Solar Growth Stumbles. Bipartisan Buy In for ESG. Twin Peaks for Oil.

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Feds file environmental review for Cook Inlet lease sale
Sabine Poux, KDLL, October 24, 2021

The federal government has filed another draft environmental impact statement for a federal oil and gas lease sale in Cook Inlet and is asking for comments from the public.

It’s the second time in less than a year that the feds have put out an environmental review on a potential Cook Inlet sale, since the Biden administration halted the process leading up to the auction earlier this year. That pause was part of a larger executive order aimed at fighting climate change.

The leasing process resumed this summer when a Louisiana district court judge ordered programs to resume in Cook Inlet and the Gulf of Mexico, following a lawsuit from Alaska and several other states. The states argued the Biden administration’s decision was bad for economic development and that the feds bypassed the public process when they hit pause on the sales.

The potential auction includes 224 blocks across one million acres in Cook Inlet, from the southern end of Kalgin Island down to Augustine Island.

The department can still decide to cancel a lease sale after an environmental impact statement is filed. The Bureau of Ocean Energy Management, which oversees the offshore leasing program, canceled sales in 2006, 2008 and 2010 in Cook Inlet due to lack of industry interest.

The bureau is accepting public comments on its environmental impact statement from Oct. 29 to Dec. 13. The department is also holding three virtual public hearings next month.


Twin peaks: Whether it’s supply or demand, oil era heads for crunch time
Noah Browning, Reuters, October 25, 2021

 Energy transition and peak demand predictions have spooked investors in oil, putting the prospect of peak production sooner than anticipated accompanied by wild price spikes.

Key climate talks are set to begin at the end of this month in Glasgow, Scotland to tackle global warming under the 2015 Paris Agreement, with fossil fuel in policy-makers’ crosshairs.

But as it stands now, mobility curbs which hollowed out both spending on upstream oil projects and oil end use may already be set to permanently rein in the growth of both supply and demand.

“On current trends, global oil supply is likely to peak even earlier than demand,” the research department of bank Morgan Stanley said in a note this week.

“The planet puts boundaries on the amount of carbon that can safely be emitted. Therefore, oil consumption needs to peak. However, this is such a well-telegraphed prospect that it has solicited its own counter-response already: low investment.”

Still, with most oil producers and watchdogs putting the peak to the world’s thirst for oil at least several years away, demand is already veering back toward pre-pandemic levels.

The mismatch between demand for oil and other polluting fossil fuels roaring back to normal and output having lagged has helped contribute to an energy crunch in Europe and Asia, with crude prices soaring to multi-year highs.

The medium-term erosion of oil demand supposes that renewable energies like electric cars and wind power gain pace, which the International Energy Agency says needs to pick up fast in order to head off shortages and sky-high prices.

“The amount being spent on oil appears to be geared towards a world of stagnant or falling demand,” the Paris-based agency said in its annual outlook this month. “A surge in spending on clean energy transitions provides the way forward, but this needs to happen quickly, or global energy markets will face a bumpy road ahead.”

The IEA does not predict an immediate peak to oil supply, with producer club OPEC and Russia comprising a rising share of supply in the next decade.

OPEC’s annual outlook last month saw global supply nearing a plateau in 2045 but no clear peak.

Despite the pitfalls to prices and supply, the IEA said current low oil and gas spending was one of the few areas aligned with its most ambitious Net Zero Emissions by 2050 (NZE) scenario in which no new fossil fuel projects should go forward.

In its most conservative status quo, or stated policies scenario (STEPS), however, average annual spending on oil to meet demand would need to rise sharply to above $500 billion – more than at any time in the last five years.

Energy consultancy FGE said in a note the problem was not an immediate one but could come to a crescendo in coming years.

“Although there are huge concerns regarding the state of upstream oil investment i.e., that, as it stands, it is insufficient to meet growing demand in the years ahead, this is a problem for 2023 and beyond not for the next 12 to 18 months.”


Tough transition
Craig Medred, October 22, 2021

Before the first great pandemic of the twenty-first century played havoc with life as all have known it in the Information Age, some European countries seemed on the verge of upending the hydrocarbon economy that has powered the world since the beginning of the Industrial Revolution.

And now, as the world that was in lockdown starts to unlock, the Europeans are facing what is touted as an “energy crisis” thanks to a perfect storm of natural and manmade events.

“Resurgent energy demand post-Covid, extreme weather events (unprecedented heatwaves and prolonged winters), supply chain disruptions, and poor regional and global stockpiling have all contributed to Europe’s current crisis,” writes market analyst Ariel Cohen at Forbes. “Russia’s supremo Vladimir Putin may have a reason to pop a champagne bottle in view of the EU’s sanctions on the Kremlin. He says that Europe had created a self-inflicted wound. He may be right.”

Putin was the man in charge of Russia’s zigging toward increased production of natural gas when Europe was zagging toward renewable energy because of concerns about global warming due to an atmospheric carbon-dioxide build-up linked to the burning of fossil fuels – coal, oil, and natural gas.

As a result of this move, Putin now has significant parts of Europe dependent on Russian gas.

“Supplies of natural gas are so tight that prices are up by almost 400 percent since the start of the year. Utilities are switching to power generated from coal and even fuel oil, two of the world’s dirtiest fuels. That has some accusing Russia – which supplies 35 percent of the European Union’s gas imports – of using energy as a weapon,” Foreign Policy reported this week. “It didn’t help calm waters when the Russian ambassador to the European Union, Vladimir Chizhov, recently suggested a linkage between gas supplies and Europe’s behavior, hinting that the gas shortage could get resolved if Europe stopped treating Russia as an ‘adversary.’”

Putin, for his part, called the accusation that Russia is restraining gas supplies “entirely groundless bloviation.”

Storage problems

Whatever the case politically, the physical problem is a simple one: storage.

Wind and sunlight can produce a lot of power, but there are problems storing it, not to mention predictable interruptions like night and dead air. Water can be stored and reused, but hydropower has a somewhat dirty reputation thanks to dams in the U.S. Pacific Northwest that helped make a mess of salmon runs.

France’s response to the problematic problem of dirty fossils versus clean, renewable energy was to go nuclear. About 70 percent of that country’s electricity – necessary to power electric cars, heat homes and power industry in a “clean economy” – is now produced by nuclear power plants.

Most other countries, however, fear the potential for a nuclear disaster more than the threat of climate change and thus the nuclear option remains widely unpopular.

All of which has the Russians gambling fossil fuels are going to be around for a long time still although anyone who has regularly been using cordless power tools for the past decade knows well the slow but steady improvement in batteries.

There are now, too, companies looking at using surplus renewable power – say wind power that isn’t needed in the moment – to split water into oxygen and clean-burning hydrogen, which can be stored like any other gas for future use.

Renewable energy production will continue to grow in the future because the wind and sunlight free, but what Europe is experiencing now is the storage problem destined to plague its growth.

“Renewable energy became the biggest source of electricity in the European Union in 2020, beating fossil fuels for the first time,” The Verge raved as the start of this year. “Germany and Spain also hit that milestone individually last year – so did the UK, which officially left the EU in January 2020.”

Unfortunately, the big growth was in wind and solar which present the biggest storage problems.

“Much like refrigerators enabled food to be stored for days or weeks so it didn’t have to be consumed immediately or thrown away, energy storage lets individuals and communities access electricity when they need it most – like during outages, or when the sun isn’t shining,” notes the Union of Concerned Scientists. “Storage can reduce demand for electricity from inefficient, polluting plants that are often located in low-income and marginalized communities. Storage can also help smooth out demand, avoiding price spikes for electricity customers.”

The Russians

Enter the Russians, who understand state capitalism, recognize the comparatively easy storability of their gas, and have less reason to fear climate change than most any other area of the globe.

The largest country in the world, Russia has the longest Arctic coastline and the largest Arctic landmass, about 5 million square kilometers or approximately 1.9 million square miles.

That’s an area about the size of France, Spain, Germany, Italy and the United Kingdom combined, and yet home to only about 2 million people or about a fifth the population of London.

Credit the long, cold Arctic winters for keeping the population low, if you love the wilderness, or blame it if you prefer the bustle of the cities in which eight out of 10 Americans now live. 

“Siberia, like ‘the cold,’ has for centuries been synonymous with the very image of Russia,” Clifford Gaddy and Fiona Hill of the Brookings institute observed almost two decades ago. “From the tsars, who first planted the seeds of cities in Siberia, to the Soviet central planners, who moved masses of people and industry into its vast and remote regions, the exploration and development of Siberia have shaped Russia’s sense of national identity. Siberia’s ‘untamed frontier’ has long promised wealth and opportunity for the rest of Russia.”

They went on to characterize that promise of wealth and opportunity as foolishness.

“Thanks to Soviet industrialization and mass settlement of Siberia, much of Russia’s population today is scattered over a vast landmass in large but isolated cities and towns,” they wrote. “Inadequate road, rail, air, and other communication links hobble efforts to connect those population centers, promote interregional trade, and develop markets. About one in ten Russians live and work in almost impossibly cold Siberian cities, places where average January temperatures range from -15 to -45 degrees Celsius (5 to minus-49 degrees Fahrenheit). Because of their location, these cities still depend heavily, as they did in the Soviet era, on central government subsidies for fuel, food, and transportation. Costs of living are as much as four times higher than elsewhere in the Russian Federation, while costs of industrial production are sometimes higher still.”

The duo pretty thoroughly trashed the Siberian dream of Russians.

“…Pumping large subsidies into Siberia deprives the rest of Russia of the chance for economic growth,” they wrote.

“To become competitive economically and to achieve sustainable growth, Russia must modernize and connect its physically vast but misdeveloped economy,” they wrote.

Fixing Siberia’s infrastructure problems, they wrote, “would simply improve the connections between towns, cities, and enterprises that should never have been where they are. It would make places more livable where, from an economic point of view, most people should not live to begin with.”

Putin’s view

Putin – a product of that old Soviet system and the man who “rears his head” over the Arctic as former Alaska Gov. Sarah Palin once so famously and hysterically observed – clearly had a different view of the situation.

Under his leadership, Russia has aggressively moved to tap oil and natural gas resources in Siberia – global warming be damned – and pioneer the Northern Sea Route along the Arctic coast while at the same time building pipelines to deliver oil and gas to Asia.

“Russia is one of the three biggest oil exporters in the world, alongside Saudi Arabia and the United States,” noted in May. “It has enough oil to keep producing at current rates at least until 2080, with enough gas reserves to last for another 103 years. And the state is pouring billions – $110 billion to be precise – into the development of new oil reserves in eastern Siberia to tap 100 million tons of new crude annually. That’s about a fifth of the country’s annual output in 2019.”

“In the first eight months of the year, China spent some $837.32 million on Russian gas, which is a 98.94 percent increase compared to the corresponding period last year, the Chinese General Customs Administration said on Monday.”

China, like Russia, publicly proclaims a desire to join the battle to slow global warming, but its action say something else. China more than a decade ago surpassed the U.S. as the world’s largest greenhouse-gas producing country.

And China’s emissions of carbon dioxide, the most common greenhouse gas, continue to creep upward.

In 2020, the International Energy Agency (IEA) reported, “most economies saw a decline of five to 10 percentage points compared to recent rates of emissions growth, with lesser declines in Brazil and most notably, China. The only major economy to record an increase in annual CO2 emissions in 2020, China’s emissions growth slowed by just one percentage point compared with its average rate over the 2015 to 2019 period.”

U.S. emissions dropped 10 percent in the same period, and those in the United Kingdom fell `even more.

The United Kingdom – formerly the British Empire and the dominant world force from the sixteenth into the twentieth centuries – has promised to reach “net zero” carbon emissions by 2050 and was applauded for getting more than halfway there last year.

“The UK’s greenhouse gas emissions in 2020 were 51 percent below 1990 levels, according to new Carbon Brief analysis,” Carbon Brief headlined. “This means the UK is now halfway to meeting its target of ‘net-zero’ emissions by 2050.

“The milestone was reached after a record-breaking 11` percent fall in greenhouse gas emissions in 2020,” Simon Evans wrote in the story below before adding the all-important caveat, “largely due to the coronavirus pandemic.”

The pandemic slowed the carbon-dioxide spewing engines of commerce and significantly altered the way the Brits got about. They started working more from home than driving to offices, and when they did go there or elsewhere, they traveled less by motor vehicle and more on foot or by bicycle because of their government’s encouragement of “active travel” to increase “social distancing.”

“COVID-19 has radically changed our travel habits in just a matter of weeks. Walking and cycling are up, as people enjoy their daily exercise or take essential journeys they might otherwise have made by public transport. Cycle-to-work schemes have seen a 200 percent increase in the number of bicycle orders, while car use is roughly 40 percent of what it was in mid-February as more people work from home. Air pollution in cities has duly fallen rapidly, with nitrogen oxide pollution down 70 percent in Manchester, England,” The Conversation reported in May 2020.

“Transport is the UK’s most polluting sector, so encouraging more people to keep walking and cycling after the pandemic would benefit the environment, as well as make cities healthier for the people who live in them.”

But these weren’t the only reasons for the UK’s drop in production of the gases that power the atmospheric “greenhouse effect” that has kept the planet warm enough to be habitable for humans for 200,000 to 300,000 years, but which many now believe could make it uninhabitable in the near future as the planet steadily warms.

The government backed a plan for a “Green Industrial Revolution” to power the country with wind, water and sunshine to fight “climate change” and to take advantage of, according to a government white paper, the “huge opportunity for both growth and job creation. The global markets for low-carbon technologies, electric vehicles and clean energy are fast growing: zero-emission vehicles could support 40,000 jobs by 2030, with exports of new technologies such as CCUS (carbon capture usage and storage) having the potential to add £3.6 billion GVA (gross value added) by 2030. The time is now to seize these opportunities.”

The time may still be now – some in fossil-fuel short EU countries are arguing the current energy crisis only underlines the need to speed the move to renewables – but the crisis of the moment also makes clear the bumps in the road, more of which can be expected ahead.

Oil and gas are wonderfully convenient sources of power, and there’s nothing much more than convenience that the citizens of the modern world now desire.


Challenging quarter slows Pogo gold output
Shane Lasley, North of 60 Mining News, October 21, 2021

Challenged by a spike of COVID cases in Alaska and unplanned downtime due to a failure of the primary conveyor that delivers ore to the mill, Northern Star Resources Ltd.’s Pogo Mine in Alaska produced less gold at higher costs during the first quarter of the Australian miner’s fiscal year 2022, which began on July 1.

These hurdles came at a time when crews were commissioning mill upgrades that will expand production rates to 1.3 million metric tons per year, which is a 30% increase over the current 1-million-metric-ton-per-year capacity.

“We seized the chance to complete other major works, including replacing the primary conveyor belt that transports ore from underground to the processing plant,” said Northern Star Resources Managing Director Stuart Tonkin. “This resulted in 24 days total downtime, which reduced throughput and gold production, in turn increasing costs per ounce.”

The Pogo Mine produced 40,127 ounces of gold during the quarter that ended on Sept. 30, a significant drop from the 60,968 oz of gold produced during the previous quarter.

As a result, the all-in sustaining cost per oz of Pogo gold sold during the September quarter was US$1,751, compared to US$1,347/oz during the July quarter.

In addition to nearly one month of downtime, Northern Star says the average grade of ore processed during the September quarter was 7.1 grams per metric ton gold, significantly less than the 9.1 g/t gold processed during the previous quarter and the average reserve grades at the underground operation.

As of the end of March, Pogo hosted 12.86 million metric tons of indicated resource averaging 9.5 grams per metric ton (3.95 million oz) gold, plus 10.03 million metric tons of inferred resource averaging 9.1 g/t (2.95 million oz) gold.

Of these resources, 5.85 million metric tons averaging 8 g/t (1.5 million oz) gold has been elevated to reserve status.

The lower-than-reserve grades processed during the September quarter are likely related to underground mining during the mill downtime that prioritized waste development with the focus on accelerating access to additional mining fronts. These additional fronts will make it easier for mining to keep pace with the expanded mill capacity.

Now, with the upgrades complete and conveyor repaired, Northern Star expects Pogo gold output to trend higher and costs to trend lower moving forward.

“This work is now finished, and we expect to see a significant benefit for both production and costs from the December quarter onwards,” said Tonkin.

In its guidance published in July, Northern Star forecasts Pogo will produce 220,000 to 250,000 oz of gold at all-in sustaining costs of around US$1,300 per oz of gold during fiscal year 2022.

Despite the slow start, the Australia-based gold miner has not adjusted this gold production outlook.

Once the expanded and upgraded mill is running at full capacity, Northern Star expects Pogo to produce around 300,000 oz of gold per year, or about 75,000 oz per quarter.

The company says mill throughput is increasing in line with expectations and mill availability has returned to normal levels exceeding 90%.

“I extend my thanks to the Pogo team who continue to manage the associated impacts of COVID, whilst adjusting to the challenges to make the growth plan,” said Tonkin.


First look: Bipartisan buy-in for ESG among voters
Ben Geman, Axios, October 25, 2021

A new poll and analysis finds “surprising evidence” of bipartisan support for corporate environmental, social and governance (ESG) efforts, including climate initiatives.

Why it matters: Penn State business professor Tessa Recendes and the public affairs firm ROKK Solutions find “public opinion on ESG is not nearly as polarized as popular narratives suggest.”

  • One key finding: stronger support among voters under 45. This “indicates companies should capitalize on generational trends in the workforce and financial markets as these constituents gain influence.”

Catch up fast: ESG describes initiatives in areas like emissions and water management; diversity and inclusion; shareholder rights, and more.

What they found: Some top-line findings from the poll of 1,240 registered voters include…

  • 76% feel companies should be held accountable for making a positive impact where they operate. 79% of Democrats and 54% of Republicans put climate in their top five ESG issues most important to them, and environmental matters overall are a priority.
  • Democrats are more likely than Republicans to buy things from companies that speak out on topics they agree with. That’s also one of several places where age matters, with 36% of Republicans over 45 more likely, rising to 51% under 45.

What’s next: It offers recommendations on crafting and communicating ESG policies, such as tailoring social media efforts but also using other channels, noting, for instance, that local TV remains the most popular information source for voters over 45.

The intrigue: The findings are relevant to policymakers, the report finds.

  • “Our research absolutely begs the question: are policymakers underestimating support for tackling climate change, and tackling these pervasive social and governance issues,” ROKK Solutions managing director Lindsay Singleton tells Axios.


Solar’s Growth Stumbles Just as the World Needs It Most
Dan Murtaugh, Maxwell Adler, BNN Bloomberg, October 25, 2021

Cracks are emerging in the global solar industry, threatening to flatten its growth trajectory just as the world needs clean power more than ever.

The sector is being slammed by a barrage of obstacles, with rising materials costs, forced labor accusations and a worsening trade war all hitting at once. As a result, panel prices are rising for the first time in years, and some manufacturers have asked buyers to delay purchases if they can. And although annual installations are still ticking higher, Wall Street warns the pace of expansion may slow sharply if those hurdles continue unchecked. 

“The shocks to the system in the last two to three months are more or less unprecedented,” said Jenny Chase, an analyst with BloombergNEF. “We need to get to net zero as soon as possible, and to do that we just need so much solar and wind. We’re not on track; we need to ramp all this stuff up dramatically.”

These setbacks may only be temporary, with delays in installations expected to be largely resolved by the end of 2022 when new solar factories help ease supply chain issues. But any snag in the sector’s rollout will have lasting effects, with the emissions from the fossil fuels burned instead trapping heat in the atmosphere for decades. Solar provided just 3.3% of the world’s electricity in 2020. BloombergNEF estimates that to be on target for net-zero by 2050, the world needs to add 455 gigawatts of solar every year through 2030. Last year was a record—and it only added 144 gigawatts. The recent stumbles are hitting right before the United Nations’ COP26 climate talks begin later this month, viewed by many as a crucial—and last-ditch—effort to curb global warming. 

It was easy to be optimistic about solar coming into the year. Joe Biden’s ascendance to the presidency, China’s 2060 net-zero pledge, and Europe’s Green Deal meant that for the first time, all three dominant economies supported an energy transition at the same time. And thanks to decades of painstaking work by researchers and companies, solar can now produce energy cheaper than fossil fuels in most of the world. Even the technology’s Achilles’ heel—the sun doesn’t always shine—was on the way to being solved by improvements in batteries.