Sullivan on Willow. Carbon-neutral LNG. CORE Gets Lucky. Review or Ban?

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News of the Day:

US Sen. Sullivan tells lawmakers that Biden decisions harm Alaska economy, asks for help with large oil project
Andrew Kitchenman, KTOO & Alaska’s Public Media, May 3, 2021

U.S. Sen. Dan Sullivan told Alaska’s legislators on Monday that President Biden’s administration is at war with Alaska over developing resources. 

In an address to a joint session in the Legislature, Sullivan said Alaska’s economy benefited from a series of decisions by former President Trump’s administration. These decisions included on oil development for the Willow Project in the National Petroleum Reserve-Alaska and the development of a road between King Cove and Cold Bay that will run through a national wildlife refuge. He says those decisions are under attack.

“This is not surprising,” Sullivan said. “We knew this anti-Alaska agenda was coming if the national Democratic Party took control of the White House, the Senate and the House. Alaska is always the gift that national Democratic administrations give their extreme, radical environmental supporters.”

This year is the first time Sullivan, a Republican, has been in the minority caucus in the U.S. Senate. And with Democrats controlling both Congress and the White House, he said he will be strategic.

“We need to look for ways to gain ground when we can, even if we feel that we’re in retreat right now,” he said.

He said support in Alaska for developing projects like the oil discovery at Willow hasn’t been partisan. 

“But we need all of your help, especially our Democratic friends in the Legislature,” he said. “You all have powerful voices. Please, underscore the importance of Willow in any and all conversations you have with any Biden administration officials. We need to turn Willow into a victory for Alaska and America.”

He said the Biden administration’s proposals are part of a long-term battle facing the country.  

“They’re tempting America with cradle-to-grave, European-style socialism,” he said. “They’re cutting the ties between work and income, and in so doing, undermining the notion of earned success and the dignity and importance of work.”

But he did say there were some early successes for the state with the new administration, including the decision to build a dock, pier and office in Ketchikan, to serve as the home port for a National Oceanic and Atmospheric Administration research vessel.

It was the Legislature’s first joint session in the House chamber since the pandemic arrived in Alaska. The Legislature has been easing some of its COVID-19 safety rules, including no longer requiring fully vaccinated people who work in the Capitol to frequently be tested for the coronavirus. 


Oil Rises To Seven-Week High On Strong Remand Recovery
Tsvetana Paraskova, OilPrice.Com, May 4, 2021

Oil prices rose to the highest level in seven weeks early on Tuesday, as the market continues to believe that the economic and oil demand rebound in the United States and Europe will outweigh the still tragic COVID numbers in India and Brazil.

As of 8:51 a.m. EDT on Tuesday, the U.S. benchmark WTI Crude was back above $65 per barrel, having touched the highest level since March earlier in the day. WTI Crude prices were up 1.29 percent at $65.27, while the international benchmark Brent Crude was up 1.32 percent on the day at $68.40.

The oil complex was also supported on Tuesday by a weaker U.S. dollar, which fell after Monday data showed that U.S. manufacturing activity grew in April at a slower pace than expected.  

The central theme in the oil market, however, was the expected economic and oil demand recovery as more U.S. states are easing restrictions toward full reopening and the European Union is proposing to welcome vaccinated tourists this summer.  

Starting mid-May, New York, New Jersey, and Connecticut will remove the majority of the capacity restrictions for restaurants and offices. They also have plans to increase the limit on outdoor social gatherings in a significant easing of restrictions on the region’s businesses, venues, and gatherings “given significant progress in vaccinations and sustained reduction in COVID-19 cases and hospitalizations,” the governors of the three states said.

In Europe, the EU also gave oil bulls hope this week, unveiling on Monday a plan to open its borders to vaccinated tourists. The European Commission proposes that the EU allow entry for non-essential travel for anyone who has received the last dose of an EU-approved vaccine at least two weeks before arrival.

“Crude prices were extending Monday’s moderate gains early Tuesday in Asia under the positive momentum of a steadily improving economic picture in the US and the Eurozone,” Vanda Insights said in a daily commentary on Tuesday.


Cheniere and Shell deliver carbon-neutral U.S. LNG to Europe
Sabrina Valle, Reuters, May 4, 2021

U.S. liquefied natural gas company Cheniere Energy Inc announced it has supplied a carbon neutral cargo to Royal Dutch Shell as part of the companies’ long-term agreement, adding to a list of sellers neutralizing emissions as more buyers commit to environmental and sustainability targets.

The carbon-neutral LNG cargo was supplied from Cheniere’s Sabine Pass facility and delivered to Europe in early April, the producer said in a statement. Offsets used were bought from Shell’s global portfolio of nature-based projects.

In March, Russian energy giant Gazprom said it had delivered its first carbon-neutral shipment to Europe. Pavilion signed a long-term contract with Chevron Corp earlier this year and one with Qatar Petroleum Trading late last year requesting data on greenhouse gas emissions. Last year, China National Offshore Oil Corp, or CNOOC, bought from Shell its first cargoes with offset carbon emissions.

Cheniere on Tuesday boosted its annual guidance after posting a 40% increase in first-quarter earnings.

Earnings before interest, taxes, depreciation and amortization, or EBITDA, rose 40% to $1.5 billion in the quarter. The company increased its annual guidance by 4.5%, with expected earnings now ranging from $4.3 billion to $4.6 billion.

“Continued strength in global LNG market fundamentals, together with the strong first quarter results we reported today, improves our outlook for the balance of the year and enables us to increase our full-year 2021 financial guidance,” Chief Executive Jack Fusco said in a statement.

Improved market margins also allowed for stronger distributable cash flow guidance, now expected between $1.6 billion and $1.9 billion this year, the company said.

Cheniere’s revenue rose to $3.09 billion in the first quarter from $2.71 billion a year earlier.

Net income rose by $18 million during the quarter to $1.54 per share, compared with $1.43 per share in the first three months of 2020.

Cheniere operates three LNG processing units, known as trains, at its Corpus Christi terminal, including the third train which achieved substantial completion on March 26, with a total annual LNG production capacity of about 15 million tonnes.


CORE gets lucky in Richardson District
Shane Lasley, North of 60 Mining News, April 30, 2021

Contango ORE Inc. April 29 announced it has staked 52,920 acres of state of Alaska mining claims covering a significant portion of the Richardson Mining District. This property, known as Shamrock, lies alongside the Alaska Highway about 70 miles southeast of Fairbanks, Alaska. In addition to excellent access via gravel roads and trails connecting to the paved highway, Shamrock boasts a high-voltage power line that runs along the southern property boundary.

Since the discovery of placer gold on Tenderfoot Creek in 1905, the Richardson District has produced 120,000 ounces of the precious metal. This includes a reported 2,000 oz of lode gold recovered from a 70,000-ton bulk sample collected from the Democratic pit at Richardson in 1988.

The property was most recently explored by Northern Empire Resources Corp. from 2015 to 2017.

Sampling of the wall of the Democratic pit now covered by the Shamrock property confirms the high-grade gold potential. One 32-meter-long channel sample collected from the Democratic pit wall in 2015 returned 5.73 grams per metric ton gold and 29.8 g/t silver, including six meters of 18.33 g/t gold and 48.95 g/t silver.

Another sample collected about 60 meters away returned 2.57 g/t gold and 39.3 g/t silver across six meters.

Northern Empire, however, shifted its exploration focus to the Sterling gold project in Nevada. Coeur Mining Inc., also interested in Sterling, acquired Northern Empire in 2018.

Considering Richardson, the former name of what is now Shamrock, a non-core asset, Coeur allowed its mining claims to lapse in 2020.

Based on historical exploration, Contango ORE determined that there are several well-defined soil anomalies with limited drilling that remain underexplored.

The company says Shamrock is prospective for three types of gold deposits: gold in low angle quartz veins similar to those being mined at Northern Star Resources Ltd.’s Pogo Mine about 50 miles to the northeast; intrusive related gold deposits similar to Kinross Gold Corp.’s Fort Knox Mine about 55 miles to the northwest; and high-level rhyolite intrusive dikes with associated clay and silica alteration which occurs in the Democrat and Banner dikes area of the property.

CORE plans to compile all previously acquired geochemical sampling, drilling and geophysical surveys completed on the Shamrock property and develop an exploration program for the 2021 field season.

In the meantime, an $18 million program aimed at preparing Manh Choh (formerly Peak Gold) for permitting and to support a feasibility study is underway.

Last year, Kinross paid US$93.7 million to buy a 70% interest in Manh Choh from Contango ORE, the company that discovered and expanded the Peak Gold deposits on the property.

According to a new resource estimate calculated under S-K 1300, new mineral resource standards for companies listed in the U.S., the Peak Gold deposits host 9.2 million metric tons of measured and indicated resources averaging 4.08 g/t (1.21 million oz) gold and 14.2 g/t (4.2 million oz) silver; plus 1.34 million metric tons of inferred resource averaging 2.7 g/t (116,000 oz) gold and 16.1 g/t (694,000 oz) silver.

Kinross plans to process ore mined from Manh Choh through the mill at its Fort Knox operation north of Fairbanks, Alaska.

The 2021 program at Manh Choh is focused on in-fill drilling to upgrade resources, as well as water monitoring wells for environmental baseline. Drilling to support further metallurgical test work and pit geotechnical studies, along with ongoing environmental baseline and community outreach work is also being carried out this year.

As a 30% JV partner, CORE is responsible for $5.4 million of the budgeted 2021 program at Manh Choh.


Listen: Will Biden’s review of oil, gas leasing turn into a drilling ban?
Meghan Gordon, S & P Global Platts, May 4, 2021

The US Interior Department has approved more than 500 drilling permits on federal lands and waters since January, despite the Biden administration’s halt to new lease sales. The agency has not said when it might resume leasing, other than canceling any sales through June.

Producer-state senators contend that this pause will turn into a permanent ban. Senator John Hoeven, Republican-North Dakota, made that case on the Capitol Crude podcast May 3. We took a look at how the leasing review is actually impacting US oil production.

Ash Singh, S&P Global Platts manager of supply and production analytics, shares the latest outlook and gives his prediction for how leasing might resume. He also gets into the current economic climate for US drillers and how capital discipline is playing out in the early stages of pandemic recovery.


Australia Backs Three ‘Green’ Hydrogen Projects with More Than A$100 Million
Pipeline and Gas Journal, May 4, 2021

Australia said it had awarded A$103 million ($80 million) to back three ‘green’ hydrogen projects, hiking its planned funding by almost 50% as the government seeks to speed up commercial production of the gas using renewable resources.

All three projects selected by the Australian Renewable Energy Agency (ARENA) plan to use 10 megawatt (MW) electrolysers to split water using renewable energy to produce hydrogen.

The electrolysers, nearly 10 times the size of the largest one in Australia, will be among the biggest in the world.

The three projects ARENA chose were from a shortlist of seven. It originally planned to back two projects with A$70 million but increased the amount offered to A$103 million so it could back three.

ARENA awarded funds to France’s Engie SA to use green hydrogen to make ammonia for export from a plant owned by Norway’s Yara International SA in Western Australia.

The two other winning projects, run by Canada’s ATCO and Australian Gas Infrastructure Group (AGIG), will produce hydrogen to blend with gas in pipelines.

AGIG is owned by units of Hong Kong-based CK Group.

“Not only will these projects allow for new export opportunities, but they will build up domestic demand so we are able to reduce emissions both here at home and overseas,” Energy Minister Angus Taylor said in a statement.

Australia, under Prime Minister Scott Morrison, aims to develop the production and usage of hydrogen to help cut carbon emissions. Morrison has resisted international pressure to reduce Australia’s emission targets under the Paris Agreement, which seeks to curb global warming.

“Our hydrogen industry in Australia is in its infancy, so the lessons learned from these three projects – and the entire funding round – will be important in driving our future hydrogen economy,” ARENA Chief Executive Darren Miller said.