September 2010 Archives

(Click for tonight's OCS meeting notice)

Lawmakers Struggle With OCS Complexity

Commentary and Report (Planned for completion 9-28)

by

Dave Harbour (ABM link)

Alaska Senate Resource Co-chairmen, Senators Bill Wielechowski and Lesil McGuire (NGP Photo) presided over a full house at the Anchorage Legislative Information Office yesterday (9-21-10), dealing with the infinitely complex subject of Arctic oil spill preparation and response.  They approached the potentially controversial and divisive challenge with tact and courtesy.  Invited witnesses seemed cooperative.  While appearances can be deceiving, one could observe a common theme that nowhere in the world are oil and gas industry contingencies better anticipated than in the North American Arctic, though, as in all human endeavor constant improvement is both possible and desired.

Wielechowski opened by observing that his goal for the hearing was to, avoid controversy and asses Alaska's OCS (Outer Continental Shelf) oil and gas exploration and development with the needs of both the nation and the state in mind.  He said that while -- in contrast to deep water Gulf of Mexico (GOM) operations -- Alaska's OCS is primarily focused on shallow water prospects, unlike the GOM, Alaska has ice and other peculiar challenges affecting mammals, humans and the general environment.  "We want to do it right," he said, and noted OCS activity is critical to Alaska's economic health.

McGuire stressed the importance of conducting a credible, balanced and informal process for the hearing.  "We wanted to wait to give time for the experts in the Gulf to contain that oil spil and respond so that these hearings wouldn’t be a catalyst for more controversy," she said.

Alaska Oil and Gas Association Executive Director Marilyn Crockett (NGP Photo) said that, "Industry capabilities and requirements is an appropriate first step," in approaching the subject, observing that, "Alaska takes the lead in oil spill and clean up response."   Representative David Guttenberg (NGP Photo) expressed concern with the history of spills and noted that, "successful outcomes is what we're looking for."

Becky Silves (NGP Photo-lower left) serves as the Alaska Emergency Response Coordinator for ConocoPhillips (HSE Alaska Drills and Training Coordinator).  She stressed the importance of satellite tracking capability and that before the first exploration well is drilled in 2012 or 2013 ( or later) that, "Oil spill recovery equipment will be available on-site to provide for immediate response in the event of a spill."  When Wielechowski questioned her about spill response in winter, Arctic conditions, Silves noted that while there are challenges associated with oil recovery in icy water, the industry had about a decade to prepare for year-round development.  She said that before development could occur, exploration would proceed only on, "open water" and only during the warm months when ice is not present.  When McGuire inquired about ice being swept into "open water" exploration areas during the spring and fall "shoulder seasons," Silves emphasized the value of satellite tracking which would enable operators to shut down exploratory operations in threatening ice conditions.  Guttenberg expressed concern for the lack of infrastructure referring to all of the hotels and other support services and infrastructure required in the GOM just to, "bring in 100 workers."  Silves said the company's initial and "very preliminary" thinking involved -- as in the Exxon Valdez experience -- using barge housing "on the water".  Guttenberg observed that 150' of water was probably approaching the limit for divers who could repair underwater assets and wondered about the use of remotely operated undersea vehicles.  Silves said that all such alternatives would be "looked at".

Shell's Alaska General Manager Pete Slaiby (NGP Photo-r) then reviewed the .... 

...much more coming Friday....comments of Craig Johnson, Jeff Short, Lois Epstein, Nancy Wainwright, Harold Curran, Mike Munger, Mark Swanson, Larry Dietrick, Larry Hartig, Dan Seamount, Cathy Foerster, Kevin Banks.  (Note: We always urge readers to offer additions/corrections to our stories.  This distinguishes us from mainstream media.  While we sometimes opine, we love the facts and urge everyone to help keep us focused on accurate reporting.  See related story: KTUU.  -dh)

Yesterday.  Those trying to develop Alaska's vast natural gas reserves, both for local consumption and export, told the state's business leaders Tuesday that the state is on track, or multiple tracks, to get a natural gas pipeline.  Two big pipeline efforts are underway, seeking to build a 48-inch-wide pipeline through Canada, to feed gas into the U.S. Midwest, an industry panel told the Alaska State Chamber of Commerce convention Tuesday. ... Denali's Dave MacDowell (NGP Photo-l) said the company has spent $150 million developing a pipeline plan, and is now out seeking bids from customers who want to ship gas through that line in a process called "open season."  ...   The state-sponsored Alaska Natural Gas Development Corp. is studying a "bullet line," a small diameter line that would be somewhat cheaper to build but would not provide enough gas for export.  "What happens if those big pipes are delayed? There needs to be a backup plan," said Bryan Butcher (NGP Photo-r), the venture's vice president for public affairs. ... Federal Pipeline Coordinator Larry Persily (NPG Photo-l, below) said the bullet line could provide neither the cheap energy nor the revenue to the state that the Denali and TransCanada plans may be able to.  "This is why you shouldn't give up on the big pipe," he said. ...  Persily said that contrary to some opponents' statements, there is a strong market for Alaska's gas in North America, a stronger market than the export market for liquefied natural gas.   Juneau Empire by Pat Forgey.

Today.  Anchorage Mayor Dan Sullivan's (NGP Photo) Energy Task Force Meeting: will include a review and updating of the Energy Transition Report created a year ago.

Tonight.  WE URGE ALL ANCHORAGE-BASED NGP READERS TO GO HERE AFTER DINNER TONIGHT: The Future of Offshore Drilling in Alaska: The Risk/Reward Balance. The forum will be at UAA’s Wendy Williamson Auditorium on Wednesday, September 22^nd, 7-9pm.  The International Association of Energy Economists are sponsoring the event and say the purpose of the forum will be to present a variety of perspectives to the public, and to conduct a deliberative discussion surrounding the benefits and risks of Arctic drilling within the contexts of the following:

Next week.  6th Annual Alaska Oil & Gas Congress.  Conference co-chairs: Dave Harbour, Publisher, Northern Gas Pipelines and Margaret Brown, President & Chief Executive Officer, Cook Inlet Region Incorporated • Larry Persily, Federal Coordinator, Alaska Natural Gas Transportation Projects ... Alaska Gas Pipeline ü Key insights from the Joint In-State Gas line Development Team on in-state gas development ü Global natural gas supply/demand trends and impact on Arctic gas ü How the state of Alaska is expediting the ... Latest News - http://www.prlog.org/page1.html

On Friday Commonwealth North's Energy Action Coalition, chaired by Mary Ann Pease (NGP Photo-r), heard Executives with Enstar Natural Gas update members on the status of the Cook Inlet Natural Gas Storage Alaska, LLC (CINGS) project.  

Enstar Regional Vice President, Colleen Starring (NGP Photo-l) said adequate natural gas storage is critical to Enstar's mission of providing energy to homes and businesses at all times of the year, particularly during the coldest days of winter.  "We're in a situation when we need the storage now," she said, "and expect our situation will be particularly critical by the winter of 2012."

The new storage facility in Kenai is adjacent to existing gas pipelines.  Since demand for home heading is low in the summer and high in the winter Enstar could accumulate natural gas when it was plentiful in warm months and release it from storage as needed.  

CINGS Project Manager Richard Gentges (NGP Photo) said the company screened about 50 possible storage sites in Southcentral Alaska, looking for just the right combination of attributes: location, level of existing reservoir depletion, reservoir porosity, and other factors.  He said about two dozen state and federal permits were required for the project, but noted that, "The permitting process here looks to be as streamlined as anywhere else in the country."

Starring said the proposal is now before the Regulatory Commission of Alaska.  She said the Commission is expected to approve CINGS' request for a Certificate of Public Convenience and Necessity by year-end with Commission action on consumer rates to be ordered by the end of January.  Starring added that while several parties have intervened in the process, she expects the parties to all be supportive of the certificate petition.  Assuming that regulatory process moves as anticipated, Starring hopes for the storage facility to be ready to support reliable deliverability of winter gas by late 2012.   -dh (More CWN photos below.)

The Alaska Standard, By Victor John Yannacone Jr. (B&W Photo) "A Hope and A Prayer".  The prayer for relief in the lawsuit filed by the State of Alaska and Governor Sean Parnell against Ken Salazar, United States Secretary of the Interior, is just that, a prayer. The sovereign people of the State of Alaska “pray” to a federal judge for judgment against an unaccountable appointed federal cabinet official not elected by the people of the United States. And what is it that the State is praying for? 

Late Friday, David and Mary Ann Pease (NGP Photo) hosted a party for Cathy Giessel (NGP Photo).  We would encourage all NGP readers to engage in such social and political events as with every exposure, one's knowledge of the energy landscape improves

Other guest photos below:

Alice Hanley

Cathy Giessel

and Rick Mystrom

Randy Eledge

Steve Pratt

Sophie

Minich

John Lau

Steve

Sutherlin

Dan

Dieckgraeff

Arden

Page

Associated Press.  The oil and gas industry says an Obama administration plan to double fees charged for inspections of offshore operations could cost jobs.  The industry recognizes the need for improved inspections and oversight following the massive BP oil spill, American Petroleum Institute president Jack Gerard said. But doubling the fees is not appropriate, especially during a recession, he said.  "This is not the time to go back and impose additional costs on industry," Gerard said Tuesday in a conference call with reporters.  The oil and gas industry contributes billions of dollars to the U.S.

Boding badly for Alaska, Interior's BLM is developing rules for the National Petroleum Reserve-Alaska that are based on 'climate change and the recent listing of polar bears as a threatened and endangered species...."  

We urge Anchorage citizens to attend the September 23 meeting!  -dh

The Bureau of Land Management seeks public input as it begins to develop its integrated activity plan and environmental impact statement for the National Petroleum Reserve-Alaska. Previous NPR-A plans dealt with portions of NPR-A. The new plan will cover all of the more than 22 million acres in NPR-A The comment period began July 28, 2010 and ends October 1.

Emerging issues such as climate change and the recent listing of polar bears as a threatened and endangered species will be addressed. The planning effort will identify areas to be made available for oil and gas leasing and measures to mitigate impacts to resources from oil and gas activities.

Meetings will occur in the following locations throughout the state:
Community Date Location
Barrow Thurs., Sept. 9, 2010 North Slope Bor. Assembly Rm
Fairbanks Mon., Sept. 13, 2010 Noel Wien Library
Anaktuvuk Pass Tues., Sept. 14, 2010 Community Center
Nuiqsut Thurs., Sept.16, 2010 Kisik Community Center
Wainwright Mon., Sept. 20, 2010 Community Center
Atqasuk Tues., Sept. 21, 2010 Community Center
Anchorage Thurs., Sept. 23, 2010 Campbell Creek Science Center

In Anchorage and the North Slope communities, an open house will begin at 6:30 PM followed by the scoping meeting at 7 PM.
In Fairbanks, the open house will begin at 6 PM followed by the scoping meeting at 6:30 PM.  For more information and other ways to comment, see www.blm.gov/ak or contact Jim Ducker at 907-271-3130.

Boding badly for Alaska shallow water exploration, Interior's BOEM shows its deceptive colors in the GOM!  -dh

The Hill (9/13) reports, “Oil-and-gas companies that drill in shallow Gulf of Mexico waters on Monday said they’re at an “impasse” with the Interior Department over permitting policies they allege are bringing the industry to a standstill. The Shallow Water Energy Security Coalition met Monday morning in Louisiana with Michael Bromwich (NGP Photo), who directs Interior’s Bureau of Ocean Energy Management, but the meeting failed to produce reassurances about speeding up permits the group is seeking. “With 15 of the total of 46 available shallow water rigs now idle without permits, and only five permits for new wells issued since April, we are clearly at an impasse with the regulators. While we share Director Bromwich's commitment to safety, BOEM must recognize that it cannot continue to shove a square peg into a round hole by treating all offshore drilling operations the same, disregarding history and geological facts,” said Jim Noe, the group’s executive director who is also a top executive with Houston-based Hercules Offshore Inc.