Permitting delays. Tight LNG Market. Mahn Choh Cuts AK Spend.

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Today’s Key Takeaways: had a meteoric rise after killing Keystone – now crashing. Drilling permits delayed after judge stops social cost of carbon pricing. Lack of new supply and investment leads to tight LNG market. Kinross reduces 2022 spending at Manh Choh to US$26 million citing impacts of inflation and contractor and labor market constraints in Alaska.


The group that brought down Keystone XL faces agonies of its own
Zack Colman, Politico, February 20, 2022

The group that revived a slumbering environmental movement by focusing on big targets was flying high. It was no longer just a plucky collection of friends from a Vermont college and their luminary founder, Bill McKibben. It was a global force. The $800,000 retreat at a five-star luxury resort in Killarney, Ireland in March 2019 proved it.

The rise for had been meteoric. The crash would be, too.

In the early 2010s, was the environmental movement’s driving force. Led by McKibben, a famed environmentalist and best-selling author, its spectacle-worthy, guerrilla-style protests over causes, including blocking the Keystone XL pipeline, captured the public’s imagination. It brought younger, more diverse activists into the green tent. Starting out with eight founding members in 2008it had grown to 165 full-time employees — not including its many contractors — when staff traveled to Ireland that March.

It was at the Killarney retreat that May Boeve, the executive director and one of’s founders, announced that she’d hiked the organization’s annual budget to $25 million. She told staff to dream big. She revealed plans for nearly 130 new hires to make a splash at global climate strikes that September — part of an envisioned revamp to improve the organization’s diversity and equity. Everyone there was elated.

But had never eclipsed $20 million in revenue in a single year. When it quickly became clear it wouldn’t that year, Boeve said she initially kept the information largely to herself, according to an October 2019 internal email to the staff.

“[W]e decided to go very big this year in anticipation that there would, in fact, be a movement surge. We were right about that. My big mistake was not giving us enough time to bring in the resources prior to expanding our spending,” Boeve wrote in the all-staff memo. “Money certainly has come in, but not at the scale we needed it to. … My other regret is not to have sounded the alarm sooner.”


Federal court ruling delays U.S. oil and gas drilling permits
Jennifer Dlouhy, World Oil, February 21, 2022

Permits to drill for oil and gas on U.S. public land will be delayed after a federal judge ruled against the Biden administration’s estimates of the social costs of greenhouse gas emissions, the Interior Department said Saturday.

At issue is a 2021 executive order directing federal agencies weighing environmental permitting and regulatory decisions to consider a metric for estimating the societal costs from carbon dioxide associated with those moves. A Louisiana-based federal district judge last week blocked federal agencies from using that “social cost of carbon” plan, following a lawsuit by Louisiana and other states challenging the way it was imposed.

The Biden administration could rely on a higher social cost of carbon to justify moves against fossil fuels and to counter climate change. But because the court ruling bars the federal government from adopting or relying on the metric, in the short term it upsets current work on federal drilling permits as well as new regulations. For instance, the Interior Department said the injunction is expected to lead to delays in permitting and leasing for federal oil and gas programs.

“The Interior Department continues to move forward with reforms to address the significant shortcomings in the nation’s onshore and offshore oil and gas programs,” the agency said. “Specifically, the Department is committed to ensuring its programs account for climate impacts, provide a fair return to taxpayers, discourage speculation, hold operators responsible for remediation, and more fully include communities, tribal, state and local governments in decision-making.”

Social Cost

The court’s ruling will have wide impact across the federal government, as the Biden administration moves to counter climate change and advance environmental rules.

In a filing Saturday, the Justice Department said the social cost of the carbon decision will affect 21 rules being developed at the Energy Department, five at the Environmental Protection Agency, nine at the Transportation Department and three at the Interior Department. That includes a $2.3 billion Federal Transportation Administration grant program and a draft Interior Department rule to combat methane emissions and the waste of natural gas from wells on federal land, the administration said. 

In addition, at least 27 environmental reviews at the Interior Department are also affected, the Justice Department told the court. “The injunction has halted work” on applications for permits to drill on “at least 18 wells on federal oil and gas leases in New Mexico,” the administration said. 


LNG market supply-demand balance to remain tight in 2022, says Shell
Marwa Rashad, Ron Bousso, Reuters, February 21, 2022

The global liquefied natural gas (LNG) market is expected to remain tight this year following last year’s volatility which saw demand rise 6% and gas prices hit an all-time high, Shell (SHEL.L) said on Monday.

Natural gas prices around the world soared late last year due to a combination of tightening supplies, weaker renewable power generation and a strong growth after Covid-19.

“The high prices we’re seeing at the moment are being driven by fundamentals, low storage levels and supply uncertainty,” said Steve Hill, executive vice president, energy marketing.

He added that the lack of new supply and the reduction of investment in LNG are other reasons behind the tight market.

Shell, the world’s largest buyer and seller of LNG, said earlier on Monday that global trade in liquefied natural gas (LNG) in 2021 grew 6% year on year to 380 million tonnes as economies recovered from the impact of the COVID-19 pandemic. read more

LNG demand is expected to almost double to 700 mln tonnes by 2040, Shell said in its annual LNG market outlook, adding that liquefied gas has a key role to play as a back-up in the event of intermittent renewable supply.

Soaring gas prices have put around 30 British energy suppliers out of business while some heavy industry companies curtailed output in energy-intensive sectors.

LNG prices lurched from record lows under $2 per mmBtu in 2020 to record highs of $56 in October 2021.

Benchmark prices currently stand at about $25 per mmBtu.

“Last year showed just how crucial gas and LNG are in providing communities around the world with energy,” said Wael Sawan, integrated gas, renewables, and energy solutions director at Shell.

The world’s No.2 traded energy company said more investment is needed to meet rising LNG demand, particularly in Asia, especially with a forecast supply-demand gap in the mid-2020s.

China and South Korea led LNG demand growth in 2021. China increased its LNG imports by 12 million tonnes to 79 million.

Last year Chinese LNG buyers signed long-term contracts for more than 20 million tonnes a year.

Global LNG exports grew in 2021 despite outages that dented availability of LNG for delivery. The United States led export growth with a year-on-year increase of 24 million tonnes, Shell’s report said.

The U.S. Energy Information Administration projects that U.S. LNG exports will reach 11.5 billion cubic feet per day (bcfd) in 2022, becoming the world’s largest LNG exporter ahead of Australia and Qatar. read more


Peak Gold JV slows plans at Manh Choh
Shane Lasley, North of 60 Mining News, February 21, 2022

With inflation pushing costs higher and billions of dollars of COVID relief and infrastructure spending flowing into Alaska from Washington D.C., creating a competitive market for construction contractors, the Peak Gold Joint Venture has decided to cut back on the preliminary development that was originally planned for its Manh Choh gold mine project near the communities of Tetlin and Tok in eastern Alaska.

Peak Gold JV – a partnership between Kinross Gold Corp. (70%) and Contango ORE Inc. (30%) – is working toward the development of a mine at Manh Choh that would deliver high-grade gold ore to the Kinross Alaska mill at the Fort Knox Mine.

With 9.2 million metric tons of measured and indicated resources averaging 4.1 g/t (1.2 million oz) gold and 14.2 g/t (4.2 million oz) silver, the mineralization in the Peak Gold deposits at Manh Choh is roughly seven times higher grade than the ore currently being fed into the Kinross Alaska mill.

This potentially higher-grade ore and Manh Choh’s ready access to the Alaska highway system makes the economics of trucking ore roughly 240 miles to the Fort Knox mine for processing a more economical and environmentally sound option than recovering the gold and storing the tailings on the property.

The Peak Gold JV had originally budgeted US$47.9 million for the 2022 work program to advance this project that is more akin to a rock quarry than a full-scale gold mining operation.

Much of this original 2022 budget was to be invested into the construction of a camp that would provide housing for crews working on the roads and other construction activities on the property, as well as for workers when mining operations get underway at Manh Choh.

Kinross, which is managing the activities under the Peak Gold JV, however, has since opted to forego some of the onsite construction and dirt work at Manh Choh.

During a Peak Gold JV meeting held last week, Kinross announced plans to reduce the 2022 spending at Manh Choh to US$26 million due to a revised work plan resulting from recent impacts of inflation, as well as contractor and labor market constraints in Alaska.

“The reduced spend in 2022 reflects the reality that inflation is hitting all sectors of the economy – especially construction. With the recent CPI (consumer price index) for January hitting 7.5%, this shouldn’t come as a surprise to anyone,” said Contango ORE President and CEO Rick Van Nieuwenhuyse. “In Alaska, the State has received several billion dollars in COVID relief money and another $5.6 Billion from the recently passed Infrastructure bill so again, it should not be a surprise that competition for construction contractors is on the rise.”

Neither Kinross nor CORE currently expects the reduced budget and onsite activities to change the overall schedule of completing the feasibility study and achieving first gold production from Manh Choh in 2024.

Still a robust spending package, the revised 2022 budget will continue to fund a feasibility study that provides the economic and engineering details of the proposed mine, permitting activities, ongoing environmental monitoring, community engagement around Manh Choh and along the route to Fort Knox, engineering, and continued mineral exploration.

Kinross Gold President and CEO Paul Rollinson told investors during a Feb. 17 conference call that some preliminary onsite activities at Manh Choh remain in the 2022 budget, and the global gold mining company expects to publish the feasibility study results before the end of the year.

The rising competition and costs for construction, however, are expected to impact the economics of Manh Choh mine development. As such, Kinross has determined that it is in the best interest of the Peak Gold JV that certain activities that were initially planned for 2022 be delayed pending further analysis of options, including a re-bidding process.

The same inflationary pressures that are pushing construction costs higher, however, are putting upward pressure on gold.

“It should also be no surprise to gold investors to see the price of gold rise as well – yesterday piercing above the $1,900 level,” Van Nieuwenhuyse said on Feb. 18. “Gold is doing what it has done for eons and remains a store of value.”

The feasibility study will provide a clearer picture of the economics of a mine at Manh Choh in an inflationary environment that is expected to put upward pressure on mining and production of this 1.2-million-oz gold project in eastern Alaska.


Biden needs a Trump substitute
Hans Nichols, Jonathan Swan, Axios, February 21, 2022

Searching for a strategy to avoid a 2022 midterm disaster, advisers to President Biden have discussed elevating a unifying Republican foil not named Donald Trump.

Why it matters: Biden confidants worry that House Minority Leader Kevin McCarthy is too unknown, that Biden won’t demonize Senate Minority Leader Mitch McConnell because of their longstanding and collegial relationship and that elevating Florida Gov. Ron DeSantis could backfire.

  • Biden isn’t on the ballot in November. But if voters see the elections as a referendum on the last two years, it could hurt Democrats across the ticket and cost their party control of Congress.
  • Biden advisers and Hill allies told Axios voters are more likely to side with the president if he’s compared to an alternative.

Between the lines: Team Biden’s muscle memory is to elevate and focus on the best foil Democrats have ever been gifted — Trump.

  • But as Terry McAuliffe’s loss in the Virginia governor’s race showed last fall, running against an out-of-office Trump won’t cut it with voters.
  • Biden advisers know they need to bring Republicans back into the fray and interrupt the ceaseless news cycles about Democratic infighting. They want to avoid inside baseball stories about the president as a legislative tactician dealing with recalcitrant moderate senators.

What we’re hearing: DeSantis is an obvious target who has been discussed among Biden confidants as a potential foil for the president.

  • But some Biden advisers are reluctant to contest every midterm race on DeSantis’ signature issue — COVID-19 — because the Biden administration’s approaches on vaccine and mask mandates may be a political liability with some swing voters.
  • Biden will likely still invoke Trump when the setting makes sense— as he did on his Jan. 6 anniversary speech — but advisers do not expect him to run the Trump-obsessed McAuliffe playbook.

What they’re saying: Since the Democrats’ drubbing in Virginia last fall, vulnerable House Democrats have been warning against talking too much about the former president. Today, there’s close to a consensus that Democrats can’t hold Congress by focusing on Trump.

  • “It would be a mistake to run against Trump in the 2022 elections,” close Biden ally, Sen. Chris Coons (D-Del.), told Axios.
  • Sen. Mazie Hirono (D-Hawaii) told Axios: “I wish that we could just find one face that we could point to, such as with Donald Trump… maybe a composite.” She said, “I’d like us to do a much more effective job of really drawing the contrast between Republicans and Democrats.”
  • Sen. Ben Cardin (D-Md.) told Axios: “Mitch McConnell is well known… He is, for sure, no Donald Trump, I want to make that 100% clear… but he is a figure that does represent a sharp difference from the Biden agenda.”
  • One Biden adviser told Axios that Democrats should contrast their own efforts to steer the country through COVID with Republican efforts to obstruct them because “elections are about choices.”

In recent months, Team Biden has been discussing alternative strategies to sharpen the contrast with Republicans.

  • “One of the problems is our messaging has been driven by governing, not by campaigning, and we need to move into campaign mode,” said Celinda Lake, who polled for Biden during the 2020 campaign and continues to work with the Democratic National Committee.
  • “If you’re trying to negotiate on the Hill, it’s hard to draw contrast,” she said. “If you’re trying to win the November 2022 elections, you must draw a contrast.”

Lake, like others Axios interviewed, said Democrats won’t get far by raising one individual foil — not even a figure as polarizing as Trump.

  • She advocates drawing a broader contrast with the “MAGA faction” — including Republicans “who supported the violent insurrection” and now want to pardon Jan. 6 rioters.
  • “That’s a much better foil than just talking about picking one obscure congressional leader that nobody will know anyway, or a future presidential nominee that nobody will know anyway,” Lake said. “Trump is not on the ballot,” Lake added. “And these ‘MAGA faction’ candidates are.”

The big picture: Incumbent presidents presiding over boom times look for ways to turn elections into referendums. But White Houses facing a restless electorate prefer to talk about elections as a choice, hoping to be compared to a real-life alternative and not an amorphous standard.

  • Biden’s approval rating has been in decline since the chaotic U.S. withdrawal from Afghanistan — and now hovers in the low 40s.
  • Some White House officials are optimistic that Biden’s numbers may creep slightly upwards if the omicron variant is, indeed, the last wave of COVID-19. But it’s not clear such a boost would come soon enough or be powerful enough.
  • Biden is plainly aware of the bleak national mood and knows that voters could punish him for it. “I understand the overwhelming frustration, fear, and concern with regard to inflation and COVID,” he said in a press conference last month. “I get it.”

The bottom line: Biden may not find a truly effective GOP foil until after the midterm elections.

  • A GOP-controlled House would allow Biden to pick daily fights and present his policies as an alternative.
  • The last two Democratic presidents won re-election after losing the House in the mid-term election.