OIL
From the Washington Examiner, Daily on Energy:
PRICE RECOVERY FALLS SHORT: The oil price recovery of recent weeks is not sufficient for a significant chunk of producers. Nearly a third of executives (27%) from 165 oil companies polled by the Dallas Fed said oil prices would have to rise to between $41 and $45 per barrel for the majority of producers in the U.S. to restart production. A slightly higher percentage, 30%, said they expect production to return at $36 to $40 per barrel oil, the range where oil prices currently sit. The Dallas Fed conducted the survey between June 10–18.
Iffy long-term forecast: Producers don’t expect drilling activity to return to normal levels for at least a year. Forty-one percent of executives expect drilling to return to pre-pandemic levels sometime in 2021, while 39% expect a return in 2022 or later. Sixteen percent of them don’t ever foresee a return to prior levels.
Oil executives have a similar outlook for the demand side. More than half of executives — 54% — expect global oil consumption to return to pre-pandemic levels sometime in 2021. But 36% expect a return in 2022 or later, and 5% don’t foresee a return to prior levels at all.
GAS
ALASKA LNG PROJECT ANNOUNCES UPDATED $38.7 BILLION PROJECT CONSTRUCTION COST
$5.5 Billion (12.4%) Cost Reduction Enhances Ability to Deliver Competitively Priced LNG
ANCHORAGE, AK (June 25) – Today the Alaska Gasline Development Corp. (AGDC) released an updated $38.7 billion cost estimate for the Alaska LNG Project, which will increase the project’s ability to deliver natural gas to Alaskans and LNG to export markets at competitive prices. The updated cost estimate was presented during today’s AGDC board meeting.
The updated estimate reflects a $5.5 billion (12.4%) cost reduction off the previous $44.2 billion cost estimate, which was compiled in 2015 by the project’s previous joint venture leaders, which included BP Alaska, ExxonMobil Alaska, ConocoPhillips and AGDC. The new estimate will enhance the competitive price of LNG from the Alaska LNG Project versus similar projects vying to serve major Asian markets. Long-term LNG demand is forecast to exceed available supply as consumers seek the environmental benefits of LNG over other energy sources.
Alaska LNG Project cost reductions capitalize on technology and process improvements developed in the LNG industry over the past several years, reflecting maturation of the LNG industry. These improvements include advancements in gas liquefaction technology and modular construction techniques, lower engineering costs, and a streamlined project management team. The cost estimate validates the efficiency of the Alaska LNG project’s design and major components, including a North Slope gas treatment plant, an 800-mile pipeline, and a Nikiski, AK-based LNG plant. AGDC President Frank Richards said, “These updates improve the competitive position of the Alaska LNG Project and its ability to deliver LNG and natural gas at favorable prices. We are incorporating these results into our discussions with potential partners as we work to transition to a new market-led project team and maximize project benefits for the State of Alaska. While today’s results strengthen the case for developing this project, it will ultimately be the market that determines the best path forward.”
AGDC obtained federal authorization to construct and operate the Alaska LNG project on May 21, 2020.
MINING
Alaska investment board approves summer work for controversial Arctic mining road
POLITICS
Biden signals willingness to use ‘unfettered discretion’ to reject pipelines
Josh Siegel, Washington Examiner, June 25, 2020
Joe Biden is signaling he would make it difficult for developers to obtain federal permits to build fossil fuel infrastructure such as pipelines and liquefied natural gas export facilities, delivering on a key priority of environmental groups. “There is virtually unfettered discretion there, so long as procedural safeguards are observed,” said Glenn Schwartz, director of policy at Rapidan Energy Group, a consultancy firm. As his chief tool to curb pipelines and LNG export terminals, Biden could require thorough and lengthy reviews to determine whether a project’s economic value is outweighed by its contribution to climate change.