Today’s Key Takeaways: BLM position on Willow – “cannot meaningfully limit ConocoPhillips activities on its leases…” BP ups investment in oil and gas. AK Mine production 4.51B in 2022. Fossil fuel priorities in House Energy and Commerce bill.
NEWS OF THE DAY:
WHAT’S AT STAKE WITH WILLOW: President Joe Biden and his Interior Department face what’s perhaps the most consequential environmental and political decision of his presidency in deciding the fate of ConocoPhillips’s Willow project in Alaska.
Interior just finalized its supplemental environmental analysis for the project, and the Bureau of Land Management will be taking comment on it for the next month from political players and interest groups from which it there have been two prevailing sentiments:
- The project should have been permitted yesterday
- Biden’s legacy on climate change is on the line.
Read on for what’s at stake and where things are headed…
COTINUING WITH THE WILLOW PROJECT: ConocoPhillips has had the mineral rights to the areas covered by the Willow project for more than two decades and began the process to develop them in 2018.
Willow’s master development plan seeks to develop five drill sites in the National Petroleum Reserve in Alaska, as well as supporting road and bridge infrastructure, to support the ultimate production of 180,000 barrels of oil per day over the course of three decades. ConocoPhillips estimates the project as pitched would produce up to some 629 million total barrels of oil over 30 years.
A 2020 record of decision, which the U.S. District Court of Alaska threw out less than a year later at the request of environmental plaintiffs, conditionally approved the five drill sites.
What Interior prefers: The department’s environmental impact statement identified an alternative that provides for three drill sites vs. the proposed five.
The BLM’s analysis estimated that the proposed project would produce some 283,956 metric tons of carbon dioxide, while its preferred alternative would generate 277,582 metric tons. Interior said it has “substantial concerns” about the project and the preferred alternative.
A lot is riding on the project politically. Republican lawmakers and Democratic power player Joe Manchin have made a lot of Biden’s trip to Saudi Arabia last year and the easing of sanctions on Venezuela in pushing for policies that are more favorable to U.S. oil and gas production, including production on federal lands.
House Republicans came out swinging in the new Congress against Biden’s energy policies, which they will take up in one form or another in at least four separate hearings this week. If he decides to run for reelection, Biden will doubtless have to deal with attacks against his administration of the leasing program.
The administration could in the same breath find plenty of justifications to block the project. Biden wants to cut U.S. greenhouse gas emissions by at least half in 2030. Moreover, the International Energy Agency’s net-zero-by-2050 target, one Biden shares, provides for no approvals of new oil and gas fields beyond 2021.
Promises made, promises kept…to a point: Biden pledged to restrict drilling and leasing on public lands during his campaign, and the Interior Department followed through via Biden’s oil and gas leasing moratorium until it was rebuffed in court and subsequently given new leasing directives from Congress in the Inflation Reduction Act.
The Biden administration has been leasing new acreage while simultaneously adding some new restrictions, including by shrinking the amount of acreage available for leasing in the NPR-A.
On Willow, the administration has also shown some measure of ambivalence (if it can be called that). Interior was pretty clear last week that it isn’t especially comfortable with the project, although it defended and sought to uphold the Trump-era record of decision approving the project.
The bureau has not been slow to reject Trump-era authorizations in other areas.
BLM has adopted an “apparent position that it cannot meaningfully limit ConocoPhillips’ activities on its leases and cannot select the no action alternative has no basis in the law,” Earthjustice wrote in comments to the bureau’s draft EIS, saying Willow’s approval would transgress Biden’s promise to combat climate change.
Supporters of the project maintain that it’s on firm legal ground and is exactly the kind of thing Congress sought when it created the NPR-A.
“It’s not a matter of whether or not you think it should happen. It’s a legal right to develop. They have a right to develop their lease,” a former BLM career official who now works for a member of Congress told Jeremy, downplaying the legal case that the administration has authority to unilaterally block the project.
“This isn’t an [environmental NGO’s] project. The BLM has a responsibility when an application comes in to develop to respond. It’s a legal obligation,” the person said.
OIL & GAS:
BP to up investment into oil and gas as profits double
Paul Godfrey, UPI, February 7, 2023
British oil giant BP has switched tracks on its carbon emissions strategy, announcing plans Thursday that it will now invest $8 billion into new oil and gas production over the next seven years — the same as it will spend on bioenergy, EV charging and hydrogen and renewable power.
The move is part of a plan to boost the group’s before-tax earnings to as much as $56 billion in 2030 and comes as BP posted a $27.7 billion net profit for 2022, more than double its 2021 profit.
The target is now to lower its emissions by 20% to 30% by the end of this decade, a big drop from the 35% to 40% the company announced when it unveiled its net-zero by 2050 goal three years ago, the first of the global oil giants to do so.
MINING:
Alaska mine production tops $4.5 billion
Shane Lasley, North of 60 Mining News, February 6, 2023
More gold, strong zinc prices helped push value higher; critical minerals could add a boost moving forward.
Alaska mines produced approximately $4.51 billion worth of nonfuel minerals last year, a 16% increase over the $3.89 billion in 2021, and an impressive 42.7% jump over the $3.16 billion of mined products during 2020, according to the U.S. Geological Survey’s Mineral Commodity Summaries 2023 report.
The rise in Alaska mine production value is largely due to increased zinc and gold production, along with strong zinc prices during 2022.
According to early estimates by the Alaska Division of Geological & Geophysical Surveys, Alaska mines produced roughly 1.33 billion pounds of zinc, 215 million lb of lead, 690,000 ounces of gold, and 15.8 million oz silver during 2022. This is about a 6% increase for zinc, a 15% drop for lead, a 10% rise for gold, and a 4% increase for silver when compared to 2021.
The single largest boost to Alaska mine production values for 2022, however, came from the approximately $1.57/lb average selling price for the zinc being shipped from Teck Resources Ltd.’s Red Dog Mine in Northwest Alaska and Hecla Mining Company’s Greens Creek Mine on the state’s Southeast Panhandle.
As a result, zinc accounted for roughly $2.1 billion of Alaska’s mineral production value last year. Gold accounted for another $1.2 billion, and silver $343 million. The balance of Alaska’s 2022 nonfuel mineral value came from lead byproducts at Red Dog and Greens Creek, as well as sand and gravel products.
Because the USGS only tracks nonfuel minerals, the nearly 1 million metric tons of coal produced each year at Usibelli Coal Mine Inc.’s operations near Healy and shipped to Interior Alaska heat and power plants last year was not calculated into the 2022 Alaska mine production totals.
With gold production expected to rise at both Kinross Gold Corp.’s Fort Knox and Northern Star Resources Ltd.’s Pogo mines in Interior Alaska, coupled with expected strong zinc prices due to global inventories held in London Metals Exchange and Chinese warehouses at historic lows, the production value from Alaska mines is expected to continue to climb in 2023.
POLITICS:
Energy and Commerce takes up first package of energy bills
Nico Portuondo, E & E Daily, February 6, 2023
The committee will consider 17 bills this week on a range of Republican priorities on fossil fuel production, lowering regulatory boundaries and decreasing critical mineral reliance.
House Energy and Commerce Committee Republicans will kick-start their long-planned legislative agenda this week with a hearing on legislation and resolutions meant to “unleash American energy.”
The measures to be considered, 17 in total, run the gamut of Republican priorities on increasing fossil fuel production, lowering regulatory boundaries and decreasing critical mineral reliance on foreign adversaries.
“We look forward to our first legislative hearing this Congress to discuss how to lower costs, strengthen our supply chains, reduce emissions, and restore American energy dominance,” said House Energy and Commerce Chair Cathy McMorris Rodgers (R-Wash.); Energy, Climate and Grid Security Subcommittee Chair Jeff Duncan (R-S.C.); and Environment, Manufacturing and Critical Materials Subcommittee Chair Bill Johnson (R-Ohio).
A Republican aide said the proposals were a starting point for the committee’s work. The aide said the large number of draft bills reflects the desire to foster discussion in the early stages of legislation as a return to “regular order,” a priority of House Speaker Kevin McCarthy (R-Calif.).
‘Critical resources’
A handful of bills on the docket are aimed at loosening regulations on and encouraging production of minerals by creating new waivers for “critical energy resources”
The objective is to give the executive branch greater autonomy to waive potentially burdensome regulations included in laws like the Clean Air Act or the Toxic Substances Control Act for resources the secretary of Energy deems critical.
Proponents say the proposals match frameworks for existing authorities that make sure fuels important to transportation and shipping are available during emergencies.
“These would basically use that same framework, and update them for a world in which we rely on a lot of different critical materials for our energy sector besides just oil and gas, and electricity,” said a separate Energy and Commerce GOP aide.
The measures up for debate include:
- A bill to amend laws governing the Department of Energy to label certain energy resources as critical, including minerals and other materials.
- A bill to authorize EPA to waive certain fees and regulations with respect to processing or refining of critical energy resources at a “critical energy resource facility.”
- A bill to amend the Solid Waste Disposal Act to expedite permitting for critical energy resource facilities that treat, store or dispose of hazardous waste.
- A bill to amend the Toxic Substances Control Act with respect to critical energy resources.
- A bill to require EPA to authorize the use of flexible air permitting with respect to certain critical energy resource facilities.
Fossil fuel priorities
Other measures on the hearing agenda highlight long-held Republican policy positions and messaging strategies around fossil fuels. Those measures have very little chance of winning Democratic support.
One resolution would simply express that Congress disapproves of President Joe Biden’s decision to revoke permits for the Keystone XL pipeline in 2021.
H.R. 150, from Duncan, would say states should have primacy in implementing regulations on hydraulic fracking, and would ban the president from imposing a moratorium on fracking without approval from Congress.
Rep. August Pfluger (R-Texas) is partaking in Republican momentum repeal sections of the Inflation Reduction Act by championing H.R. 484, which would strike an Inflation Reduction Act methane emission and waste incentive program.
“I am proud to stand up for the Permian Basin by introducing legislation to strike the President’s new harmful natural gas tax that will drive up the cost of household energy bills and make inflation even worse,” Pfluger said in a statement.
Other bills include:
- H.R. 647, the “Unlocking our Domestic LNG Potential Act of 2023,” would streamline approval processes for new liquefied natural gas export facilities.
- The “Promoting Cross-border Energy Infrastructure Act,” to accelerate the construction and operation of international border-crossing facilities for the import and export of oil, natural gas and electricity.
- A bill from Rep. Michael Burgess (R-Texas) to specify timelines and procedures for the Federal Energy Regulatory Commission and other agencies to follow in conducting gas pipeline environmental reviews.
- A bill to require the secretary of Energy to issue a report on petrochemical refineries in the United States.
- Legislation that would prohibit the Clean Air Act from including provisions to phase out gasoline use.
- A resolution to express the sense of Congress that the federal government should not impose any restrictions on the export of crude oil or other petroleum products.
- A bill to repeal the $27 billion greenhouse gas reduction fund included in the Clean Air Act which stems from the Inflation Reduction Act.