The Shale Daily Update – 8.18.2020: Trump Plans ANWR Lease Auction

What You Should Know About Oil and Gas Today

The Big Story

The Trump Administration issued a plan for a comprehensive lease sale for the northern extent of the Alaska National Wildlife Refuge (ANWR) on Monday. Interior Secretary David Bernhardt said the plan was in response to a bill passed by congress in 2018 mandating that DOI develop a leasing program for the coastal plain of ANWR, which occupies 1.56 million acres of ANWR’s total extent of 19 million.

The environmentalist lobby will now come out in force against his policy, as it has done every time such a plan for development has been proposed since 1977. The talking points were already flying on Monday, as reported by the Houston Chronicle:

“An oil spill in this special sanctuary could devastate polar bears and caribou and cause irreparable harm to a pristine Arctic ecosystem,” said Kristen Monsell, an attorney with the Center for Biological Diversity. “We’ve reached a dangerous new low in the Trump administration’s obsession with expanding the extraction of dirty fossil fuels.”

Thus, once again we have ANWR to kick around as we approach another election.

Meanwhile, in other news…

The price of oil jumped up on Monday, with WTI closing just below $43 per barrel amid news about shrinking U.S. inventories. Yesterday’s close of $42.85 per barrel was WTI’s highest point since early March.

Hey, remember when there was a big shortage of oil pipeline capacity coming out of the Permian Basin a couple of years ago? Yeah, that’s not a thing anymore. As Jordan Blum reports at S&P Global Platts, the frenzy of development over the past few years has now resulted in a significant capacity surplus, and ExxonMobil and Enterprise have plans to add more capacity still. Blum says that the opening of those new projects would result in pipeline capacity actually doubling the basin’s output by the end of 2021.

Natural gas prices have leapt by 15% since last Thursday as a major heat wave ramps up demand to unexpected levels.

Don’t expect this to really turn out to be accurate, but the International Energy Agency, the U.S. Energy Information Administration and the Organization of Petroleum Exporting Countries — published new quarterly forecasts this week and none project oil demand back at 2019 levels by the end of next year. All three of these groups have a long history of significantly underestimating demand for crude oil year-in and year-out.

The Petroleum Economist has a very good analysis piece about the real existential threat a Biden/Harris administration would present to the U.S. shale business. Here’s an excerpt:

Over the course of his 2020 campaign, Biden has moved increasingly to the ‘left’ on energy and the environment. His initial plan was widely panned for not doing enough to prevent climate change. In response, Biden adopted a more aggressive strategy that would hurt shale gas by requiring electricity generation to be carbon-free by 2035, as well as by incorporating administrative and regulatory policies that would hinder conventional and unconventional fossil fuel energy production.

Throughout his career, Biden has demonstrated a notable level of ideological and policy flexibility that has allowed him to adapt to the times, and there is no reason to believe this behaviour will change when it comes to energy policy.

That “notable flexibility” in this case means that Biden has essentially adopted the far-left energy policies advocated by Bernie Sanders and Alexandria Ocasio-Cortez. Anyone who still thinks Joe Biden is somehow a “moderate” is not in touch with reality.

That’s all for today.