Oil,Gas Trounce Green Energy. Alaska Natural Gas Update. R’s Border Carbon Fee?

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Biden Administration Supports Oil, Mining Projects Backed by Trump
Timothy Buco, The Wall Street Journal, June 1, 2021

Biden administration lawyers are defending oil and mining projects approved under the Trump administration, benefiting ConocoPhillipsRio Tinto PLC, BHP Group Ltd. and others at the expense of environmental and tribal groups challenging the projects.

In a series of court arguments this spring, the administration has supported the Willow oil project in Alaska, the Resolution Copper Mining project in Arizona and the Dakota Access Pipeline, all of which are on federal land or need federal approval for major water crossings.

The legal filings have helped improve some of President Biden’s shakier relationships with lawmakers from Western states, specifically moderate Democrats and some Republicans whose support Mr. Biden needs to get his nominees and initiatives through Congress.

“I sense there’s a lot more pragmatism there now,” said Sen. Steve Daines (R., Mont.), who has criticized the Biden administration’s pause on federal oil and gas leasing and its decision to kill the Keystone XL pipeline project.

Mr. Daines applauded the administration’s recent federal court filing to defend ConocoPhillips’s Willow project against challenges from environmental groups. And he praised several recent nominations from Mr. Biden to fill out the leadership ranks at the Interior Department, including the former energy industry lawyer Tommy Beaudreau as deputy secretary.

“They have demonstrated an openness and willingness to have an open dialogue on what’s important to the West,” Mr. Daines said.

The actions haven’t gone over as well with Mr. Biden’s typical allies among environmentalists and tribes.

During his campaign, Mr. Biden promised to help spur a move away from fossil fuels, especially oil.

“I would transition away from the oil industry, yes,” Mr. Biden said during the final presidential debate. “The oil industry pollutes, significantly. It has to be replaced by renewable energy over time.”

He also said he would enhance environmental protections for and consultations with poor and minority communities, including Native American tribes. “We cannot turn a blind eye to the way in which environmental burdens and benefits have been and will continue to be distributed unevenly along racial and socioeconomic lines,” reads “The Biden Plan for a Clean Energy Revolution and Environmental Justice.”

Some of the administration’s recent decisions not only advance oil projects, but come in direct opposition to tribes that have been fighting them.

“To the present moment, those are still empty words from the Biden administration, empty words,” said Michael Nixon, a lawyer representing the Apache Stronghold, a nonprofit fighting the Resolution mine.

Administration officials say the president remains committed to an agenda aimed at curbing greenhouse gas emissions and arresting climate change. But they note Mr. Biden had also promised his administration would honor the government’s legal obligations toward oil, gas and other industries—and never called for halting oil and mineral production under federal oversight.

Previously granted leases are being reviewed on a case-by-case basis, administration officials say. There are no expectations inside the administration or among lobbyists or members of Congress the administration is pulling back from a larger goal of transitioning the country to cleaner fuels to address climate change.

“We have worked extremely hard to make sure we are doing all we can to address climate impacts,” Interior Secretary Deb Haaland said on a call with reporters Friday on the administration’s budget proposal, saying it would reflect its commitment to addressing climate change.

ConocoPhillips’s Willow project is planned as a 160,000-barrel-of-oil-a-day, 30-year project, drilling from on top of permafrost in the federal government’s National Petroleum Reserve-Alaska.

The Trump administration gave it final approval in October, but the Ninth U.S. Circuit Court of Appeals halted the project this year. The decision came as part of a suit filed by Sovereign Inupiat for a Living Arctic and several environmental groups, saying Willow was approved without proper analysis of environmental impacts, especially potential harm to polar bears.

Last week, the Biden administration filed a court brief in U.S. District Court in Anchorage, Alaska, supporting the Trump administration’s decision. In a statement the Interior Department said the department’s approval last year met requirements under the National Environmental Policy Act, and that environmental groups challenging the decision didn’t do so in time to meet legal deadlines.

The Willow project was a priority for Alaska’s members of Congress, including Sens. Dan Sullivan and Lisa Murkowski, two of just four Republicans who voted to approve Ms. Haaland’s nomination.

Their potential support, especially Ms. Murkowski’s, is considered crucial as Mr. Biden pursues a major infrastructure package and other legislation with a Senate divided 50-50.

Whether ConocoPhillips moves Willow forward is still uncertain pending a potentially long court case.

Under pressure from Wall Street to reduce costs and raise profits, oil companies have been shying away from expensive megaprojects, especially in far-flung, environmentally sensitive places like Alaska. In January, the federal government’s first ever major oil lease sale in the Arctic National Wildlife Refuge produced only $14 million in high bids—far shy of the billion dollars once forecast—the vast majority of it from an Alaska state investment agency, none from major oil companies.

Conoco leaders have been encouraged that the administration is fulfilling permit requests and carrying on with day-to-day operations despite public rhetoric often challenging to the industry, according to a person familiar with the company’s thinking.

“We are pleased that the U.S. Department of Justice, U.S. Department of the Interior and U.S. Army Corps of Engineers recognize the robust, thorough and extensive review completed by” federal agencies over more than two years, a ConocoPhillips spokesman said. “We believe that review satisfies the legal requirements.”


Oil & Gas continues to trounce green energy
Seeking Alpha, June 2, 2021

  • Oil & Gas ETFs continue their march to the topside as they inversely trade against many green energy-related names. Energy stocks are the top performing aspect of the market in Wednesday afternoons trading session, while specific green energy names are among the worst performers.
  • Oil and Gas is currently trending upward as crude oil hit its highest trading levels in more than two years, dating back to October of 2018 yesterday after OPEC+ agreed to continue the current pace of gradually easing oil supply.
  • Per the Guardian, new data divulges the fact that the United Kingdom, United States, Canada, Germany, France, Italy, and Japan committed $189B to support oil, coal, and Gas between January 2020 and March 2021, compared to spending $147B on clean energy.
  • The investment community has pumped large amounts of capital into the oil and gas space as it has been the top-performing sector of the market year-to-date. 
  • Examining two different exchange traded funds, Energy Select Sector SPDR ETF (NYSEARCA:XLE) and iShares S&P Global Clean Energy Index ETF (NASDAQ:ICLN) and investors can see the apparent divergence in performance. Below is a year-to-date chart of the two ETFs and the performance of the S&P 500, which is tracked in the middle. 

Related:  IEA criticizes oil and gas industry’s green spending, expecting a fourfold increase


Alaska is a major natural gas producer, but little of the natural gas reaches market
 U.S. Energy Information Administration, May 27, 2021

Alaska is the third-largest natural gas producer in the United States after Texas and Pennsylvania, but producers in Alaska reinject more of that natural gas back into the ground than in any other state. Because of falling natural gas production in natural gas fields close to Alaska’s main consumption center, in and around Anchorage, the state is exploring ways of moving some of the natural gas currently being reinjected in the north to consumers in the south, and potentially, to export markets overseas.

In 2019, Alaska’s natural gas gross withdrawals averaged 8.9 billion cubic feet per day (Bcf/d), 98% of which came from oil wells. To maintain optimum reservoir pressure for continued crude oil production, 90% of that natural gas was reinjected into oil-bearing formations (primarily into the Prudhoe Bay oilfield on the North Slope of Alaska). This natural gas recycling in Alaska accounts for 82% of all natural gas reinjected back into existing reservoirs in the entire United States.

With proven dry natural gas reserves totaling 9,297 Bcf, Alaska had an average annual consumption among non-energy sector end-use consumers of 0.2 Bcf/d as of 2019, which represents a small fraction of the economically viable natural gas reserves consumed in Alaska each year. In 2020, the United States Geological Survey (USGS) updated its Alaska natural gas resource estimate, adding a further 8,942 Bcf in natural gas resources in the central region of the North Slope of Alaska.

Over the past 7 years, the highest non-energy sector end use of natural gas has been for electric generation, followed by the residential and commercial sectors. Historically, the industrial sector has consumed the least natural gas. However, over the past 3 years, natural gas consumption in the industrial sector has been increasing more than in other sectors, rising from less than 10% of total natural gas consumption in 2017 to more than 21% in 2020. The energy sector end-use consumers have a higher total consumption of natural gas overall. In 2019, the last year for which data is available, total consumption of natural gas by oil and natural gas industry activities in Alaska accounted for 78% of total marketed consumption. In states like Texas and Pennsylvania this number was 12% and 18% respectively.

Natural gas delivered to Alaska’s consumers originates primarily from the Cook Inlet and the Kenai Peninsula. When discovered, the resources identified in these two areas exceeded Alaska’s demand, so the two lead developers, Phillips Petroleum Company and The Ohio Company (now known as Marathon Petroleum) proposed, and received approval, to export surplus production as liquefied natural gas (LNG). In the fall of 1969, the Kenai LNG liquefaction facility shipped its first cargo to Japan, becoming the first supplier of LNG to Asia and one of the first LNG exporters in the world. Until 2012, the Kenai LNG plant was the only such facility in the United States authorized to export natural gas overseas.

Because production in the Cook Inlet and the Kenai Peninsula is declining, the Kenai LNG plant ceased producing LNG in 2015, and its operators have sought authorization to import LNG to ensure continuous supply to Anchorage-area consumers. The state government has also proposed to build, with private-sector partners, a natural gas pipeline from Alaska’s North Slope to the south. The Alaska Gasline natural gas pipeline would deliver natural gas first to the Fairbanks area, where petroleum is used as the primary fuel for heating and power generation, and eventually to Anchorage, where the natural gas would supplement declining in-region production and allow for a restart of LNG exports from a proposed new 2.55 Bcf/d export terminal. The Alaska LNG terminal received final export authorization from the Federal Energy Regulatory Commission in May 2020.


Lawmakers in Alaska and Washington state push B.C. on mining regulations
Canadian Press, Coast Reporter, June 1, 2021

Lawmakers in Alaska and Washington state are renewing calls for British Columbia to strengthen its mining regulations to protect shared waterways.

A group of 25members of the Washington state legislature sent a letter to Premier John Horgan in March, saying a tailings dam breach at one of several mines in B.C. within 100 kilometres of the state’s border could damage transboundary rivers and fisheries. 

Eight Alaskan state legislators followed with a letter to Horgan in May expressing their constituents’ “deep concerns” about the potential impacts of abandoned, active and future mines on shared waterways. 

B.C. is making changes to mining policies after a 2016 audit found “monitoring and inspections of mines were inadequate to ensure mine operators complied with requirements,” increasing environmental risk.

The audit was already underway in 2014 when the 40-metre tailings dam failed at the Mount Polley copper and goldmine in south-central B.C.

The disaster sent more than 20 million cubic metres of mining wastewater into the surrounding waterways and it looms large for the U.S. lawmakers. 

Washington state is spending tens of millions of dollars to repair salmon habitat and the potential for that work to be “destroyed by one accident” at a mine upstream is concerning, state Sen. Jesse Salomon said in an interview. 

In a followup letter to Horgan and Mines Minister Bruce Ralston, Salomon asked whether reclamation liability in the event of a tailings disaster at the Copper Mountain Mine near the Similkameen River in southern B.C. would extend to transboundary waters.  

The open-pit copper mine has two 150-metre tailings dams that have been raised regularly in recent years. The owner, Copper Mountain Mine Ltd., is planning a major expansion to increase the mine’s life and storage capacity, according to a design plan posted online last April. 

Copper Mountain’s chief operating officer, Don Strickland, said in an interview the concern is based on the assumption that the mine’s dam is not safe.

“It’s not based upon the facts and the data that we’ve put a lot of effort into making sure that it is safe, and protection of that dam is very important to us.”

In addition to the professional engineers who designed the tailings facility, the company has an independent tailings review board with “globally experienced geotechnical professional engineers” who review the design and operation on a regular basis, Strickland said. 

The latest annual report by B.C.’s chief inspector of mines showed the province held a security or bond close to $30 million for Copper Mountain, while the reclamation liability was estimated to be $14.8 million.

Cleaning up after Mount Polley has cost at least $70 million, according to Imperial Metals.

The inspector’s report estimates there is an $850-million gap between the bonds the province holds and the liability estimates for a list of 100 mines. 

Salomon and his colleagues are seeking assurances that changes to B.C.’s mining regulations will see companies put up a full financial bond for existing and proposed mines that could affect shared waterways.

Washington, Alaska and other states require full bonding up front.

B.C. sets bonds based on site-specific assessments and the amounts reflect outstanding reclamation and closure obligations, the Mines Ministry said in a statement. The chief permitting officer may increase or decrease the amount of any security based on the risks at any time, it added.

Mining companies in B.C. are responsible for reclamation liabilities regardless of whether the province holds a bond, Ralston said in a letter replying to Salomon and his colleagues obtained by The Canadian Press. 

A bond is used if a mining company defaults on its obligations, he wrote, adding B.C. is “working to close the historic gap between reclamation liabilities and the amount of reclamation security held in order to reduce the risk to B.C. taxpayers” and limit the potential for environmental impacts.

B.C.’s mining reforms also include the creation of a mine audits and effectiveness unit, which is currently looking at revisions to B.C.’s code on tailings storage made in 2016 and 2017.

In southeast Alaska, state Rep. Dan Ortiz said his constituents are concerned that wild salmon are already under pressure, while tailings dams continue to be approved in B.C. at the headwaters of shared waterways.

“From our perspective, it’s all downside and nothing good,” he said in an interview. “That’s not to say … the Canadian people don’t have the right to develop the resources. It’s just we just wish that there would be some protections put in place (for) our interests in fishing and tourism.”

Ortiz pointed in particular to Seabridge Gold Inc.’s proposed KSM mine, which would span two salmon-bearing watersheds near the Alaska border.

The massive project would see the construction of four dams ranging in height from 168 to 239 metres with the total capacity to store 2.3 billion tonnes of tailings. Seabridge’s proposal was approved through federal and provincial environmental assessment processes in 2014.

Alaskans have also called for the cleanup of the Tulsequah Chief mine, which has been leaking acid mine drainage into nearby waters since its original owner — Teck Cominco, now Teck Resources — left in 1957.

A closure and reclamation plan for the mine released by the B.C. government last April pegged the cost of closure at $48.7 million plus more than $1 million in monitoring and maintenance each year.

The last owner of the Tulsequah Chief, Chieftain Metals, wentinto receivershipin 2016 and an Ontario court ruling last August allowed two years in which a receiver could be re-appointed for the mine.

The receivership proceedings must wrap up before a long-term reclamation and remediation plan is finalized, the Mines Ministry said in a statement.

In the meantime, it said the province is taking initial actions outlined in the remediation plan, such as bridge repairs and water monitoring.


From the Washington Examiner, Daily on Energy:

GRANHOLM TO PITCH HELP FOR FOSSIL FUEL WORKERS IN WEST VIRGINIA: Energy Secretary Jennifer Granholm is traveling with Sen. Joe Manchin to his home state of West Virginia tomorrow and Friday as she tries to make the case that fossil fuel-dependent regions won’t be harmed by the administration’s investments in infrastructure and clean energy.

In order to pass a significant climate bill, the Biden administration will have to convince Manchin, a key centrist swing vote, and his constituents that it can support fossil fuel workers as it looks to phase down the use of coal, oil, and gas in the economy.

Policies targeting fossil fuel workers: Biden’s infrastructure plan calls on Congress to invest $40 billion for training to help “dislocated” workers transition into new clean energy jobs.

It also invests $16 billion to employ “hundreds of thousands” of fossil fuel workers to plug leaking oil and gas wells and restore and reclaim abandoned coal mines. And it calls on Congress to offer companies subsidies to build or retool manufacturing and industrial facilities in rural areas to make clean energy technologies.

Manchin, uncoincidentally, has introduced legislation to that effect that would dedicate half the funding for use in places where coal mines have closed or coal plants have retired, such as West Virginia, a big coal and natural gas producing state.


4 Senate Republicans in talks about border carbon fee

Scott Waldman, E&E News reporter
Published: Wednesday, June 2, 2021

A group of Republican senators is showing interest in an obscure carbon pricing strategy that could benefit U.S. businesses by levying climate-related fees on foreign competitors.

A border carbon adjustment is being discussed among moderate lawmakers as a policy that might soften the Republican Party’s perceived antagonism toward climate action without mandating new costs or regulations on American industry, according to two people close to the discussions.

The carbon pricing plan would assign fees to foreign manufacturers of carbon-intensive goods that enter the United States, while providing rebates to American companies that export products with a lower emissions profile.

The idea is being explored by at least four Republican senators who view carbon border adjustments as potentially viable because they would challenge China economically, the sources said. The group includes Sens. Lisa Murkowski of Alaska, Mike Braun of Indiana, Mitt Romney of Utah and Susan Collins of Maine, one of the sources said.

The group is in discussions about the idea but has not put together a proposal. The conversations are noteworthy because it’s rare for Republicans to express support for carbon pricing.

“It’s a good entry point for this policy,” one source close to the discussions said.

The Biden administration has also signaled interest in border adjustments. Climate envoy John Kerry has hinted that the administration will seriously consider one in the lead-up to international climate talks in Scotland later this year. Some of the United States’ closest allies in Europe are already moving forward with a similar mechanism.

At least 25% of global greenhouse gases stem from international trade, said Catrina Rorke, vice president of policy for the Climate Leadership Council. A border adjustment for carbon emissions could integrate trade and climate policy in a way that rewards U.S. manufacturers, she said.

“We’re giving ourselves a competitive advantage against our international competitors by moving forward on climate policy,” Rorke said. “That sounds like a game changer to me.”

Many of the goods that dominate international trade are economic pillars for the countries that buy and sell them. They’re also carbon-intensive. That includes metals, glass, pulp and paper, cement and more. Lowering the emissions associated with those products could help the United States decarbonize its economy, observers said.

It would also bring the United States in line with two of its primary trading partners. The European Union and Canada are exploring their own border carbon mechanisms, with the European Union expected to unveil the details of its plan in the coming weeks.

It would come months ahead of international climate talks in Glasgow, where the United States is expected to announce significant climate policies to help it halve emissions by 2030.

When it comes to climate policy, the interests of Republicans and Democrats rarely intersect. Carbon border adjustments might be an exception. The U.S. manufacturing sector generally has a lower emissions profile than similar industries overseas, where pollution enforcement is lax or nonexistent.

Part of the appeal for Republicans is that corporations are increasingly supportive of the border adjustment, said Alex Flint, executive director of the Alliance for Market Solutions. It also places pressure on China and other countries to follow through on their climate pledges, he said.

“What is emerging in the conversation, particularly among Republicans, is that this could be a way to induce climate action globally with a higher degree of certainty than the voluntary commitments being made pursuant to the Paris Agreement,” Flint said. “That appeals to Republicans’ desires to ensure that the U.S. doesn’t act alone.”

Braun, a member of the Senate Climate Solutions Caucus, acknowledged the discussion around carbon pricing. In the past, he expressed support for carbon markets, and has cosponsored legislation to help farmers join them. Yesterday, he described one form of carbon pricing — a tax — as being out or reach, without directly addressing the political prospects of a border adjustment.

“Though there is discussion among industry stakeholders on carbon pricing, a carbon tax would currently be dead on arrival in the Senate,” Braun said in a statement.

That Republicans are engaging on the issue is notable, said Adele Morris, policy director for climate and energy economics at the Brookings Institution. But she said the border adjustment is just one part of a broader climate policy that has historically been opposed by Republicans.

For a border adjustment to truly work, it would have to rely on some sort of domestic carbon pricing, she said. And while many Republicans resist the idea of a carbon tax, it may be needed if Canada and Europe start to penalize the United States for its carbon-intensive exports, she said.

“Europe and Canada are pursuing very significant prices on carbon, so unless we’re going to do something analogous, they can put that charge on our goods going into their markets,” Morris said. “So be careful what you wish for in this deal.”

Getting some congressional Republicans on board with a border carbon adjustment could be vital for Kerry as he expands his international climate talks, said Rorke of the Climate Leadership Council. She added that the United States needs a strong domestic position as it works with allies on a potential joint agreement over the measurement and verification of emissions by major competitors.

That’s a message Republicans can sell to their constituents, she said.

“We have a profound carbon advantage, and the advantage is extraordinarily wide with countries like China and India, Russia, countries we know are going to be slower to move on climate action,” Rorke said. “The U.S. economy makes things with much fewer carbon emissions than the vast majority of our trading partners, and that carbon advantage goes unmonetized in the current trading system.”