On the “road to hell” without investment in oil and gas.

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Today’s Key Takeaways:  JP Morgan CEO:  refusing to fund oil and gas is the road to hell for America. Cook Inlet drilling auction planned for December. Germany nationalizing gas company to control prices. Drone that can prevent tailings dams’ failures. Manchin’s permitting reform on life support without GOP support in Senate.


Failing To Invest In Oil And Gas Would Be The “Road To Hell For America”
Irina Slav, OilPrice.Com, September 22, 2022

  • The CEO of JP Morgan, Jamie Dimon, said that banks refusing to fund new oil and gas projects would be “the road to hell for America.”
  • An unnamed senior executive at a U.S. bank is considering removing the organization from global green commitments due to legal risk.
  • Dimon highlighted the fact that the current energy crisis has led to rising emissions due to increased coal use as oil and gas was not available.

Cutting off investments in fossil fuels would be the road to hell for the United States. This is what JP Morgan’s chief executive Jamie Dimon said during a congressional hearing on a range of topics.

“Please answer with a simple yes or no, does your bank have a policy against funding new oil and gas products, Mr. Dimon?” Rep. Rashida Tlaib asked JP Morgan’s chief executive, after laying out net-zero plans that require a shift away from fossil fuels.

“Absolutely not, and that would be the road to hell for America,” Dimon said in response. He went further, as well, saying the country needed to invest more not less in oil and gas.

“We aren’t getting this one right. The world needs 100 million barrels effectively of oil and gas every day. And we need it for 10 years,” Dimon said, adding “To do that, we need proper investing in the oil and gas complex. Investing in the oil and gas complex is good for reducing CO2. We’ve all seen, because of the high price of oil and gas — particularly for the rest of the world — you’ve seen everyone going back to coal.”

Dimon’s statements come amid rising opposition among banks to increasingly stringent decarbonization rules, with some, including JP Morgan considering an exit from the Glasgow Financial Alliance for Net Zero, according to a recent report by the FT.

The reconsideration of their participation in the alliance came as a result of growing fears of litigation opportunities, rife in new climate-related requirements for the businesses they fund.

“I am close to taking us out of these global green commitments — I’m not going to allow third parties to create legal liabilities for us and our shareholders. It is immoral and irresponsible,” one unnamed senior executive at a U.S. bank told the FT. “What if we get it wrong, make a mistake or someone lies? Then the bank can be sued, that is an unacceptable risk.”


U.S. plans to hold Cook Inlet drilling auction in December
Nichola Groom, Reuters, September 21, 2022

The Biden administration on Wednesday revealed plans to hold an auction of oil and gas drilling rights for up to 1 million acres in the Cook Inlet off the coast of Alaska in December.

The sale is among the concessions to the oil and gas sector included in U.S. President Joe Biden’s new climate change law, the Inflation Reduction Act (IRA).

Biden paused drilling auctions on federal lands and waters shortly after taking office as part of an agenda to fight climate change. But Senator Joe Manchin, a Democrat who represents the coal-producing state of West Virginia, demanded protections on federal leasing in exchange for his support for the IRA.

According to documents posted on a government web site, the Bureau of Ocean Energy Management will publicly announce bids received on Dec. 30, the day before the legislation’s deadline to hold the sale.

BOEM will offer up to 224 blocks, the agency said, in water depths from 33 to 260 feet. It is considering removing 17 blocks that overlap with beluga whale and sea otter habitats.

Earlier this year and before passage of the IRA, the administration scrapped a planned Cook Inlet sale, citing a lack of industry interest in the area.

Read about the real reason for the cancellation of the Cook Inlet sale here.

The administration will publish a final sale notice at least 30 days before it is held.


Germany nears deal on nationalizing gas company Uniper
Associated Press, September 21, 2022
Uniper’s losses have mounted as Russia has cut back natural gas supplies to European countries supporting Ukraine. Prices have soared for the fuel needed to heat homes, generate electricity, and power factories, raising fears of business closures, rationing and a recession as the weather turns cold.

 Natural gas supplier Uniper said Tuesday that it’s in “final discussions” for Germany to nationalize the company, ramping up the government’s intervention in the gas and oil industry as Russia’s war in Ukraine provokes an energy crisis.

The expansion of Uniper’s July rescue deal would feature a capital increase of €8 billion that the government would finance and involve it taking a majority stake now held by Finland-based Fortum, the company said. The Finnish government has the largest stake in Fortum.

Uniper’s losses have mounted as Russia has cut back natural gas supplies to European countries supporting Ukraine. Prices have soared for the fuel needed to heat homes, generate electricity, and power factories, raising fears of business closures, rationing and a recession as the weather turns cold.

European countries have scrambled to counter the price spiral and prioritized securing their energy supplies for winter, including by filling their natural gas storage. Just last week, Germany also moved to take control of three Russian-owned oil refineries before an embargo on Russian oil takes effect next year.

The initial Uniper rescue package foresaw the government taking a roughly 30 percent stake in the company after Russia’s cutbacks forced it to buy gas at far higher prices on the market to fulfill its supply contracts.

Under the prospective new deal, “it is envisaged that the federal government will obtain a significant majority stake in Uniper,” said the company, which confirmed talks on a possible nationalization last week. It added that “the final agreement has not yet been concluded.”

While the government tries to stabilize Uniper, authorities say Germany’s gas storage facilities are now more than 90 percent full in preparation for the winter heating season despite Russia halting gas deliveries through the Nord Stream 1 pipeline.

The head of the national network regulator, Klaus Mueller, tweeted late Monday that Germany had “achieved another milestone” and that the stored gas will help in managing any potential gas emergencies and will flow back into the market.

He cautioned that “nevertheless, we must continue to save” gas.

The government tightened storage requirements in July after Russia’s state-owned Gazprom started reducing gas supplies through Nord Stream 1, citing alleged technical problems. German officials dismissed that explanation as cover for a political decision to push up prices and create uncertainty.

Germany introduced a requirement for storage to be 75 percent full by Sept. 1 and raised the targets for October and November to 85 percent and 95 percent, respectively, from 80 percent and 90 percent. The November target is roughly equal to the amount of gas that Germany used in January and February this year when temperatures were relatively mild.

Before the reductions started, Russia accounted for a bit more than a third of Germany’s natural gas supplies.

Chancellor Olaf Scholz says Germany is well-placed to get through the winter with enough energy, pointing to new liquefied natural gas terminals expected to start work in the coming months, among other things.

In a separate move last Friday, his government announced that German authorities were taking control of three Russian-owned refineries to ensure energy security. Two subsidiaries of Russian oil giant Rosneft are being put under the administration of Mueller’s Federal Network Agency.

Rosneft accounts for about 12 percent of Germany’s oil refining capacity, importing oil worth several hundred million euros every month, according to the government, which said the trusteeship was initially due to last for six months.

The network regulator already was put in charge of Gazprom’s former German subsidiary in April, a decision that the government said was necessary to bring “order to the conditions” at the company after the Kremlin-controlled parent company abruptly cut ties with the unit.


Researchers working on smart drone capable of preventing tailings dams failures
Mining.Com, September 22, 2022

Engineers at West Virginia University are developing new technologies for coal waste storage facilities that will detect and prevent potential failures like leakage of hazardous materials into the environment.

After receiving almost half a million dollars in funding from the United States Department of Energy, the researchers plan to deliver an aerial robot-enabled inspection and monitoring system for active and abandoned coal ash and tailings or waste storage facilities.

The goal of the project is to find a way to detect leakages and failures at coal waste facilities before tailings and coal ash are released into the environment. Coal ash is considered one of the largest US supplies of industrial waste, containing metals such as lead, mercury, chromium, selenium, cadmium, and arsenic, which never biodegrade and are toxic to humans.

“Failure of these structures has been shown to be catastrophic, causing massive mudslides that have devastated entire communities and created irreversible environmental damage,” Ihsan Berk Tulu, one of the engineers involved in the project, said. “Industry and federal and state governments spend great effort and time inspecting these structures, finding hazards that might lead to wastewater leakages or failures.”

AI + autonomous features

Tulu and his colleague Guilherme Pereira’s intelligent drone is expected to do its work autonomously and be able to create thermal and visual images and high-resolution, three-dimensional maps of the coal waste storage facilities, which will permit the detection of cracks, deformities, and other hazards in the structures.

A second objective of the project is to create and equip the device with software that uses artificial intelligence-based algorithms to detect potential hazards. The software will collect and use thermal and visual images, as well as 3D point clouds, a technology that utilizes laser scanners to measure where light hits a particular surface or object, to generate highly accurate 3D models of the coal storage facilities. This will allow researchers to identify potential hazards quickly and efficiently without having to physically be at the inspection site.

“I’m originally from Minas Gerais state in Brazil, where catastrophic accidents with tailing dams happened recently, so the project has a special motivation for me,” Pereira said. “It is an opportunity to develop a technology that can save lives in the United States and in my country.”

In 2015, the Samarco mine tailings dam in Bento Rodrigues, Brazil collapsed, unleashing thousands of pounds of hazardous mud spill that killed 19 people. The mine waste eventually flowed more than 400 miles from its source to the Atlantic Ocean, contaminating water supplies along its route.

In the US, a tailings dam in Logan County, West Virginia, failed in 1972 following a heavy rainstorm, known as the Buffalo Creek Flood. This catastrophic collapse released 132 million gallons of wastewater into the surrounding community. The incident killed 125 people, injured 1,100 others, and left 4,000 people without homes.

“We will train the next generation of engineers in the application of robotics technologies for our mining communities,” Tulu said. “A successful outcome from this project will be another technology tool for both West Virginia’s and the nation’s mining industries to improve the safety of the mines and the health of the nearby communities.”


Manchin’s permitting reform deal on life support in face of GOP opposition
Alexander Bolton, The Hill, September 22, 2022

The controversial permitting reform bill unveiled by Sen. Joe Manchin (D-W.Va.) late Wednesday has only a slim chance of passing the Senate next week, as Republicans don’t want to give the West Virginia senator a victory after he resurrected President Biden’s tax and climate agenda in late July.

Republican senators, who had been shut out of negotiations over the permitting bill’s language, said Wednesday they don’t expect it to pass if attached to a short-term government funding bill that Senate Majority Leader Charles Schumer (D-N.Y.) plans to bring to the floor next week.

GOP senators didn’t get a chance to look at the bill to reform permitting for energy projects until 6 p.m. Wednesday but predicted earlier in the day that if it fell short of a stronger permitting reform proposal offered by Sen. Shelley Moore Capito (R-W.Va.), they wouldn’t vote for it.

Capito and Barrasso said Wednesday evening their staffs were reviewing the 91-page bill and said they would hold off on making final verdicts until they know more about it.

Sen. John Barrasso (R-Wyo.) outlined multiple problems with the draft of Manchin’s bill that circulated earlier this summer during a presentation he delivered to a Senate Republican lunch Wednesday.

His message to GOP senators was clear: Unless Manchin fixed multiple provisions that were problems for the fossil fuel industry, Republicans shouldn’t support it.

Sen. John Cornyn (R-Texas), an advisor to the Senate GOP leadership, said he couldn’t see a government funding measure pass next week with Manchin’s permitting reform attached.

“I don’t know what Sen. Schumer’s plans are, whether he’s going to attach it to the CR. I doubt it’s going to pass,” Cornyn said, referring to a short-term continuing resolution to fund the government.

Capito, who has a competing permitting reform bill, said Wednesday afternoon that Manchin hasn’t shared any of the details of his legislation before it was made available to the media and general public.

Republicans say they don’t want to reward Manchin by passing his permitting reform resolution because Schumer is bringing it to the floor as part of a deal he struck with the West Virginia senator in July to pass the Inflation Reduction Act, which implemented a 15 percent corporate minimum tax and included $369 billion in energy investments to combat climate change.

“It’s going to be extremely difficult to do just because of the circumstances surrounding the deal that was made,” said Sen. Mike Rounds (R-S.D.). 

Rounds said he would take a close look at Manchin’s proposal if he’s willing to shift it substantially closer to the reforms that Capito has proposed but predicted that’s not likely to happen.

“I’m not sure he’d have the support of Democrats then. I think that it’s going to be a very difficult deal to get done,” Rounds added.

Even Democrats who support Manchin’s permitting reform bill say they won’t support it if it is rewritten to mirror Capito’s proposal as part of an effort to secure more Republican votes.

Manchin will need more than 10 Republicans to pass his permitting reform bill, as several Democrats and Sen. Bernie Sanders (I-Vt.) have signaled opposition to marrying the Manchin permitting reform language with a short-term spending bill.

Sen. Jeff Merkley (D-Ore.) is circulating a letter with the support of Sens. Elizabeth Warren (D-Mass.), Tammy Duckworth (D-Ill.), Cory Booker (D-N.J.) and Sanders urging Schumer to keep separate permitting reform and a short-term government funding bill that needs to pass by the end of next week.

But Merkley on Wednesday stopped short of threatening to vote against the government funding resolution if it includes permitting reform. He explained that he drafted the letter to draw attention to the concerns environmental justice groups have over Manchin’s bill.

Sen. Ed Markey (D-Mass.) has also released a statement saying the permitting reform language should not be added to must-pass legislation to keep the government funded.

Sen. Tim Kaine (D-Va.) issued a statement Wednesday evening declaring his opposition to the Manchin bill because it would approve the construction of a hundred miles of the Mountain Valley Pipeline through his home state and he was not adequately consulted.

“I cannot support the Mountain Valley Pipeline-related provisions in this legislative text. Over 100 miles of this pipeline are in Virginia, but I was not included in the discussions regarding the MVP provisions and therefore not given an opportunity to share Virginians’ concerns,” he said.

Schumer was spotted having an intense conversation with Kaine just off the Senate floor shortly after the Virginia senator put out his statement. 

Schumer faces an even bigger problem on the Republican side of the aisle, where opposition to Manchin’s bill has coalesced over the last two weeks.

Senate Minority Leader Mitch McConnell (R-Ky.) on Wednesday praised Capito’s permitting reform bill as a better option than Manchin’s.

“Very predictably, this background deal is crumbling before our eyes,” McConnell said on the Senate floor, making reference to Schumer’s promise to pass Manchin’s permitting reform bill before the end of September.

He predicted that Republicans would find Manchin’s bill insufficient to get enough domestic oil, gas, and coal projects up and running to reduce the cost of mounting energy bills.

“Every indication thus far suggests [it] will be weak reform in name only legislation,” he said.

He promised all 50 Republicans would vote for Capito’s permitting reform bill if it’s included in the short-term funding measure instead of Manchin’s proposal. 

“If our colleague across the aisle wants real permitting reform, Sen. Capito’s fantastic bill only needs Sen. Manchin plus nine more Democrats to clear this chamber,” McConnell said.

“Otherwise, it would appear the senior senator from West Virginia traded his vote on a massive liberal boondoggle in exchange for nothing,” he said, referring to the Inflation Reduction Act, which passed in August because of Manchin’s support.

Manchin on Wednesday said he still expects Schumer to include his permitting reform proposal in the continuing resolution, which needs to pass by Sept. 30 to avoid a government shutdown.

He said Republicans may change their minds about supporting his bill once they review it more closely.

“When they see it — all sides need it. You can’t build anything in America today. So if you want to have transmission lines … you’re going to have to have it. So, we’re hoping common sense kicks in sooner or later,” Manchin told reporters.