Today’s Key Takeaways: Support for fossil fuels doubles in 2021. Musk calls for more oil and gas – media goes nuts- read his full quote. Canada looking at smaller LNG export projects. Earth Mapping Resources Initiative (Earth MRI) benefits Alaska. Climate activists looking for loopholes in IRA to stop oil and gas leasing mandates.
NEWS OF THE DAY:
Support for fossil fuels almost doubled in 2021, analysis from OECD and IEA shows
World Oil, August 29, 2022
Major economies sharply increased support for the production and consumption of coal, oil, and natural gas, with many countries struggling to balance longstanding pledges to phase out inefficient fossil fuel subsidies with efforts to protect households from surging energy prices, according to analysis released today by the Organisation for Economic Co-operation and Development and the International Energy Agency
New OECD and IEA data show that overall government support for fossil fuels in 51 countries worldwide almost doubled to 697.2 USD billion in 2021, from 362.4 USD billion in 2020, as energy prices rose with the rebound of the global economy. In addition, consumption subsidies are anticipated to rise even further in 2022 due to higher fuel prices and energy use.
“Russia’s war of aggression against Ukraine has caused sharp increases in energy prices and undermined energy security. Significant increases in fossil fuel subsidies encourage wasteful consumption though, while not necessarily reaching low-income households,” OECD Secretary-General Mathias Cormann said. “We need to adopt measures which protect consumers from the extreme impacts of shifting market and geopolitical forces in a way that helps keep us on track to carbon neutrality as well as energy security and affordability.”
The OECD and IEA produce complementary databases that provide estimates of different forms of government support for fossil fuels. The current OECD-IEA combined estimates cover 51 major economies, spanning the OECD, G20 and 33 other major energy producing and consuming economies representing around 85% of the world’s total energy supply.
OECD analysis of budgetary transfers and tax breaks linked to the production and use of coal, oil, gas, and other petroleum products in G20 economies showed total fossil fuel support rose to USD 190 billion in 2021 from USD 147 billion in 2020. Support for producers reached levels not previously seen in OECD tracking efforts, at USD 64 billion in 2021 – up by almost 50% year-on-year, and 17% above 2019 levels. Those subsidies have partly offset producer losses from domestic price controls as global energy prices surged in late 2021. The estimate of consumer support reached USD 115 billion, up from USD 93 billion in 2020.
The IEA produces estimates of fossil fuel subsidies by comparing prices on international markets and prices paid by domestic consumers that are kept artificially low using measures like direct price regulation, pricing formulas, border controls or taxes, and domestic purchase or supply mandates. Covering 42 economies, the IEA finds that consumer support increased to USD 531 billion in 2021, more than triple their 2020 level, driven by the surge in energy prices.
Read more at: www.oecd.org/fossil-fuels/
OIL:
Media goes nuts over Elon Musk calling for more oil and gas, but here’s the full quote
Fred Lambert, elektrek, August 29, 2022
The media is going nuts over Elon Musk calling for more oil and gas at an energy conference in Norway, but the full quote is not being widely reported and brings some important context.
Earlier this year, Elon Musk called to drill for more oil, which raised a few eyebrows, but it was in the context of the Russian invasion of Ukraine and how it sent gas prices skyrocketing:
Hate to say it, but we need to increase oil and gas output immediately. Extraordinary times demand extraordinary measures. Obviously, this would negatively affect Tesla, but sustainable energy solutions simply cannot react instantaneously to make up for Russian oil and gas exports.
At an energy conference in Norway today, Musk brought back the comment in the context of the current energy crisis in Europe.
The Tesla CEO said that he believes the world still needs more oil and gas and the media is running with the headline:
However, many of these articles don’t include the full quote, which makes it clear that Musk hasn’t changed his mind and still believes that renewables, especially solar and wind, are the way to go.
Musk is often a very literal person and sometimes he simply points out the obvious, which is the case with this comment.
The full quote shows that Musk is talking about fossil fuels being needed right now to keep civilization functioning until we can reach sustainability with renewable energy:
I want to thank the leaders and the people of Norway for their long-standing support. I do think we actually need more oil and gas for civilization to function. But simultaneously moving fast to a sustainable energy economy.
Musk still believes that solar and energy storage should dominate the energy market to achieve sustainability, but he does realize that fossil fuels are needed until it can be achieved.
GAS:
Canada sees west coast LNG revival as world scrambles for gas
Nia Williams, Reuters, August 29, 2022
Canada is taking a second crack at developing a liquefied natural gas (LNG) export industry on its west coast a decade after soaring costs and indigenous opposition derailed a previous wave of proposed LNG terminals.
This time, companies are focusing on smaller west coast projects they bet will be cheaper and faster to build.
“Smaller project are easier to manage, especially in Canada,” Enbridge chief executive Al Monaco told Reuters in an interview. “The need for global LNG is clearer now than it was before, we’re getting a second chance and I hope we don’t blow it this time. We’ve got to get on it right away.”
Environmental and regulatory hurdles to pipeline construction have discouraged new LNG terminals on Canada’s Atlantic coast. read more British Columbia’s Pacific coast is close to Canada’s vast Montney shale field and Asian markets, where LNG prices hit a record high last week.
Privately owned Port Edward LNG is raising capital and negotiating off-take agreements with Asian buyers, a Shell-led (SHEL.L) consortium is studying the feasibility of building Phase 2 of the LNG Canada project and last month Enbridge Inc (ENB.TO) outlined a C$1.5 billion investment in Pacific Energy Corp’s Woodfibre LNG project.
MINING:
Earth MRI for Alaska critical minerals
Shane Lasley, North of 60 Mining News, August 25, 2022
Alaska is known to be a trove of the minerals and metals critical to every segment of the American economy. This critical mineral richness is despite the fact that Alaska is a vast state that remains largely underexplored. To help gain a better understanding of the Last Frontier State’s potential to provide domestic supplies of the 50 critical minerals, the U.S. Geological Survey has allotted $6.75 million to explore specific regions of the state for 29 critical minerals.
The new funding includes grants to the Alaska Division of Geological & Geophysical Surveys (DGGS) for geologic mapping and sampling of a portion of the Yukon-Tanana Upland near the Canadian border.
In addition, the USGS funding will support new airborne geophysical surveys in the Kuskokwim River region and on the Seward Peninsula, areas of western Alaska known for their antimony, graphite, rare earth elements, tin, tungsten, and other critical minerals.
These programs are being carried out under the Earth Mapping Resources Initiative, or Earth MRI, a cleverly named partnership between the USGS, Association of American State Geologists, and state geological surveys to better understand America’s geology and mineral resource potential through new mapping, geophysics, and geochemical sampling.
USGS says the new Earth MRI surveys of Alaska are a key step in securing a reliable and sustainable supply of the critical minerals and metals that power everything from smartphones and household appliances to clean energy technologies like electric vehicle batteries and wind turbines.
“All the way back to the days of the Gold Rush, Alaska has been famous for its mineral wealth. These new projects represent the next steps in understanding the mineral potential for commodities that are critical to our national economy and defense,” said USGS Director David Applegate.
Exploring the Yukon-Tanana Upland
While best known for its rich gold endowment, including being home to Kinross Gold Corp.’s Fort Knox Mine near Fairbanks and Northern Star Resources Ltd.’s Pogo Mine near Delta Junction, the Yukon-Tanana Upland is a past producer and future domestic source of many of the minerals and metals considered critical to the U.S.
Antimony, bismuth, platinum group metals, rare earth elements, tin, and tungsten are among the critical metals known to be found in potentially economic quantities across this roughly Maine-sized region of eastern Alaska.
This 100-mile-wide swath of Interior Alaska that extends about 300 miles west from the Yukon border to the town of Tanana at the confluence of the Yukon and Tanana rivers offers up another advantage when it comes to being a domestic source of critical minerals – excellent transportation infrastructure. This includes the Alaska Highway, which transects the Yukon-Tanana Upland from the Canadian border to the city of Fairbanks; a road that extends further west to Tanana; several highways that extend both north and south; and the Alaska Railroad that runs from Fairbanks to the port town of Seward.
This readily available access will make it easier and less expensive to transport metals from future critical mineral mines to market.
With the new Earth MRI funding, DGGS will focus on geologic mapping for critical mineral commodities in an area of the Yukon-Tanana Upland near Alaska’s border with Canada’s Yukon Territory.
The geologic mapping efforts, which are managed through the USGS National Cooperative Geologic Mapping Program, will refine our understanding of the geology underlying areas of interest.
In addition to gaining a better understanding of the critical mineral potential, USGS says these maps will support decisions about land use; provide information on water, energy, and minerals resources; and can help mitigate the impact of geologic hazards on communities.
Western Alaska geophysics
DGGS and USGS are also carrying out airborne magnetic and radiometric surveys of the Kuskokwim River region of Southwest, which has potential for antimony, gold, rare earths, tin, tungsten, and other critical minerals, and an airborne electromagnetic survey over the Seward Peninsula in areas with potential for graphite.
Several critical mineral prospects – including occurrences with antimony, arsenic, bismuth, niobium, rare earths, tin, and tungsten have been identified in the Kuskokwim Mountains.
The Earth MRI magnetic and radiometric geophysical surveys flown over the Kuskokwim region will provide geologists with data on the magnetic levels of natural radioactivity in the rocks, which will help pinpoint areas for further exploration for critical minerals.
The Seward Peninsula survey will primarily be looking for graphite, and for good reasons.
It is forecast that by 2030 the world will need roughly 5 million metric tons of graphite per year for the lithium-ion batteries going into electric vehicles. This compares to only about 1 million metric tons that were mined globally to meet the demands of all industrial sectors during 2021, according to “Mineral Commodity Summaries 2022,” an annual report published by the USGS.
The Graphite Creek project on the Seward Peninsula, which is being advanced toward production by Graphite One Inc., is the largest known deposit of graphite in the U.S.
Airborne electromagnetic surveys, such as those to be flown over the Seward Peninsula as part of Earth MRI, help identify areas that are electrically conductive, such as areas with near-surface graphite.
In addition, USGS says the data compiled from these surveys can also be used to locate geothermal energy resources, groundwater resources, and potential earthquake hazards in the region.
“Data provided through these projects will have many applications and will create a foundation for better understanding of mineral and geothermal resources, earthquake hazard potential, carbon storage capacity and many other geoscience opportunities,” said Applegate.
Part of a larger Alaska strategy
The 2022 Bipartisan Infrastructure Law provided the USGS with an additional US$74 million in funding to Earth MRI for accelerated mapping in areas with potential for hosting critical mineral resources both still in the ground and mine waste. Overall, the Infrastructure Law is providing a $510.7 million investment to USGS to advance scientific innovation and map critical minerals.
Given its known rich mineral endowment, even with being less explored and mapped than other states, Alaska is one of four priority regions in the U.S. being explored under Earth MRI
The critical mineral commodities that are included in the Yukon-Tanana Uplands, Kuskokwim, and Seward Peninsula research projects are:
• Arsenic – used in lumber preservatives, pesticides, and semiconductors
• Antimony – used in flame-proofing compounds, alloys, and rechargeable batteries.
• Bismuth – Stomach remedies, weighting agent, solar power, and atomic research.
• Cobalt – used in rechargeable batteries and superalloys.
• Graphite – used for lubricants, lithium batteries, and fuel cells.
• Indium – mostly used in LCD screens for smartphones, monitors, and televisions.
• Platinum group metals – used for catalytic agents.
• Rare earths – primarily used in magnets, batteries, and electronics.
• Tantalum – used in electronic components, mostly capacitors, and in superalloys.
• Tellurium – used in solar cells, thermoelectric devices, and as a steelmaking alloy.
• Tin – used as protective coatings, alloys for steel, and solder for electronics.
• Tungsten – primarily used to make wear-resistant metals.
In addition to the Yukon-Tanana Uplands, Kuskokwim, and Seward Peninsula, USGS announced updates to two reports representing Earth MRI investigations on Alaska’s potential for 38 of the 50 minerals and metals critical to the U.S.
These reports can be accessed at the links below:
POLITICS:
Climate Activists Plotting To Negate Manchin Oil Lease Mandate
Jennifer Dlouhy, Rigzone, August 28, 2022
Climate activists have developed plans to foil a provision Senator Manchin put into the new climate law that ties renewable energy projects to more oil and gas drilling.
Climate activists have developed plans to foil a provision Senator Joe Manchin wedged into the new climate law that ties renewable energy projects to more oil and gas drilling.
Under the Inflation Reduction Act, new wind and solar leases on federal lands and waters are contingent upon the sale of drilling rights in the same territory within a specific timeframe. Environmentalists initially dubbed it a “climate suicide pact” and warned the requirement would hold green projects hostage to fossil fuel development.
Now, climate activists, and even some proponents of oil exploration, say they there is enough ambiguity in the law that it may still allow the federal government to keep new drilling in check.
“There are lots of things the administration can do to not turn this into a headlong rush into oil and gas development,” said Drew Caputo, vice president of litigation at the environmental advocacy group Earthjustice.
The provision was a concession to Manchin, the Democrat from coal-and-gas rich West Virgina whose support was essential to pass the climate measure in the evenly split Senate. The law dedicates a historic $369 billion to advancing clean energy and fighting global warming but it comes at a cost that some environmentalists find too high to bear — more oil and gas lease sales on federal property.
Interior Department officials are still developing strategies for implementing the leasing requirements embedded in the law President Joe Biden signed last week. “We are committed to implementing the law, including direction regarding the federal oil and gas program,” Interior spokeswoman Melissa Schwartz said by email.
Some options under discussion include speeding up an auction of wind rights along the US West Coast to make sure it occurs in the next three months and delaying the issuance of any purchased leases until new oil-leasing requirements are met, according to two people familiar with the matter who asked not to be named because the deliberations are private.
The new law mandates three sales of offshore oil and gas leases — one this year in Alaska’s Cook Inlet and two next year in the Gulf of Mexico. The Interior Department is also required to reinstate a $192 million auction of Gulf drilling rights held last November that was voided by a federal judge.
Climate activists have developed plans to foil a provision Senator Manchin put into the new climate law that ties renewable energy projects to more oil and gas drilling.
Climate activists have developed plans to foil a provision Senator Joe Manchin wedged into the new climate law that ties renewable energy projects to more oil and gas drilling.
Under the Inflation Reduction Act, new wind and solar leases on federal lands and waters are contingent upon the sale of drilling rights in the same territory within a specific timeframe. Environmentalists initially dubbed it a “climate suicide pact” and warned the requirement would hold green projects hostage to fossil fuel development.
Now, climate activists, and even some proponents of oil exploration, say they there is enough ambiguity in the law that it may still allow the federal government to keep new drilling in check.
“There are lots of things the administration can do to not turn this into a headlong rush into oil and gas development,” said Drew Caputo, vice president of litigation at the environmental advocacy group Earthjustice.
The provision was a concession to Manchin, the Democrat from coal-and-gas rich West Virgina whose support was essential to pass the climate measure in the evenly split Senate. The law dedicates a historic $369 billion to advancing clean energy and fighting global warming but it comes at a cost that some environmentalists find too high to bear — more oil and gas lease sales on federal property.
Interior Department officials are still developing strategies for implementing the leasing requirements embedded in the law President Joe Biden signed last week. “We are committed to implementing the law, including direction regarding the federal oil and gas program,” Interior spokeswoman Melissa Schwartz said by email.
Some options under discussion include speeding up an auction of wind rights along the US West Coast to make sure it occurs in the next three months and delaying the issuance of any purchased leases until new oil-leasing requirements are met, according to two people familiar with the matter who asked not to be named because the deliberations are private.
The new law mandates three sales of offshore oil and gas leases — one this year in Alaska’s Cook Inlet and two next year in the Gulf of Mexico. The Interior Department is also required to reinstate a $192 million auction of Gulf drilling rights held last November that was voided by a federal judge.
To issue onshore renewable rights over the next decade, an oil or gas lease sale will have to have been held in the previous four months. The window stretches to one year for offshore wind projects. The law also lays out minimum acreage requirements.
After studying the law’s more than 700 pages, environmentalists think they have found a catch: It doesn’t require lease sales to result in new barrels of oil, or even leases.
“Nothing in the provision says the lease sales have to be successful,” observed Brett Hartl, government affairs director at the Center for Biological Diversity. That requirement is filled “even if no one bought them,” says Hartl.
Some activists and lawmakers are encouraging the Interior Department to satisfy the mandate by only putting unwanted acreage on the auction block and packing leases with so many onerous stipulations even the most committed oil companies won’t want to buy them.
“There is a way to technically comply with these provisions without changing very much about the amount of oil and gas that gets developed,” said Representative Jared Huffman, a Democrat from California.
Even some oil advocates are nervous.