Today’s Key Takeaways: Russian and Chinese warplanes intercepted on AK coast. Oil market rollercoaster. The case for foreign investment in U.S. LNG. $10m to advance the Pebble project. Ranked choice voting repeal survives legal challenges in AK.
NEWS OF THE DAY:
U.S. Intercepts Russian and Chinese Bombers on First Joint Mission Off Alaska
Michael Gordon, Nancy Youssef, The Wall Street Journal, July 25, 2024(subscription)
Flights reflect growing military and security cooperation between Moscow and Beijing
Russian and Chinese warplanes were intercepted off the coast of Alaska by U.S. and Canadian fighters Wednesday, marking the first time strategic bombers from the two U.S. adversaries have operated together near North America, a U.S. official said.
Two Russian TU-95 Bear and two Chinese H-6 bombers flew into the Alaska Air Defense Identification Zone, a buffer zone in international airspace, the North American Aerospace Defense Command said. The flights, which came as close as 200 miles off the Alaskan coast, were the most recent sign of growing military and security cooperation between Moscow and Beijing.
“It’s the first time that we’ve seen these two countries fly together like that [but] they didn’t enter our airspace,” Defense Secretary Lloyd Austin told reporters at a press conference Thursday.
The Russian and Chinese bombers all took off from a Russian air base, a development first reported by Air & Space Forces Magazine and confirmed by a second U.S. official.
Norad, a joint U.S. and Canadian command that protects against air threats to North America, said the Russian and Chinese planes didn’t enter U.S. or Canadian airspace and weren’t seen as a military threat.
The U.S. closely monitored and intercepted the aircraft, Austin said.
The Russian and Chinese planes were intercepted by U.S. F-16s and F-35s as well as Canadian CF-18s. “Norad will continue to monitor competitor activity near North America and meet presence with presence,” the command said.
The Pentagon chief said he is concerned about the evolving relationship between the two countries because Beijing is “providing support to Russia’s illegal and unnecessary war in Ukraine.”
In August last year, a combined Russian and Chinese naval force patrolled near the coast of Alaska in what experts said was the largest such flotilla to approach American shores.
Eleven Russian and Chinese ships steamed close to the Aleutian Islands. The ships, which were shadowed by U.S. destroyers and P-8 Poseidon aircraft, never entered U.S. territorial waters.
OIL:
A Volatile Week for Oil Prices
Editorial Department, OilPrice.Com, July 26, 2024
Oil Market Rollercoaster: A Week of Twists and Turns
The crude oil market experienced a turbulent week, with prices oscillating as traders weighed economic data, global events, and supply-demand shifts. The week began cautiously, saw a mid-week upturn, and then faced renewed pressure as various factors came into play. Despite the volatility, a key development emerged: traders demonstrated respect for technical support levels, particularly as positive U.S. economic news surfaced. This interplay of technical and fundamental factors allowed light crude oil to recoup most of its weekly losses, highlighting the market’s resilience and the importance of key price levels in shaping trading decisions.
U.S. Inventory Surprise: A Glimmer of Hope
The most positive factor of the week came from U.S. inventory data. The Energy Information Administration (EIA) reported a big decrease in crude and fuel stocks. Crude inventories fell by 3.7 million barrels, more than experts expected. Gasoline and distillate stockpiles also dropped significantly. This data showed strong U.S. oil demand, which usually pushes prices up. However, the market didn’t react much to this good news, showing that other factors were affecting traders’ decisions.
The China Conundrum: Demand Worries Persist
Ongoing concerns about weak oil demand from China, the world’s largest crude importer, continued to affect the market. China’s oil imports and refinery activity have been lower in 2024…
GAS:
Why US LNG Is Attracting Foreign Investment
Ruth Liao, Bloomberg, July 26, 2024
Woodside’s acquisition of Tellurian highlights the appeal of exporting American natural gas.
Australia’s Woodside Energy Group Ltd. made a bold leap into US liquefied natural gas with its agreement to acquire Tellurian Inc. for $900 million in cash.
Tellurian owns Driftwood, a proposed multibillion-dollar LNG export terminal in Louisiana. The takeover could make Woodside the second foreign entity to control such a facility after QatarEnergy, which holds a majority stake in the Golden Pass project.
Japanese electricity generator Jera Co. and French energy giant TotalEnergies SE hold minority stakes in other US sites.
The trend toward foreign investments is likely to continue as Woodside looks for partners to help it bear the cost of Driftwood. Saudi Aramco could be among those it courts as the petrostate looks to expand internationally.
Abu Dhabi’s state oil company and Woodside’s existing Japanese LNG buyers also may be contenders, said Saul Kavonic, an analyst at MST Financial Services Pty.
The primary attractions of US LNG are the flexibility to ship to either Asia or Europe, and its cheapness compared with prices in those regions. Despite the market volatility, the arbitrage opportunities can make a huge investment in American export capacity worthwhile.
MINING:
Pebble gets $10M second royalty payment
A.J. Roan, North of 60 Mining News, July 26, 2024
Northern Dynasty receives final installment of second $12M tranche, supporting advancement of the Pebble project amidst legal challenges.
Northern Dynasty Minerals Ltd. July 25 announced the receipt of a remaining $10 million payment, completing the second tranche of a $60 million royalty agreement to support the advancement of the Pebble project in Southwest Alaska.
Toward the end of July 2022, Northern Dynasty was pleasantly surprised by a $60 million investment from an unnamed royalty investor.
Under the terms of the agreement, this investment was structured in five tranches, beginning with an initial $12 million payment that granted the investor rights to 2% of the payable gold and 6% of the payable silver, contingent on the mine reaching production status.
This royalty is calculated after accounting for a notional payment from the investor of $1,500 per ounce of gold and $10 per oz of silver, respectively, for the life of the mine.
The second $12 million tranche, completed in six equal installments of $2 million each, increased the royalty holder’s entitlement by approximately 0.33% of the payable gold and 1% of the payable silver per installment.
With the final installment received, the investor’s rights now total 4% of the payable gold and 12% of the payable silver from Pebble.
The Pebble Mine advanced to the final step of the permitting process, would produce 320 million pounds of copper; 363,000 oz of gold; 15 million lb of molybdenum; 1.8 million oz of silver; and 26,000 lb of rhenium annually over the first 20 years of mining.
Given that a recent preliminary economic assessment indicates the Pebble deposit can support a mine of this scale for nearly a century, the potential royalties could be substantial.
“We are pleased that the investor has completed the second of five $12 million tranches,” said Northern Dynasty President and CEO Ron Thiessen. “As a result, the expiration date has been extended for one year, by which time we could receive the additional $36 million investment from the remaining three tranches contemplated in the original royalty agreement.”
Securing this crucial financing will certainly enable the company to continue navigating the significant legal and regulatory challenges it is currently facing.
POLITICS:
Ranked choice voting repeal effort survived legal challenges, qualifies for the ballot in November
Claire Stremple, Alaska Beacon, July 25, 2024
Alaska voters are slated to have an opportunity this year to affirm or repeal the state’s use of ranked choice voting, Division of Elections officials confirmed on Wednesday.
The news comes after Superior Court Judge Christina Rankin disqualified some of the signatures gathered by a repeal effort on Friday because the gathering process was not carried out in accordance with state law.
Whether there would be enough total signatures was not in question, but rather whether there would be enough to meet the requirement for a certain number of signatures from at least 30 of 40 state House districts.
Officials with the state’s Division of Elections confirmed the repeal effort gathered enough signatures in the requisite number of districts and filed their findings with the court.
Former Alaska Attorney General Kevin Clarkson represented repeal supporters in the case and predicted the outcome would be favorable for the repeal initiative last Friday.
Attorney Scott Kendall wrote the 2020 ballot measure that led to the use of ranked choice voting and represented the plaintiffs in court. He said he expects to file an appeal with the state’s Supreme Court this week.