TODAY’S KEY TAKEAWAYS: Detail on Manchin’s permitting reform released today. Alaska’s Congressional delegation asks BLM to approve Willow by year’s end. U.S. gas market rollercoaster ride not over yet. Rick Van Nieuwenhuyse launches Valhalla Metals, Inc. in Alaska. 5 million in UK go without food to pay energy bills.
NEWS OF THE DAY:
U.S. Senator Manchin to unveil energy permitting measure on Wednesday
Reuters, September 20, 2022
U.S. Senator Joe Manchin will unveil his full energy permitting bill on Wednesday to speed fossil fuel projects and offer incentives for renewable energy electricity transmission, legislation that faces an uphill battle.
“The text will be out tomorrow,” Manchin, a Democrat from West Virginia, told a press conference on Tuesday, noting it will give senators plenty of time to review the legislation he wants to attach to a temporary federal funding bill to prevent government shutdowns before the start of the new fiscal year on Oct. 1.
Manchin, an important swing vote in the 50-50 Senate, reached a side deal with Senate Majority Leader Chuck Schumer during talks for the wider Inflation Reduction Act for his permitting measure to be voted on this fall.
A short version of the measure has been out for months and included speeding the permitting of Equitrans Midstream Corp’s (ETRN.N) long-delayed $6.6 billion West Virginia-to-Virginia natural gas Mountain Valley Pipeline.
The measure’s support for fossil fuel projects has spurred 77 Democrats in the U.S. House and two in the Senate, including Senator Bernie Sanders, an independent who caucuses with Democrats, to already oppose the measure. Some Republicans also say they oppose it.
“I’ve never seen stranger bedfellows than Bernie Sanders and the extreme liberal left siding up with Republican leadership” and its rank-and-file senators, Manchin said.
When asked whether he was willing to shut down the government if he does not win the vote, Manchin said, “I’m not shutting the government down, I’m voting for it.”
Senator Brian Schatz, a Democrat from Hawaii, said at a Washington Post event on Tuesday he did not know whether the measure will pass this month given the opposition from some Republicans who hope their party can retake the Senate in the Nov. 8 midterm elections.
But Schatz said the bill has a chance if it offers incentives for renewable energy including transmission lines. “Democrats in the Senate by and large are for this because they understand the need to make it easier to build these projects,” said Schatz.
OIL:
Murkowski, Sullivan, Peltola Urge BLM to Re-Approve Willow Project By Year’s End
Delegation Highlights Project’s High Environmental Standards, Benefits to U.S. Energy Security
U.S. Senators Lisa Murkowski and Dan Sullivan (both R-Alaska), and Representative Mary Sattler Peltola (D-Alaska), today sent a letter to Secretary of the Interior Deb Haaland urging the Bureau of Land Management (BLM) to complete the permitting process for the Willow Project in the National Petroleum Reserve in Alaska (NPR-A) by the end of the year, in time for the winter construction season. In their letter, the Alaska congressional delegation noted that the project has been developed under the strictest environmental standards in the world and is strongly supported by Alaska Native leaders, labor leaders, the State of Alaska, legislators from both parties, and President Joe Biden.
“The expeditious approval of this crucial project would greatly benefit Alaska, our nation, and the world, while demonstrating the Administration’s commitment to addressing inflation, high energy costs, the need for greater energy security, and environmental justice initiatives,” the delegation wrote. “After years of study and review, both the Administration and Alaskans can feel confident that the Project will abide by the strictest environmental considerations in the world, while being constructed and operated by a company with an impressive record of safe and responsible development on the North Slope.
“We believe the final SEIS should identify the preferred alternative; appropriately weight the purpose of energy production in the NPR-A; and recognize the public interest in supporting energy security and responsible resource development. The permitting process must be completed by the end of 2022 at very latest so the project’s proponent can make a final investment decision and hire Alaskans in time for the winter construction season. That decision will not be possible, and none of those jobs will be created, in the absence of a clean and timely Record of Decision (ROD).”
Click here to read the full letter.
GAS:
USA Gas Market Rollercoaster Ride Far from Over
Andreas Exarheas, Rigzone, September 21, 2022
It’s an understatement to say that U.S. gas markets have had a whirlwind year, but the rollercoaster ride is far from over as winter beckons.
That’s what Rystad Energy Analyst Ade Allen said in a market note sent to Rigzone on Tuesday, adding that high gas prices are expected to stick around for a while.
“Market participants have been forced to adapt their strategies in response to rising demand, geopolitical complications and supply bottlenecks,” Allen stated in the note.
“The importance of U.S. LNG exports to Europe is increasing further as one of the only immediate solutions to the gas shortage currently gripping Europe. However, the first half of the year presented some significant headwinds as dry gas supply failed to meet expectations,” Allen added.
“Supply chain bottlenecks and capital-disciplined operators have served as the primary inhibitors of significant supply growth, but an uptick in dry gas supply is emerging,” Allen continued.
Even increased production is unlikely to temper prices though as drillers struggle to keep up with soaring domestic and international demand, Allen highlighted.
“Further, storage levels are far below the five-year average and have shown little sign of making up ground despite winter on the horizon,” Allen said in the note.
“Market participants are trying to decide if the gains are a result of short-term responsiveness to price or whether the growth is structural due to increased spending in the second half of the year. Our analysis points to the latter as we expect medium-term growth of 8.25 percent over the next two years,” Allen added.
The Rystad analyst also outlined in the note that a “sweltering” summer pushed power burns to previously unseen levels and highlighted that the Freeport LNG explosion “immediately changed the market dynamics by reducing overall demand by two billion cubic feet per day”.
“Henry Hub prices on the precipice of $10/MMBtu were short-lived and cratered immediately,” Allen said.
“However, as record temperatures lingered, the narrative implied that record gas-for-power generation could create some buoyancy for the overall demand picture,” Allen added.
In the note, Allen warned that the specter of winter is looming over the market and added that the large disparity of pricing outcomes is becoming more divergent.
“High gas prices are expected to stick around for a while, with the threat of a late-season tropical storm or hurricane and the risk of a severe winter potentially triggering an even higher price situation,” Allen said.
“We also anticipate September power burns to remain strong compared to the same month last year. Domestic gas balances are setting Henry Hub prices for increased volatility heading into winter as the market struggles to find equilibrium between upside and downside catalysts as end of season draws near,” Allen added.
At the time of writing, the price of Henry Hub gas is trading at $7.90. The commodity’s highest 2022 close, so far, was seen on August 22 at $9.68. Its lowest 2022 close, so far, was seen on January 4 at $3.71. From June to September, the Henry Hub price has bounced up and down, dropping as low as $5.51 in July before seeing its highest close of the year in August.
MINING:
Van Nieuwenhuyse: “Welcome to Valhalla!”
Shane Lasley, North of 60 Mining News, September 20, 2022
Rick Van Nieuwenhuyse, a longtime Alaskan geologist renowned for founding and serving as the top executive of both Novagold Resources Inc. and Trilogy Metals Inc., has launched yet another publicly traded company focused on exploring Alaska’s incredible mineral potential – Valhalla Metals Inc.
Originally formed as a private company in 2018, Valhalla picked up two high-grade volcanogenic massive sulfide projects at either end of Alaska’s famed Ambler Mining District that are enriched with copper, zinc, silver, and gold.
Through the reverse takeover of SolidusGold Inc., Valhalla has listed on the TSX Venture Exchange and raised C$10.2 million to fund the exploration of these Alaska VMS properties.
“In a time when the United States is working to secure domestic sources of critical minerals, we are happy that we could successfully complete the transaction to acquire two high-grade copper-zinc and precious metal rich massive sulfide projects, in northwestern Alaska – Sun and Smucker,” said Van Nieuwenhuyse, chairman of Valhalla Metals. “We successfully raised significant funds, which in today’s markets is a testament to the experience and expertise of the Valhalla management and board.”
This team includes former SolidusGold President and CEO Sorin Posescu, a geologist that worked on Novagold’s Donlin Creek and Galore Creek projects over the course of a more than 25-year career, and who now serves as CEO of Valhalla; and Joe Piekenbrock, an award-winning Alaska geologist that served as vice president of exploration for both Novagold and Trilogy, who sits on the Valhalla board.
Valhalla’s Sun rises
Sun, which lies alongside the proposed Ambler Road that will provide access to a future mine at the Arctic VMS deposit on Ambler Metals’ Upper Kobuk Mineral Projects to the west, is the most advanced of the two initial projects in Valhalla’s portfolio.
According to a 2018 calculation, the Sun deposit hosts 1.71 million metric tons of indicated resource averaging 4.32% (163 million pounds) zinc, 1.48% (55.8 million lb) copper, 1.11% (42 million lb) lead, 60 grams per metric ton (3.3 million oz) silver, and 0.21 g/t (12,000 oz) gold; plus 9.02 million metric tons of inferred resource averaging 4.18% (831.3 million lb) zinc, 1.21% (239.6 million lb) copper, 1.46% (290.3 million lb) lead, 81.7 g/t (22.7 million oz) silver, and 0.25 g/t (73,000 oz) gold.
With 10.7 million metric tons of resource averaging roughly 11% zinc-equivalent – calculating the value of all the metals in both resource categories – Sun is already considered a major deposit in terms and size and grade.
And there is geophysical evidence that the deposit detailed at the surface represents only a fraction of a larger VMS system.
“The historic work completed at Sun to date represents a good start with established resources, but we believe we can greatly expand and advance the Sun deposit by drilling down-dip and along strike,” said Van Nieuwenhuyse. “A detailed VTEM conductor plate model of the area shows several other newly identified high-quality targets leaving plenty of work to be done.”
Because they tend to get bent, broken, folded, and moved around by plate tectonics, the three- to 10-meter-thick lenses of VMS mineralization at deposits like Sun are not always easy to find.
Even large VMS deposits such as Sun are not readily noticeable on the surface.
The rich concentrations of metals, however, make these deposits highly conductive, and geophysics is a great way to trace them below the surface.
VTEM (versatile time domain electromagnetic) and ZTEM (z-axis tipper electromagnetic) geophysical surveys flown during 2019 lit up an area dipping southeast from the Sun deposit that could expand the resource by several times.
To provide some sense of the size potential of this target, drills have only traced the currently defined Sun deposit to a depth of 200 meters; the much wider and stronger geophysical target extends 900 meters further down-dip of the resource.
If this conductive target turns out to be a continuation of the zinc-rich VMS mineralization outlined so far, Sun has the potential to rival Ambler Metals’ Arctic deposit in terms of size.
Valhalla’s Smucker project, which lies about 15 miles northwest of the proposed Arctic Mine, is another promising VMS target with exploration upside.
First discovered by Anaconda in 1975, Smucker hosts more than eight million metric tons of historical resource averaging 0.8% copper, 6.8% zinc, 2.3% lead, and 200 g/t silver.
Valhalla, which staked state mining claims over the Smucker project in 2017, said the extensions of the mineralized horizon remain largely untested and open at depth and laterally.
POLITICS:
More Than 5 Million People In UK Go Without Food To Pay Energy Bills
Tsvetana Paraskova, OilPrice.Com, September 21, 2022
Millions of Britons have faced impossible choices in recent months as the cost-of-living crisis has worsened, with 5.6 million people, or 11%, having gone without food because of the rising cost of living as energy and food prices soar, the Money Advice Trust charity said in a new report on Wednesday.
As of August 2022, a fifth of UK adults, or 21%, were behind on one or more household bill, the report found. That’s up from 15% in March 2022. Unsurprisingly, energy was the most common bill for people to be behind on, with 1 in 9, or 11%, currently in energy arrears.
And 1 in 9 adults in the UK say that their energy supplier had increased their monthly payments to a level they could not afford.
As of August, a total of 10.9 million people is behind on household bills, which is an increase of 3 million people since March 2022, Money Advice Trust said.
“My energy costs are huge now so I’m in debt for the first time. I can’t afford school uniform for my kids. I can’t afford to care for my disabled child adequately,” one respondent in the survey said.
Moreover, 5.9 million people, or 11%, said they had gone without heating, electricity, or water in the past three months as a result of the rising cost of living, the report showed.
The UK’s new Prime Minister Liz Truss has a $147 billion (£130 billion) plan to freeze household energy bills at their current levels. As the energy and cost-of-living crisis in the UK deepens, the Truss government is looking to avoid an 80% planned surge in the so-called price cap on household energy bills set to kick in in October. Truss is looking to freeze the annual household bill for gas and electricity at the current level of $2,235 (£1,971) or below.