February 2012 Archives

Please take a moment to comment on Obama's National Marine Fisheries Service (NMFS) Draft Environmental Impact Statement (DEIS) on the Effects of Oil and Gas Activities in the Arctic Ocean: Deadline TODAY.

               A "Fair Share" vs. a "Fair Shake"
                                        by
                              Dave Harbour

Senate Resources Committee members announced today that they will be accepting public testimony for Senate Bill 192, relating to oil and gas production tax values today and tomorrow.

In the story linked below, legislators demonstrate why Alaska has become such a hostile climate for investment.  On the one hand, they will be the first to talk about "fairness" and extracting a "fair share" from industry.  Yet, in 2007 the Legislature took a month to create and pass the tax bill that has depressed production and threatened Alaska's economic future.  The bill was passed with retroactive effect which any historian would likely view as "unfair" if not vulturous.  At no time in the debate do we recall legislators considering what they should "give" to the taxpayers in return for what new wealth they were "taking".  Also, that 2007 ACES bill massively rejected the "fair share" equilibrium reached by republican and democrat leaders thirty years ago and whose predictability and certainty resulted in double the Prudhoe Bay development and production than was expected when the pipeline was built.  In the article below, having extracted so much, they now propose to install a socialistic control over private companies by dictating to them how they should spend any tax  savings which tax reform might create.  Yes, we hear their populist cries for a "fair share" almost daily, but never are they seen to give Alaska's most important investors a "fair shake".

ADN by Becky Bohrer.  But Democratic Sens. Bill Wielechowski (l) and Hollis French (r) say dealing with progressivity alone isn't the answer to getting more oil in the trans-Alaska pipeline, an issue important to the state's economy.  Wielechowski and French say that if Alaska gives something to the oil industry, such as a tax cut, the state should get something in return.

 Has time finally come for a power grid in rural Alaska? - The Arctic Sounder, Carey Restino - A recent study by Commonwealth North, however, brings the issue into focus. Nearly 80 percent of rural communities in Alaska depend on diesel fuel, and some in those communities spend up to 47 percent of their income on energy — heating fuel, electricity and fuel for their vehicles. The report stated that many rural Alaska families struggle to both heat their homes and feed themselves.
 $2.50 per Gallon Gasoline, Energy Independence and Jobs – An Address by Newt Gingrich - Newt2011 - In one short decade, we went from seven years supply to over a hundred years supply because science and technology had improved so much. Furthermore, instead of us importing liquefied natural gas from the Middle East, there is now serious talk that we’re going to build facilities in Houston, and we’re going to ship liquefied natural gas to China.
 U.S., China threaten Australia’s gas hopes - Wall Street Journal Market Watch, Virginia Harrison - The world’s two largest economies are sitting on massive shale reserves. The push by North America and China to become gas exporters — or in the case of China, a domestic supplier — could upset Australia’s longer- term gas ambitions.
 
Natural gas analytics firm expects prices to dip below $2/mcf by fall - mywesttexas.com, Paul Wiseman - A natural gas storage glut, expected to peak by September or October of this year, could send prices tumbling below $2 per mcf unless there is an unexpected blast of arctic air in the northeast. This warning comes from BENTEK Energy, an Evergreen, Colorado-based energy market analytics firm.
 
 

 Anchorage Daily Planet by Tom Brennan (NGP Photo).  President Barack Obama is pushing for serious damage to the world environment — and the greenies are cheering.  When Obama moved to block the Keystone XL Pipeline project he was virtually assuring that oil from the Athabasca tar sands will be consumed in China under Chinese standards, with a devastating net impact on the atmosphere. The alternative would have been to process in Texas the heavy oil from the tar sands, distributing much of it to American markets, all done under American standards and heavily regulated by federal agencies tasked with protecting the environment.

Comment:  Yesterday Commonwealth North (CWN) released its newest report, "Energy for a Sustainable Alaska: The Rural Conundrum."   The study was chaired by Meera Kohler and Ethan Schutt (NGP Photo.  Other event photos below.) and describes a number of energy production, distribution, fuel transportation, and consumption challenges facing rural Alaska. 

Kohler noted that rural residential power generation is currently subsidized via a 'power cost equalization' program designed to align rural residential with urban residential power costs.  With the cost of diesel (i.e. the source of most rural, electric power generation) so high this CWN report seeks to identify solutions that will make residential and commercial power cost in rural Alaska more 'affordable'.  Solutions generally involve new infrastructure, new technology and new financing that minimizes impact on rural residents.  

While the costly solutions involve little ratepayer support for infrastructure and projects, aid will be expected from various levels of government and perhaps the private sector, including Alaska Native Regional Corporations, as co-chairman Schutt noted in response to a question.  We suspect that this issue will evolve into a major 'funding' issue with the Alaska State Legislature even as the community of Fairbanks seeks 'funding' for a natural gas distribution and pipeline transmission system as its own response to high diesel prices.

We conclude that Alaskans would do well to keep their economic and political eyes on the ball: reversing the declining Trans-Alaska Pipeline System (TAPS)  throughput.  If the decline is not reversed and the pipeline shuts down the massive exodus of Alaska's citizens will make other issues seem rather academic, in retrospect.  

If readers agree that TAPS is where Alaska's priority attention belongs these days, then one might conclude that: 1) Alaska should immediately improve the investment climate in a way that attracts more production on state lands; and, 2) Alaskans should never, never give up in their opposition to Obama Administration efforts to stop Alaska resource development on federal and state lands (See stories below); and, 3) we should reduce -- not increase -- public spending until TAPS throughput guarantees the state's long term economy is sustainable.

-dh

Alaska Dispatch by Alex DeMarban.  The Noble Discoverer ship, contracted by Shell to drill up to three exploratory wells this summer, was leaving Auckland, New Zealand, bound for Chukchi Sea waters off Alaska, according to the release.  "I'm blocking Shell's Arctic drill ship because I believe passionately that renewable energy is the way of the future," Lucy said from the ship, according to the release.  Shell spokeswoman Kelly op de Weegh said the company respects freedom of speech, but isn't pleased with Greenpeace's tactics. The company is in contact with local authorities to keep the ship on path toward Alaska, she said.  (Comment: Enviro Extremists show their colors time and time again: disrupt the rule of law; interfere with the permitting process; stop civilization in its tracks; create newsworthy diversions that support fundraising activity.    Governments bend over backwards to support illegal 'occupiers' as if they were simply exercising the right to speak freely; when are elected officials going to wake up and provide LAW ABIDERS with equal protection under the law?   Meanwhile, other enviro-allies fight the legal battle to stop Alaska OCS in its tracks.  -dh)

Los Angeles Times/ADN by Kim Murphy.   Responding to urgings from U.S. environmentalists, Ohio-based Chiquita Brands International Inc. announced in November that it would join a growing number of companies trying to avoid fuel derived from Canada's tar sands, whose production is blamed for accelerating climate change and leveling boreal forests.  Then in January, President Barack Obama abruptly vetoed a permit for the Keystone XL pipeline, Canada's $7 billion project to deliver oil across the U.S. Midwest to the Texas Gulf Coast, which environmentalists have long opposed.

Obama goes on offensive as gas prices soar - Calgary Herald - White House hopefuls Mitt Romney, Rick Santorum and Newt Gingrich point to Obama's opposition to both offshore drilling and the construction of a pipeline from Alberta, and oil company tax breaks, as contributing to higher gas prices.

The American Energy Alliance says, "If the President's allies would stop suing, we could double U.S. proven reserves he refers to as "only 2% of the world's oil" right away."   Bloomberg (2/22/12) reports: Royal Dutch Shell Plc’s air pollution permits for offshore oil drilling in Alaska were challenged by environmental groups who said the permits violate the U.S. Clean Air Act…The Alaska Wilderness League and eight other organizations filed a petition with the U.S. Court of Appeals in San Francisco on Feb. 17, asking it to review two permits the U.S. Environmental Protection Agency granted Shell to operate its Discoverer drillship in the Sea of Beaufort and the Sea of Chukchi…“As early as this summer, the Discoverer drillship and other vessels in Shell’s fleet could be in the Chukchi Sea or Beaufort Sea of the Arctic Ocean where they will pump tens of thousands of tons of pollution into pristine Arctic skies,” the groups said in a statement today.

Red State: Obama’s Energy Policy is Hurting the American Dream **Podcast interview with David Holt** (NGP Photo)  - On today’s edition of Coffee and Markets, Brad Jackson and Ben Domenech are joined by David Holt to Obama’s hostile energy policy, the critical importance of the Keystone XL pipeline, and how a growing energy industry can help revive the American dream.

Simons: Harnessing oilsands won't cause 'climate calamity' - Calgary Herald - Swart and Weaver say the biggest potential contributors to global warming are non-conventional gasand coal. The two scientists certainly don't give the oilsands a free pass. They note that their paper doesn't weigh the other environmental consequences ...

Point missed on oilsands report, say researchers - Calgary Herald - The commentary, published in the British scientific journal Nature Climate Change, estimated the effect of consuming the fuel from oilsands deposits - without factoring in greenhouse gas emissions associated with extraction and production - would be ...