technology is good,” Mr. Chen said. “But to say that an electric stove is as good as a gas one is misunderstanding the art of cooking.”
Proponents of electrification say today’s induction stoves, which use electromagnetic current to directly heat cookware, are much better than the electric cooktops of yesteryear and—once cooks learn to use them—superior to gas, too. But some restaurant industry groups and others have pushed back against efforts to force them to make the switch.
When Berkeley, Calif., became the first U.S. city to ban natural-gas connections to new homes and businesses two years ago, the California Restaurant Association sued. It argued that the restriction would harm establishments that use the fossil fuel to flame-sear meat, char vegetables and wok-toss rice and noodles. A federal judge dismissed the challenge earlier this month; the restaurant group said it plans to appeal the decision.
Since then, several dozen other U.S. municipalities, including Denver and New York, have either passed or proposed measures that ban or restrict natural gas in new or substantially renovated buildings with the hopes it will help achieve goals of reducing the carbon emissions linked to climate change. In turn, a number of states, including Texas and Georgia, have moved to prohibit local jurisdictions from enacting such bans before more cities can catch on.
The local measures would require the installation of heat pumps and electric appliances instead of gas-powered furnaces, water heaters, ovens, and stoves, which are currently the norm in most of the country. Nationwide, fossil fuels burned for energy in businesses and homes sit at 13% of annual carbon emissions, according to 2019 data from the EPA.
Gas stoves’ contributions to emissions are negligible compared with the gas used to heat homes and water. Less than 3% of natural-gas use in homes comes from cooking on gas stoves, according to a 2015 residential energy survey from the U.S. Energy Information Administration.
An initial proposal for restrictions on new natural-gas hookups in Brookline, Mass., covered gas stoves, but those were eventually exempted. The town still needs state approval to enact its ban.
Practically, it made more sense to “go after the big stuff first,” said state Rep. Tommy Vitolo, a Democrat who represents Brookline in the Massachusetts legislature. “For some, cooking is cathartic. For others it’s spiritual or cultural. It’s an important part of people’s daily lives, and they understandably have preferences,” he said.
When the San Francisco board of supervisors voted unanimously to ban natural gas in new buildings last year, the measure included a waiver process that allowed flexibility for restaurants. Seattle building code updates that restricted natural gas in new buildings, passed unanimously by the city council in February, contained a similar carve-out for gas stoves, an approach that was “seen as preferable to an outright prohibition” at the time, said Kristin Brown, communications manager for Seattle’s Office of Sustainability and Environment, in an email.
City carve-outs for gas cooking aren’t unreasonable, said Sara Baldwin, who works on electrifying the building sector at environmental policy firm Energy Innovation. But eventually, she believes that buildings will need to be fully electrified, including stovetops, to meet ambitious emissions-reduction goals, presenting an existential threat to the gas industry.
“The gas industry really wants to make the household stovetop a wedge issue and use that to animate people against electrification as a whole,” said Charlie Spatz, a researcher at the Climate Investigations Center, an environmental advocacy group.
Natural-gas utilities and lobbying groups like the American Gas Association have poured money into public-relations campaigns defending stovetop cooking. The group has paid for Instagram lifestyle and wellness influencers for posts raving about cooking with gas stoves, as reported earlier by Mother Jones magazine.
An AGA spokesman said the sponsored posts were part of its #CookingWithGas campaign, which also includes videos posted on its website of professional chefs sharing recipes and speaking about how they prefer cooking with natural gas.
“Americans love cooking with gas, so it is understandable that misguided policy makers would try to soften the blow of policies that eliminate affordable, reliable and clean natural gas by exempting natural gas for cooking,” said AGA President Karen Harbert in an emailed statement.
While some restaurant industry groups have pushed back against gas bans, citing factors such as the higher costs of all-electric kitchens, some chefs say they see the potential environmental benefits.
Shelby Starks, a personal chef based in Oakland, Calif., said gas-fired cooking has been an important part of her craft for the 12 years that she has been serving food in the Bay Area. But she believes chefs will have to adapt.
“We will see food change on many different fronts, whether it’s how we grow the food or how it gets delivered,” she said. “Sustainably preparing food is the next frontier.”
New Aussie mineral explorer enters Alaska
Shane Lasley, North of 60 Mining News, July 15, 2021
A new Australian company has entered the Alaska gold exploration scene with a deal to acquire Monte Cristo, a 125-square-mile (324 square kilometers) underexplored project in the Kahiltna Terrane area.
Consisting of 500 state mining claims, Monte Cristo covers a 35-mile-long (55 kilometers) under-explored stretch of Southcentral Alaska east and south of two projects with multi-million-ounce gold resources – GoldMining Inc.’s Whistler gold-silver-copper project and Nova Minerals Ltd. Estelle gold project.
Ragusa Minerals Ltd., the Australia-based exploration company acquiring Monte Cristo, plans to explore for similar intrusion-related targets at several prospects already identified on its new Alaska project.
“The Monte Cristo gold project will target areas near the multi-million-ounce gold deposits discovered by Nova Minerals Ltd and Gold Mining Inc.,” said Ragusa Minerals Chair Jerko Zuvela.
Monte Cristo, St. Eugene, Old Man Breccia, and Old Man Diorite are the four priority targets on the property.
All of these targets were briefly explored about a decade ago, but these early staged investigations were halted due to tough market conditions in 2011.
Rock samples collected from the Monte Cristo prospect in 2010 assayed up to 4.2 grams per metric ton gold and sampling of talus fines, rocks accumulated at the base of a very steep rock face, returned grades as high as 3 g/t gold.
Located about five miles (eight kilometers) southwest of Monte Cristo, the St. Eugene prospect covers three separate zones. Rock samples collected from the largest zone in 2010 returned grades as high as 2.1 g/t gold and 1% copper.
The Old Man Breccia and Old Man Diorite are located in the northern part of the Monte Cristo property. Channel sampling of three trenches cut across Old Man Breccia in 2009 cut 16 meters averaging 0.74 g/t gold, 24 meters of 1.94 g/t gold, 28 meters of 3.34 g/t gold, and 10 meters of 7.12 g/t gold.
The Monte Cristo property also covers gold staged gold targets south of Nova Mineral’s Estelle property.
Upon closing of the acquisition, Ragusa plans to develop an exploration strategy for Monte Cristo and intends to secure experienced consultants to assist with advancing this new Alaska gold project.
In addition to Monte Cristo, Ragusa owns the Lonely Mine gold project in Zimbabwe and is acquiring the Burracoppin halloysite, an aluminosilicate clay mineral, project in Western Australia.
“The proposed acquisitions will diversify Ragusa’s global footprint and provide an opportunity to utilize our exploration and development experience to rapidly progress both projects, given their prime positions adjacent to major gold and halloysite projects in Tier 1 jurisdictions,” Zuvela said in regard to the Monte Cristo and Ragusa acquisitions
Five Things to Know in Alaska Politics: Lone Star pol in Alaska, weed on Wall Street and a watershed bill for U.S. dams
Linda F. Hersey, Fairbanks Daily News Miner, July 17, 2021
A Texas GOP leader sells out a Fairbanks state party fundraiser. Wall Street sees green in future cannabis stocks. And Congress considers a major investment in U.S. dams. Read on to learn more about five things to know in Alaska politics.
Allen West promotes Alaska oil and gas
The Alaska GOP held a soldout fundraiser in Fairbanks July 9 that featured keynote speaker Allen West, the Texas GOP party chair and former Florida congressman. West is a retired Army officer and author of “Hold Texas, Hold the Nation.” He also is a rising star in national Republican politics.
“The Biden administration is shutting down our oil and gas industry,” West said in a video recorded before the event. West stands next to the Alaska Pipeline in Fairbanks in the social media spot.
The 800-mile gas pipeline represents energy security and independence for Alaska and the nation, West said on the short video. He urged voters to “keep Alaska red” and said he is running for Texas governor.
The Texas GOP commented on social media that Republican leaders from the two oil states are “doing a series of joint fundraisers … to bring attention to the gas & oil industry.”
Alaska GOP leaders will visit the Lone Star State in September, according to the Texas GOP.
Rep. Young backs dam legislation
Alaska Rep. Don Young announced legislation to invest in repairing, building, and updating America’s dams. The Twenty-First Century Dams Act has bipartisan support.
“I have long supported utilizing Alaska’s vast hydropower capabilities and was proud to support projects such as the Terror Lake Hydroelectric Plant and the Swan Lake Hydroelectric Project,” Young said.
Young points to urgent safety, environmental and energy needs for federal investment. More than 6,000 dams in the U.S. are in poor condition and categorized as “high hazard.”
“Unfortunately, our state is home to dams in urgent need of repair and retrofitting, in addition to dams that need to be removed outright.”
Investing in energy generation is part of the bill, too. Hydropower is a critical carbon-neutral source. “The state of Alaska has tremendous hydroelectric potential, and through it, we can provide our rural and remote communities with reliable, renewable energy,” Young said.
Alaska delegation’s flower power
Alaska Sen. Dan Sullivan and Rep. Don Young are supporting the American Grown Act that calls for American-produced blooms at U.S. government events.
Flower Power Daily, reporting on the $25 billion a year U.S. floral industry, said that less than 25 percent of flowers bought and sold in the U.S. are domestically grown.
Legislation by Alaska’s delegation supports American flower and foliage farmers, according to Flower Power Daily, including the state’s commercial peony growers.
The bill identifies the State Department and Defense Department as places where grown-in-America flowers would be mandated for ceremonies, wreath-layings and other official events. Currently, most flowers are from South America, Europe, and Africa.
Cannabis on Wall Street?
Alaska Rep. Don Young, a founder of the Cannabis Caucus in Congress, has led the first GOP-carried legislation to legalize marijuana in the U.S. Young’s advocacy is part of a national trend to repeal cannabis laws. Wall Street and corporate America are taking interest and forecast big business growth.
The cannabis market is projected to expand from $17 billion in 2020 to $64 billion by 2030, according to analysts.
The New York Stock Exchange and Nasdaq do not list American-based cannabis companies because cannabis is illegal under federal law. They do list Canadian cannabis businesses that exclusively do business in Canada, where marijuana is legal.
Cannabis in the U.S. is legal for adult recreational use in 19 states and for medical use in 36 states, with more expected to follow. Alaska was an early state to legalize marijuana.
U.S. analysts are looking ahead, advising that established, state-based companies with a large geographic reach are better poised to take off with federal legalization. Many say that it is just a matter of time.
Jefferies analyst Owen Bennett described future investing in the nascent U.S. cannabis industry as a once-in-a-generation wealth opportunity, according to Reuters news service.
U.S. shutters oil refineries, as China invests more
The Institute for Energy Research reports that China is projected to top the United States this year in petroleum production, which it describes as a “historical first.”
Since April 2020, China began refining more crude oil than U.S. refineries for the first time, with the trend continuing for most of last year.
The United States has been idling oil refineries as China has been developing more.
In April 2021, the U.S. had more than 18 million barrels per day of petroleum refining capacity, down from 19 million barrels per day in January 2020, the institute reported.
“Operable refinery capacity is the amount of capacity that is in operation or could be brought into production within 90 days,” the institute said.
Murkowski announces energy funds for Alaska tribes
Linda F. Hersey, Fairbanks Daily News Miner, July 19, 2021
Seven Alaska tribes will receive more than $5.2 million in federal funds for energy technology to lowers costs, strengthen resilience, and increase efficiency, under grants announced by Sen. Lisa Murkowski.
Funded by the Office of Indian Energy, the grants will cover battery energy storage projects, building retrofits and a solar photovoltaic system for tribal communities in remote areas of Alaska.
Electricity rates in rural Alaska can run 800% higher than the national average, Murkowski said. “When you are paying that much just to stay warm, there is less that you will have available to feed your family.”
Murkowski joined Department of Energy Secretary Jennifer Ganholm for a formal presentation to announce energy funds for Native communities in Alaska and across the nation. The money represents the first awards this year from the Office of Indian Energy, which is part of the Energy Department.
“It’s good to be able to focus on good things that can come from the Office of Indian Energy as they work to facilitate and advance the needs of not only Alaska Natives but American Indian and Indigenous people around the country,” Murkowski said.
The grants provide opportunities to reduce energy costs and make “life better for our families,” she said.
Murkowski recalled meeting a foster mother in Aniak who showed her a $50 receipt for five gallons of home heating oil. “She said, this week I am choosing to keep my house warm. Next week, I am buying [baby] formula,” Murkowski recalled.
Helping Alaska Native communities improve energy resilience has been a focus for Murkowski that included work to secure a $6 million funding increase for the Office of Indian Energy.
Granholm said the new grants will support clean energy and help ensure that tribal communities “disproportionately affected by climate change directly benefit” from the investments. The Alaska funds to tribal communities are:
• Aniak Village: $167,948 for energy retrofits of five buildings, including the community center.
• Chefornak Village: $854,964 for a battery storage system that supports a standalone wind diesel grid.
• Kipnuk Light Plant: $855,978 for battery energy storage to integrate with a wind diesel grid.
• Metlakatla Indian Community: $1,031,110 for an electrical interconnection between the Annette Island Reserve and the mainland.
• Native Village of Diomede: $222,848 to improve energy efficiency at a new village store.
• Akiachak Native Community: $123,220 for energy retrofits and an LED upgrade.
• Native Village of Noatak and the Northwest Arctic Borough: $1,997,265 for a solar photovoltaic (PV) and battery energy storage system.