Today’s Key Takeaways: AK oil Climate protesters block climate adviser from speaking. Crude price rebound led by Chinese demand and OPEC output cut. Qilak LNG sees quicker path to AKLNG exports. Carbon sequestration and mine tailings. Biden veto of ESG legislation passed by both bodies.
NEWS OF THE DAY:
Alaska oil drilling protesters disrupt White House climate adviser appearance
Reuters, March 21, 2023
Protesters criticizing President Joseph Biden’s approval of an oil drilling project in Alaska on Monday blocked an administration official from delivering a speech about U.S. climate leadership.
Ali Zaidi, White House climate adviser, was unable to address the event on the “Future of U.S. Climate & Energy Leadership” at the Center for Strategic and International Studies. A dozen protesters holding a sign saying “End Fossil Fuels” chanted: “Keep your promise, no new drilling” for several minutes, preventing Zaidi from starting his remarks.
OIL:
Oil Traders Spy Crude-Price Rebound, Led by China
Joel Wallace, The Wall Street Journal, March 21, 2023
Some of the world’s biggest energy traders expect rising Chinese demand and a possible OPEC output cut to push oil prices back up after a slide sparked by upheaval in banking.
Brent-crude futures rose 1.1% Tuesday to $74.56 a barrel, in line with a rally in stocks. The oil benchmark remains 10% lower than it was a month ago, after a drop driven by a flight from riskier assets and worries of a looming recession.
Jeremy Weir, chief executive of Swiss-Singaporean trader Trafigura Group, said the recent slide would make it harder for global output to rise at the same speed as demand. Add cost inflation since the pandemic into the mix, he said, and higher prices are likely needed to boost production.
“The current price level is not encouraging new production, that’s for sure,” Mr. Weir told a commodities conference hosted by the Financial Times. “The fact is, you’ve got to have reinvestment…Regardless of where you are in the energy transition, there is demand. China is coming back.”
Mr. Weir pointed to a rebound in air travel, as well as an uptick in Trafigura’s metal sales into China, as evidence of strength in the country’s economy.
“Is there much downside from there? I think not,” Mr. Weir said of oil.
Russell Hardy, chief executive of giant trader Vitol, which reported $505 billion in revenue Monday, said “underpowered” investment in crude production will support prices in the medium term. A more immediate issue, he said, is Russia’s difficulty in selling all the refined products it exported before a European Union embargo took effect on Feb. 5.
“There’s a whole bunch of products that are parked up looking for customers, not creating extreme concerns or shortages because the market is adequately supplied,” Mr. Hardy said. “But as we go through the second quarter we’re expecting a pretty significant rebound in aviation demand, and obviously summer is always a period of greater demand for gasoline.”
GAS:
Qilak LNG Still Sees Quicker Path to Alaska LNG Exports With Smaller, $5B Project
Therese Robinson, Natural Gas Intelligence, March 21, 2023
Qilak LNG is pushing ahead with a plan to invest $5 billion to develop a liquefied natural gas export terminal offshore Alaska that management believes can better compete for Asian demand with PAO Novatek’s Yamal facility in Russia.
As off takers in the Far East are looking to diversify supplies, Qilak plans to differentiate itself from other natural gas export projects in Alaska by capitalizing on the latest Arctic LNG technology as an offshore project. It also has a shorter, cheaper route to Asian markets compared to Russia’s Yamal project, said Qilak CEO Mead Treadwell.
Owned by Dubai-based LNG developer, Lloyds Energy, the facility would export natural gas directly from the North Slope. This makes the project cheaper to develop than Alaska LNG, which relies on an extensive pipeline to link it with natural gas supplies, Treadwell told NGI.
Qilak, which has been proposed for years, would deliver gas a few miles from the Point Thomson field, 60 miles east of Prudhoe Bay, to a 4 million metric tons/year (mmty) offshore liquefaction and storage facility, where icebreaking tankers would load LNG for delivery to Asian customers.
“Alaska has 2,000 less miles of ice to contend with compared with Yamal when shipping LNG through the Beaufort Sea to Asian markets,” said Treadwell, who also formerly served as Alaska’s lieutenant governor.
MINING:
Newmont to Assess Carbon Sequestration in Mine Tailings
Carbon Capture Technology Expo North America, March 21, 2023
Colorado-based mining company Newmont has partnered with the National Renewable Energy Laboratory (NREL) in the US to investigate the REMineD process, which entails rapidly transforming carbon into dolomite in tailings.
According to Mining.Com, the project will span three years and cost $4.3 million. It has been funded by the Department of Energy’s Office of Fossil Energy and Carbon Management Technology Commercialization Fund which promotes technologies used to mitigate the effects of climate change. The NREL will manage the project with UCLA, Lawrence Berkeley National Laboratory, and Missouri University of Science and Technology.
The carbonates sequestered in the tailings can be converted into substitutes for C02-intensive construction materials like concrete.
Newmont’s director of processing, Frank Roberto, says CCUS in tailings supports a long-term direction for the mining industry. “Waste rock and tailings are the largest components of residues from our mining operations, and the work for direct air capture of CO2 through tailings carbonation provides a unique opportunity to reduce our and others’ emissions throughout the value chain,” Roberto said.
POLITICS:
Biden issues first veto of his presidency
Jacob Knutson, Axios, March 20, 2023
President Biden on Monday vetoed a bill that would have repealed a Department of Labor rule allowing retirement fund managers to consider environment, social and governance (ESG) principles in their investment decisions.
Why it matters: It was Biden’s first use of the veto since becoming president, though several more may be on the way with Congress on track to pass other pieces of legislation the White House opposes.
- The House has scheduled a veto override vote on the legislation on Thursday.
Between the lines: Two vulnerable Senate Democrats up for re-election in 2024 — Sens. Joe Manchin (D-W.Va.) and Jon Tester (D-Mont.) — broke with the White House earlier this month and joined Republicans in passing a House bill that would strike down the Labor Department’s rule.
- In order for the bill to become law, both chambers of Congress must pass it again with at least two-thirds of each body voting in favor.
What they’re saying: Biden said on Monday he vetoed the legislation because “it would put at risk retirement savings of individuals across the country.”
- “They couldn’t take into consideration investments that would be impacted by climate, impacted by overpaying executives. And that’s’ why I decided to veto it. It makes sense to veto it,” he added.
- “The President vetoed the bill because it jeopardizes the hard-earned life savings of cops, firefighters, teachers, and other workers – all in service of an extreme, MAGA Republican ideology,” White House spokesperson Robyn Patterson said in a statement on Monday.
House Speaker Kevin McCarthy claimed on Monday that Biden, by vetoing the bill, “sided with woke Wall Street over workers.”
- “Now—despite a bipartisan vote to block his ESG agenda—it’s clear Biden wants Wall Street to use your retirement savings to fund his far-left political causes,” McCarthy said.
The big picture: The Labor Department rule doesn’t require fiduciaries for private companies to do anything, but it does permit them to include ESG considerations in investment decisions.
- Supporters of the ESG framework say it allows investors to support companies that are attempting to manage risks related to environmental, social, and governance criteria, such as the financial and economic risk posed by climate change.
- Anti-ESG sentiment runs hot throughout the Republican Party in general, Axios’ Hans Nichols reports. Conservative groups have derided it as “woke capitalism” and have set out to dismantle it.
Go deeper: Investors get caught in political crossfire in ESG fight