NEWS OF THE DAY:
Biden administration backs Alaska oil drilling project approved under Trump
Kanishka Singh, Reuters, May 27, 2021
U.S. President Joe Biden’s administration defended on Wednesday a proposed ConocoPhillips oil development in Alaska, backing the drilling project which was approved under the administration of former President Donald Trump.
“A Wednesday filing by the U.S. Department of Justice continues to defend a 2020 Record of Decision for the Willow Project in the National Petroleum Reserve – Alaska (NPR-A)” a spokesman of the U.S. Interior Department said in an email.
In February, an appeals court blocked construction of ConocoPhillips’ $2 billion-plus Willow crude oil project in Alaska. Wednesday’s development comes even as Interior Secretary Deb Haaland had opposed the project last year when she was a member of Congress.
The Trump administration approved the Willow development plan in October. Permits to mine for gravel and build roads were issued on the morning of Jan. 20, just before Biden was sworn in as the nation’s 46th president.
Environmental groups had sued, making the argument that the government failed to take into account the impact that drilling would have on fragile wildlife.
“The filing (on Wednesday) maintains that the decision complied with NEPA (National Environmental Policy Act) standards in place at the time, and that the plaintiffs did not challenge the Record of Decision within the time limitations associated with environmental review for projects in the NPR-A”, according to the statement shared by a Department of Interior spokesman.
The project has been pushed by Alaska Senator Lisa Murkowski, a Republican, who along with another Republican senator, Dan Sullivan, discussed the oil project during a meeting with Biden on Monday, according to Politico.
Murkowski said the engagement with the Biden administration officials since that meeting was “very productive”.
Willow holds 590 million barrels of recoverable oil and could produce up to 160,000 barrels per day as soon as 2024, according to ConocoPhillips’ previous estimates.
OIL:
U.K. explorer makes billion-barrel find along Dalton Hwy.
Elwood Brehmer, Alaska Journal of Commerce, May 26, 2021
The leaders of a small British explorer insist they have struck an oil accumulation measured in the billions of barrels that is also conveniently located alongside the Dalton Highway.
Pantheon Resources intersected two reservoirs near the bottom of its Talitha-A exploration well that, combined, likely hold roughly 1.4 billion barrels of recoverable light oil and more than 12 billion barrels of oil in place, according to Technical Director Bob Rosenthal.
The promising results from the Talitha well drilled and tested last winter transforms the prospect called “Theta West” within the company into an oil project, Rosenthal said.
Pantheon did the drilling approximately 10 miles from what would normally be the best location for a well targeting the Brookian Upper and Lower Basin Floor Fan formations that contain the discovery because the primary target for Talitha-A was a shallower zone known as the Shelf Margin Deltaic that the company was unable to test before spring put an end to the North Slope exploration season.
“We actually drilled this well 1,500 feet down-dip from the crest and we are actually 10 miles down-dip from its location, so this trap is huge,” Rosenthal described in an interview.
“We’ve drilled a huge step-out appraisal well before we drilled the crest location.”
Pantheon merged with Anchorage independent explorer Great Bear Petroleum in early 2019 and the blended operating company Great Bear Pantheon is conducting the fieldwork.
Rosenthal was a founding member of Great Bear, which previously explored the area about 20 miles south of Prudhoe Bay along the Dalton for years, first focusing on shale oil prospects and then shifting its focus to conventional plays after the oil market reset of 2015-16.
Pantheon leaders are particularly confident in their assertions about the first test results from Talitha-A because the company is also working off of data from the nearby Pipeline State-1 well drilled in 1988 by Arco that — combined with modern 3-D seismic data — has helped give them a better sense of what the rocks in the area hold.
In that sense, Talitha-A is not a true wildcat exploration well.
The Basin Floor Fan complex was also identified in data from the Pipeline State well, according to Rosenthal. He said previously that even though the 10,000-foot vertical Pipeline State-1 well has a roughly 2,200-foot oil-bearing column over four reservoirs, with the technology and oil prices of the late 1980s it did not add up to a viable prospect at the time.
Rosenthal said before the initial well tests that Talitha A was similarly expected to have an oil-bearing zone of roughly 2,000 feet in the wellbore of about 10,200 feet but that has since grown to approximately 3,700 feet of oil-bearing rocks, according to a company statement.
CEO Jay Cheatham also said prior to drilling that he thought Theta West could hold up to 500 million barrels of recoverable oil.
“We know where we have oil 10 miles down-dip from the crest (of the trap). We know that there is oil up-dip from there because, of course, oil migrates up,” Cheatham said.
Industry sources who have followed the Great Bear-Pantheon work generally said it is very probable the company hit a significant oil column but the porosity and permeability of the rock formations — and the ability to easily get the oil out of them — will most likely determine the ultimate size and success of the project.
Rosenthal said the company hopes to drill another well into the crest of the Basin Floor Fan trap located northwest of Talitha-A, where the rocks should have better characteristics.
“We expect to have thicker reservoir and because it’s shallower, better reservoir,” he said of the crest location.
Pantheon also still needs to test the Shelf Margin Deltaic that was the primary Talitha target. Cheatham said there are additional plans in the works to drill a second well at the company’s Alkaid prospect just to the north to prove up what Great Bear found when it drilled Alkaid-1 in 2015.
Cheatham acknowledged that the work the company hopes to do next winter is not yet funded; however, Rosenthal noted in a conference call that the early-stage economics of the project, which benefits greatly from its location adjacent to the Haul Road, helped convince investors to fund the Talitha work last year when work was otherwise being curtailed across the Slope due to the pandemic-induced oil market collapse.
At the time, the company was running economic development models with oil in the $40 to $45 per barrel range, according to Rosenthal.
“Oil prices are back up in the $60s,” he said. “COVID is hopefully going to be in our rearview mirror, and we’ve gone out and actually drilled the well and found a world-class resource.”
GAS:
From the Washington Examiner, Daily on Energy:
LNG COMPANY LAUNCHES CARBON CAPTURE PROJECT: Venture Global LNG unveiled plans this morning to install carbon capture equipment at two of its liquified natural gas export facilities, a first-of-its-kind project the company says will capture and store roughly 500,000 tons of carbon per year.
The company, whose projects are based in Louisiana, said its carbon capture project is “shovel-ready” and waiting only on regulatory approvals. Venture Global LNG said it is also planning a similar carbon capture project on another one of its LNG facilities. In total, the two projects would capture around 1 million tons of carbon per year, the company said.
“Through this historic carbon capture and sequestration project, we will build upon our existing state-of-the-art technology to develop even cleaner LNG at our facilities to displace coal around the world,” said Mike Sabel, the company’s CEO. The project also has the backing of Louisiana Gov. John Bel Edwards, a Democrat, who wants his state to take a leadership role in developing and commercializing carbon capture and storage technologies.
MINING:
Aluminum waste to critical minerals asset
Shane Lasley, Metal Tech News, May 26, 2021
Though originally developed to recover rare earths from recycled magnets and potential ore from its Montviel REE deposit in Quebec, Geomega Resources Inc.’s rare earths and critical minerals extraction technology may draw value from and reduce the environmental footprint of bauxite residues piling up at aluminum refineries.
Innord, a subsidiary of Geomega focused on developing solutions to large industrial mine waste challenges with its technology to extract critical minerals, has entered a research agreement with an undisclosed international partner to study the use of its environmentally friendly process to extract rare earths, scandium, and other critical metals from the readily available waste material being generated during refining of alumina using the Bayer process.
Commonly referred to as red mud, a reference to the color and consistency of this waste material, bauxite residues are typically stored in large containment facilities. The large quantities of this ofttimes caustic red mud have led researchers and refiners to seek alternative uses for it.
The process being developed and tested at the bench scale by Innord has the potential to significantly reduce the quantities of this red mud that would need to be stored at aluminum refineries.
“We are thrilled to be working on such an important environmental global challenge,” said Geomega Resources President and CEO Kiril Mugerman. “Aluminum, the most produced non-ferrous metal in the world, is a key material of the 21st century for such major industries as transportation, aviation, construction, and many other sectors. In the environmentally conscious world we now live in, local environmental regulations and social acceptability dictate that now is the time to find a solution to BR (bauxite residue) storage.”
At the same time as reducing the environmental footprint, the Innord process would also transform red mud from a liability to an alternative source of metals critical to modern technological applications.
“There is a tremendous economic potential benefit as well, as every tonne (metric ton) of BR contains between US$80 and US$120 worth of critical and strategic metals that are becoming imperative to recover,” said Muggerman. “We believe that Innord’s technology is well-positioned to offer economic and environmentally innovative solutions to sustainability challenges. We look forward to continue advancing the technology towards larger-scale testing.”
This work will continue to test and validate the process at the bench scale in preparation for potential pilot testing that could provide data for a feasibility study that details the economic and design parameters of the technology.
Innord’s unnamed industrial partner will be contributing material for this testing and expertise on various product stream specifications.
Ownership of the intellectual property developed by Innord through this research work will remain with Geomega. If the testing proves the Innord developed bauxite residue processing technology to be economically and environmentally feasible at the industrial scale, Geomega intends to make it available globally through a licensing and royalty structure.
POLITICS:
6 days into special session, Alaska’s budget progress has been slow with dividend debates still looming
Sean Maguire, KTUU, May 26, 2021
Almost one week into a 30-day special session, the Alaska Legislature’s progress on passing a budget and a Permanent Fund dividend has been slow.
The House of Representatives passed a budget late into the regular session after taking one month to organize. There were also delays waiting for federal guidance on how to spend from the latest COVID-19 relief package. The Senate then raced to pass a budget with a $2,300 dividend last Wednesday in the final hour of the regular legislative session.
Since the special session began last Thursday, only one substantive committee hearing has been held to resolve the differences between the budgets passed by the House and the Senate so a single bill can pass through the Legislature. The meeting on Wednesday afternoon dealt with largely uncontroversial differences between the two bills.
There had been hopes to pass a budget and adjourn before the Memorial Day weekend and then reconvene in August for another special session to tackle the state’s fiscal challenges. That timeline has been thrown out the window.
Nome Democratic Rep. Neal Foster oversees the operating budget in the House and said the Legislature doesn’t have a planned date to adjourn the special session.
“Speaking with the Senate, I think we’ve come to the conclusion that we’re just taking things one day at a time right now,” he said.
Pressure is on to pass an operating budget before layoff notices are sent out to 14,346 state employees ahead of the start of the next fiscal year on July 1. If a budget does not pass by then, Alaska’s state government would shut down for the first time.
Brent Wittmer, a spokesperson for the Alaska Department of Administration, said the goal is to provide 30 days of notice to state workers of a looming shutdown, but the administration must send out layoff notices 10 days before that is set to happen.
“There is significant costs associated with that,” said Sen. Bert Stedman, R-Sitka, on Monday.
He explained that when the Legislature has come close to a shutdown in the past, state employees have rushed to schedule medical appointments and cash in leave, costing the state millions of dollars.
Foster had suggested peeling off the operating budget from a bill that also contains the capital budget and the Senate’s dividend to pass it quickly and avoid that from happening. The plan now is to keep debating them all together to give legislators “maximum flexibility” to decide where funding comes from.
“It is all tied together,” Foster said of the appropriations bills, the dividend and how to spend $500 million in federal COVID-19 relief.
There have been conflicting accounts for the slow progress in the Capitol: From key legislators being away from Juneau for work and other responsibilities, which is typical as sessions drag into the summer, to organizational issues in getting committee work ready and then deadlock over the dividend.
The sharpest policy divide between legislators remains over the PFD. There are those who support a larger dividend than has been paid in recent years and those who are concerned about overdrawing the Permanent Fund by $1.5 billion, as would happen under the Senate’s dividend proposal.
Foster said the House majority coalition has a strong desire to not overdraw the fund. The nonpartisan Legislative Finance Division has previously estimated that for every $1 billion taken out of the fund, the state would lose $50 million in investment earnings each year in perpetuity.
Senate Minority Leader Tom Begich, D-Anchorage, voted for the Senate’s $2,300 dividend, following a new 50-50 formula supported by the governor, but said that was a starting point for a compromise. He suggested a $1,000 PFD could get enough support to pass.
One option is that that dividend could pass now and the August special session could see it increase during broader fiscal debates.
Senate President Peter Micciche, R-Soldotna, also voted for the 50-50 dividend. He said if the House doesn’t bend on the $1,000 dividend figure that could be an option but noted there were dozens of other ideas floating around the Capitol.
CLIMATE CHANGE:
Banks promise to keep cash flowing to fossil companies
Avery Ellfeldt, E & E News, May 27, 2021
Wall Street executives and several Republican lawmakers agreed yesterday that the most powerful U.S. banks should continue to do business with fossil energy companies despite pressure from progressives to do the opposite.
The consensus emerged during a hearing before the Senate Committee on Banking, Housing and Urban Affairs. It underscored the challenge Democrats and environmentalists face in weaving climate risks into financial regulation.
As part of yesterday’s three-hour hearing, lawmakers asked top banking executives if they planned to adopt policies that would curb the flow of cash into fossil energy companies.
“Do you now, or do you plan to have any time soon, a prohibition against financing the development of oil or natural gas?” ranking member Pat Toomey (R-Pa.) asked Jane Fraser, the CEO of Citigroup Inc.
“We don’t plan to have a prohibition against this, no,” Fraser responded. Instead, Fraser said the bank intends to help its “clients in the transition to the cleaner carbon technologies.”
The chief executive officers of the other five megabanks — Bank of America Corp., Goldman Sachs Group Inc., Morgan Stanley, JPMorgan Chase & Co., and Wells Fargo & Co. — echoed Fraser’s point when asked similar questions by lawmakers including Sens. Chris Van Hollen (D-Md.) and Steve Daines (R-Mont.).
Bank of America’s Brian Moynihan, for instance, said his firm is “standing ready” to help its clients through the transition to a low-carbon economy, and that it’s already working with companies in the oil and gas sectors to do so.
JPMorgan’s Jamie Dimon, meanwhile, argued that “we’re going to need oil and gas for a long time.” He said the financial sector needs to focus on facilitating the clean energy transition in a way that achieves emissions reductions while also protecting the economy.
Rather than starve the coal, oil, and gas sectors for cash, he said, the financial sector needs to focus on facilitating the clean energy transition, working with major emitters and protecting the economy.
“I just beg you, let’s have a rational conversation — mature and thoughtful — how to go about it,” Dimon said.
Sen. Kevin Cramer (R-N.D.) struck a similar tone. He decried the notion of fossil fuel divestment and touted the importance of protecting U.S. economic stability and access to affordable energy.
“Investing in the fossil energy sector in the United States of America is the single best way to lower carbon emissions globally, while working with these innovators in those industries to reduce it,” Cramer said.
The bankers’ and GOP lawmakers’ approach to the issue marks a major departure from that of Democrats and climate advocates, who in recent years have called on the financial sector to address its contributions and vulnerabilities to global warming. To some, that includes stopping “the money pipeline” between Wall Street banks and the principal drivers of climate change.
To be sure, the lending giants and other Wall Street firms have moved in a greener direction. All six big banks, for instance, have pledged to align their financing activities with the goals of the Paris Agreement, achieve net-zero emissions by 2050 or both.
But they have stopped short of saying they would fulfill those promises by divesting from carbon-intensive companies.
“This is always the crux of this conversation,” said Jordan Giaconia, of the Sierra Club. “A lot of these megabanks were more than willing to tout their green investments … but they failed to act on the other half of that equation, which is cutting ties with fossil energy companies.”
Even so, the banks’ climate commitments have sparked opposition from Republicans, who have accused them of succumbing to political pressure to de-bank entirely legal, yet politically controversial, companies.
Sen. Richard Shelby (R-Ala.) aired those concerns yesterday. He said financial firms have begun to restrict credit and financing services to energy companies and gun manufacturers, which he said could result in “higher costs for consumers and slower economic growth.”
Democrats, for their part, weren’t as forceful. But several did press the banks for more details on their climate ambitions.
Sen. Tina Smith (D-Minn.) asked the executives if they thought the Securities and Exchange Commission should require public companies to report their climate risks. Publicizing climate-related risks isn’t about “being woke,” she added, but instead about providing investors with critical climate-related information and promoting overall economic stability.
The head bankers of Goldman Sachs, Citi and JPMorgan said they were open to the idea and that having more consistent climate-related information would be beneficial.
In a separate hearing yesterday, SEC Chair Gary Gensler said the agency was working to address investors’ growing appetite for climate-related information. But he did not provide a concrete timeline for a potential rulemaking process in his testimony before the House Financial Services and General Government Appropriations Subcommittee