Today’s Key Takeaways: More, not less, use of fossil fuels drastically reduces societies’ sensitivity to all weather and climate extremes, including extreme temperatures. Schlumberger provides Pantheon with report on North Slope assets. US doubles gas exports to bail out Britain. Looming copper shortage threatens energy transition. Environmental groups willing to abandon new renewable energy projects to stop new oil and gas leasing.
NEWS OF THE DAY:
The “Failure” to Ban Fossil Fuel Projects in the Developing World at COP27 May Actually Save Lives.
Patrick Brown, The Breakthrough Institute, December 6, 2022
The narrative coming out of COP27 is that the major ‘victory’ was an establishment of a ‘loss and damages’ fund where high-income countries pay reparations to low-income countries for the detrimental impacts of their emissions. This supposed positive outcome is being contrasted with what is being deemed as a major ‘failure’: the lack of a clear commitment to ban international development financing of fossil fuel projects in the developing world.
The scope of things that can be lost or damaged from climate change is broad, but here we will look at the specific case of the loss of life from changes in temperature. In this case, a close look at the best available science does not support the above victory/failure narrative, in fact, it flips it on its head.
When it comes to the impact of extreme temperatures, the intuition is that rich developed countries—who are responsible for the vast majority of historical emissions—tend to be in cooler climates and poor developing countries tend to be in hot climate climates. Thus, emissions of greenhouse gasses disproportionality come from developed countries and disproportionately impact developing counties, making the extreme heat they already experience that much more deadly.
However, a closer look at the data reveals a much more complicated story—one that undermines this simple intuition. As it turns out, cold temperatures are associated with roughly ten times more deaths than hot temperatures, and this is even true of countries currently residing in hot climates. The key reason why deaths related to cold weather can outnumber deaths related to hot weather so universally is that societies are highly adaptable to the climates that they experience. This acclimation means that what might be considered a hot or cold day is relative and varies a great deal from place to place.
OIL:
US: Pantheon Resources receives reservoir modelling report from Schlumberger for Alaska North Slope assets
energy-pedia news, December 8, 2022
Pantheon Resources, the AIM listed oil and gas company with a 100% working interest in all of its oil projects spanning c. 153,000 acres adjacent and near to transportation and pipeline infrastructure on the Alaska North Slope, has announced the receipt of a report from Schlumberger (SLB). A copy of the executive summary to the report has been uploaded to the Company’s website and can be viewed here.
Completion of Phase 1 of Schlumberger reservoir modelling project
A static and dynamic reservoir model of Pantheon’s subsurface geological projects has now been completed by the world’s largest oil service company, Schlumberger, over Pantheon’s three project areas which encompass the four distinct oil reservoirs within the current Pantheon acreage footprint: (i) Alkaid, (ii) the Slope Fan System, (iii) the Shelf Margin Deltaic (SMD) and (iv) the Basin Floor Fan system. Pantheon engaged Schlumberger to undertake this project more than six months ago in order to develop a highly detailed body of work to assist in reservoir modelling, development modelling and as an important tool in Pantheon’s data room to allow potential future farm in partners to gain a greater understanding of the potential, characteristics, and scale of Pantheon’s projects. This reservoir model represents completion of the first phase of the project. Schlumberger’s report represents the most comprehensive model completed on evaluating the discovered oil resource and the productive potential.
The Schlumberger model is extremely detailed, comprising c. 13 million individual three dimensional cells within the c. 153,000 acres of Pantheon’s current leasehold. This model is extremely comprehensive, having been developed over the past six months and involved in excess of 1,000 man-hours with a team of reservoir, geological and geophysical specialists at Schlumberger and is an important step toward modelling reservoir development scenarios and attracting future project partners and supporting project financing, which is part of Pantheon’s corporate development strategy. That next phase of the project will similarly require significant man hours over a number of months.
GAS:
U.S. To Bail Out Britain By Doubling Natural Gas Exports
City AM, December 8, 2022
- The UK is grappling with sky-high energy prices.
- The Biden administration has agreed to double U.S. natural gas exports to Britain.
- The initiative has an “immediate goal” of stabilizing energy markets and reducing demand.
Under fresh plans to clamp down on the rising cost of living across the UK, the government has convinced the Biden administration to double US gas exports to Britain.
Prime Minister Rishi Sunak pledged that the new partnership to boost energy security, efficiency and affordability will cut prices for Britons and ensure the UK’s national supply can “never again be manipulated by the whims of a failing regime.”
The initiative has an “immediate goal” of stabilising energy markets and reducing demand, while seeking to build long-term resilience by accelerating the shift to clean alternatives.
This will involve promoting nuclear fuels as a “safe” and “reliable” part of the transition, expediting the development of clean hydrogen, and driving international investment in offshore wind and carbon capture.
Double of 2021 levels
As part of efforts to drive down the cost of living, the US will aim to export at least nine to 10 billion cubic metres of liquified natural gas to UK terminals over the next year, more than doubling the level in 2021.
The partnership will be steered by a new UK-US joint action group, led by senior officials from the British Government and the White House, with the first meeting held virtually on Thursday.
The Prime Minister and US president Joe Biden are not expected to attend.
Rishi Sunak said the partnership will help end Europe’s dependence on Russian energy “once and for all” and bring down prices for British consumers.
“Together the UK and US will ensure the global price of energy and the security of our national supply can never again be manipulated by the whims of a failing regime” said Rishi Sunak
“We have the natural resources, industry and innovative thinking we need to create a better, freer system and accelerate the clean energy transition.”
Citing the war in Ukraine, Sunak and Biden said in a joint statement that it is “more important than ever” for allies to work together to build “resilient international systems”.
“Our immediate shared goal to stabilise energy markets, reduce demand, and ensure short-term security of supply is underpinned by the longer-term objective of supporting a stable energy transition to achieving net zero emissions by 2050, which in itself will strengthen our energy security,” they said.
“To this end, we are establishing a Joint Action Group for Energy Security and Affordability to accelerate our immediate cooperation on short-term action to support energy security and affordability in the United Kingdom and across Europe.”
MINING:
Mining Giant Glencore Sees Huge Deficit In Copper Coming
Charles Kennedy, OilPrice.Com, December 7, 2022
A huge shortage of copper is looming, mining and commodities giant Glencore said in an investor update this week, reiterating warnings from other industry players and analysts that a supply crunch could slow the energy transition.
Commodity shortages are looming, and significant mine development is lagging, the mining giant said in a presentation.
“There’s a huge deficit coming in copper, and as much as people write about it, the price is not yet reflecting it,” Glencore’s chief executive Gary Nagle told analysts at the presentation, as carried by Bloomberg.
According to Glencore’s estimates, under the net-zero emissions pathway of the International Energy Agency (IEA), the world will be more than 50 million tons short of copper between 2022 and 2030.
“But increasing mine supply is challenging given heightened country and operational risks and the industry remains wary of multi-billion-dollar investment decisions,” Glencore said in the presentation.
The miner plans to expand its copper portfolio with a new project, El Pachon, in Argentina.
However, globally the copper industry’s expansionary capex is expected in 2025 to be at $12 billion, which would be 61% below the 2012 peak of $32 billion, Glencore said in its presentation, citing estimates from Wood Mackenzie.
The IEA has said for years that rising deployment of clean energy is “set to supercharge demand for critical minerals.” By weight, mineral demand in 2040 will be dominated by graphite, copper and nickel, the IEA said. The growing need for grid expansion will underpin a doubling of annual demand for copper and aluminum by 2040, the agency said last year.
Copper prices are set for a new record-high next year amid an “extremely” tight market, Goldman Sachs said this week.
“The sequential increase in policy targets and commitments to green transition, alongside a minimal supply response so far… have resulted in earlier and larger open-ended deficit conditions that essentially are already here, not beginning at some point in the future,” Nicholas Snowdon, metals strategist at Goldman Sachs, said, as carried by Financial Review.
Goldman expects copper prices to top in 2023 the current record-high of $10,845 per ton hit in March 2022 and raised its 12-month price target to $11,000 a ton from $9,000 per ton.
POLITICS:
THE LATEST IN EFFORTS TO STOP OIL AND GAS LEASING ON FEDERAL LANDS: Environmental groups are prepared to abandon new renewable energy development on federal lands if it means stopping new oil and gas leasing in its tracks.
Democrats’ Inflation Reduction Act, at Joe Manchin’s insistence, linked the advancement of renewable projects to regular oil and gas leasing, but some groups are arguing more renewables aren’t worth it if it unlocks more oil and gas development.
The backstory: The Interior Department has been planning new lease sales for next year, citing the new climate law.
The law gave Interior explicit instructions to carry out leasing offshore, but it also linked the continued development of renewable energy on federal lands to consistent oil and gas leasing.
On shore, Interior may not issue rights of way for wind or solar projects unless the department held an oil and gas lease sale in the 120 days prior to issuance.
For Interior, which has sought to scale back the leasing program and to prioritize renewable energy in its stead, the leasing contingencies are being treated as more than mere incentives that preserve their administrative discretion.
The Bureau of Land Management’s recent oil and gas lease sale announcements all include the preface that it’s acting “in accordance with congressional direction in the Inflation Reduction Act.”
Environmentalists out to kill new leasing and cut down the number of existing leases have sought to discourage the administration from agreeing to lease so easily and are arguing, as they have all year, that Interior has wider discretion to limit leasing than it’s exercised.
“There’s a bit of give and take now that they’re up against,” Jeremy Nichols, the climate and energy program director for WildEarth Guardians, said of the IRA, “but they still have discretion.”
“They can decide that they don’t want to lease for renewable energy,” Nichols told Jeremy. “They can decide that, sure, they’ll offer leases for sale, but they will impose stipulations that give them a lot of discretion to decide to deny drilling later on.”
Comments on the BLM’s pending Q2 2023 Wyoming lease sale filed by the Western Environmental Law Center and other green groups, including WildEarth Guardians, makes the argument this way:
“The entire purpose of prioritizing renewable energy development on public lands is to benefit the climate. If oil and gas leasing pursuant to the IRA offsets or eliminates those climate benefits, the rationale for renewable projects disappears.”
BLM “should not approve renewable projects in that circumstance,” the groups also said.
Signals from Interior: The department has already shown intent to hew closely to the law’s requirements, staying on top of new instructions and leasing deadlines provided in the law.
Declining to lease acreage for renewables could lead to legal issues, too, not to mention running afoul of the administration’s explicit goals for wind and solar development on federal lands. The bipartisan Energy Act of 2020 directed the Interior Department to permit 25 gigawatts of renewable energy on public lands by 2025.
And there are existing renewable energy projects already at various stages of advancement that will need rights of way issued to operate. The BLM is currently taking comment on the environmental assessment for the proposed Two Rivers Wind Energy Project in Wyoming, which could generate up to 420 megawatts of energy with up to 79 turbines.
More aggressive approach sought: Higher royalties and rental rates and measures like the end of noncompetitive leasing — all of which were passed in the Inflation Reduction Act and are now being implemented — help ensure the public gets a more fair return on leased lands but are pennies compared to what environmental groups maintain is necessary to blunt climate change.
“All the higher royalty rates, all the scrutiny around competitive leasing in the world is not going to change that [leasing],” Nichols said. “Higher royalty rates will not solve the climate crisis.”
From the Washington Examiner, Daily on Energy