February 2012 Archives
Consumer Energy Alliance (CEA) has extended invitations to the Republican Presidential candidates and to President Obama to be available via teleconference to speak directly with Alaskans. CEA announced this morning that the first candidate to accept the invitation is Newt Gingrich. Below are directions for calling in this morning!
Juneau Empire by Pat Forgey. If the Alaska Senate passes an oil tax reduction, as Gov. Sean Parnell has asked, it may have difficulty getting through the House of Representatives, House Democrats said Tuesday.
ADN/AP by Becky Bohrer. Alaska Gov. Sean Parnell said the Senate's work-in-progress proposal to cut oil taxes offers "no hope" for more investment and does nothing to stop the decline in oil production.
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"
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.
ADN by Lisa Demer. The big fight in the Alaska Legislature this year over oil taxes is beginning to play out in the Senate Resources Committee and it may be epic.
JUNEAU- To clarify our objectives, the Senate Bipartisan Working Group has developed the following statement as members begin discussions on how to amend Senate Bill 192 in the Senate Resources Committee:
Do Alaskans Really Believe What the Alaska Senate Believes?
Commentary by Alex Gimarc
While we cannot argue with what the Senate Bipartisan Majority wants, we strongly disagree with the underlying list of beliefs (See above).
For example, the demand that oil profits must be “shared fairly between industry and the State…” is the height of socialism. Profits DO NOT belong to the State of Alaska. The producers pay various taxes, fees and royalties to the State in return for the right to produce oil and natural gas. While royalties are negotiated via the terms of producing the leases, taxes and fees are left to the discretion of the State of Alaska exclusively.
When the State excessively increases taxes, the marketplace kicks in and the producers will take their exploration and new production elsewhere. This is precisely what they have done in response to the passage of Alaska Clear and Equitable Share (ACES) by the Alaska Legislature and the Palin administration.
Additionally, the requirement that any “significant reduction in Alaska’s current share of oil profits must directly induce commercial investment…” is top-down, government directed economic planning at its worst. It puts the Senate Bipartisan Majority into the Board Rooms of the producers making decisions, which is not what Members were elected to do. Economic planning by politicians supplanting decisions made due to marketplace needs is the quickest way to drive any business into bankruptcy.
Finally, the Senate Bipartisan Majority demands that “Industry and the State must work in partnership to recruit, train and hire more Alaska residents.” This demand essentially turns employment on the Slope into yet another welfare program. Why not let the marketplace operate? Why not allow the best and the brightest to land the jobs? Does the Majority really intend to have any less than the most highly qualified applicants working in one of the most environmentally sensitive areas in the state? Really?
With these strongly held beliefs by the Senate Bipartisan Majority, we do not have much hope that there will be any rational or reasonable progress made toward modifying ACES by the Senate, as Members are bound by beliefs that are fundamentally at odds with marketplace economics that have historically worked.
Readers be the judge:
ADN by Lisa Demer. Some senators say if the Legislature rolls back the tax rate when oil prices are high, as oil companies and Gov. Sean Parnell want, it also should ensure the state gets a guaranteed minimal level of oil tax revenue when prices are low.
The Hill (2/25/12) reports: Sen. Chuck Schumer (D-N.Y.) wants Secretary of State Hillary Rodham Clinton to press Saudi Arabia, OPEC’s dominant oil producer, to boost output as rising prices are hitting consumers at the gasoline pump…A letter to Clinton on Sunday from Schumer, a top political strategist for Senate Democrats, comes as Democrats are trying to blunt constant GOP attacks over soaring gasoline prices.
The Weekly Standard (2/26/12) reports: Gleick looks set to be spending a good chunk of his MacArthur genius prize winnings on lawyers; he’s retained the same criminal attorney that Andrew Fastow of Enron used for his defense against fraud charges. And Gleick has hired Clinton/Gore crisis manager Chris Lehane. Heartland, for its part, has set up a legal defense fund to pursue a civil case against Gleick, presenting the ultimate irony: -Gleick’s attack may well help Heartland raise more money…More than a few observers have asked why anyone should trust Gleick’s scientific judgment if his judgment about how to deal with climate skeptics is so bad. -Gleick’s defense of his motives would be laughable if it weren’t so pathetic: “My judgment was blinded by my frustration with the ongoing efforts—often anonymous, well-funded, and coordinated—to attack climate science and scientists and prevent this debate, and by the lack of transparency of the organizations involved.”
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.
Senators Thomas and Paskvan propose gas line: Cook Inlet to Fairbanks - Alaska Dispatch - According to a legislative press release, Senators Joe Thomas and Joe Paskvan have introduced legislation that would instruct the Alaska Gasline Development Corporation (AGDC) to build a natural gas pipeline from Cook Inlet to Fairbanks, with enough capacity to serve unnamed other communities along the route.
Keystone pipeline would create Bay Area jobs - San Francisco Chronicle, Joe Epstein - The $7 billion project would not only make the United States more energy independent, it would also generate an estimated 6,500 jobs across the country, including hundreds in the Bay Area.
‘Small victory’ over ‘dirty oil’ - Financial Post, Claudia Cataneo - After enduring years of bashing in the United States and Europe over the development of its vast oil sands, Canada scored a come-from-behind victory Thursday when a committee of experts at the European Union failed to reach agreement on a policy that would have stigmatized Canada’s oil as dirtier than conventional crude.
Obama's sour spot on energy – Washington Examiner, Michael Barone - Let’s get this straight. We’ve prohibited a pipeline, the safest way to transport oil, from Canada, but we’re aiding Mexico in offshore drilling, which is riskier, and by a firm that lacks the experience of the U.S. firms we have been trying to prevent drilling in the same body of water. Does this make any sense at all. “Obama has managed to find the sour spot on energy,” writes the usually judicious Walter Russell Mead, who concludes his blogpost with tart understatement: “his energy policy could use a bit more thinking through.” Ya think?
USGS releases first ANS shale oil, gas resource estimates - Oil & Gas Journal, Nick Snow - The US Geological Survey estimated that Alaska’s North Slope contains up to 2 billion bbl of crude oil and 80 tcf of natural gas, which are technically recoverable from tight shale formations using currently available technology and industry practices.
|Feds must act on pipeline: Prentice - Vancouver Sun - ... pipeline is to go ahead as planned, former cabinet minister Jim Prentice ... Enbridge's Northern Gateway pipeline and other oil and gas corridors to the ...|
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.
Please take a moment to comment on the Obama-Enviro effort to zone and restrict use of oceans and waterways: Deadline Monday.
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 Tuesday.
We ask you to recognize that the Enviro-Obama strategy to shut down Alaska's natural resource industry is overt and we ask readers to Never Give In.
The National Administration uses passive-aggressive techniques and legal technicalities to shut down natural resource development. Please do not regard the roadblocks erected by this Administration to be simple exercises of administrative law by even handed regulators. This webpage -- including today's news links -- is replete with proof of our charge that this Administration has perverted the rule of law to its own special interest ends.
Nevertheless we must play the game and take every opportunity to comment during regulatory comment periods such as the two noted above. If normal citizens do not comment, the weight of comment will fall in favor of the well organized, extreme environmental groups working in concert with this Administration. Our silence will make a harmful regulatory decision for Obama's minions easy: "Most of the comment we received argued against further exploration of ...." On the other hand, even if we do comment, biased regulators can hand pick comment to prove or disprove a given thesis. So, regulatory law in the hands of an agenda-driven regulator endangers the rule of law, and, in turn, our way of life. But if we give up, yield to force and do not comment, we have no hope whatsoever.
Please do comment and enjoy a nice weekend knowing you did all you could to preserve the state and nation for the younger generation depending on us.
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.
Major push needed to get oil to Pacific markets: Prentice - Globe and Mail - Much of the debate over the Northern Gateway pipeline, the $6.6-billion ... Board of Trade Thursday,Jim Prentice, the former Conservative Cabinet minister, ...
1-24-12 Commonwealth North Event Photos:
Alaska Dispatch by Alex DeMarban. In an argument on his "Restoring Liberty" blog, Joe Miller (NGP Photo) claims President Obama's opposition to oil development is so deep he's refusing to reclaim several islands from Russia and the oil-rich seabed around them. Some of the islands off the Kamchatka Peninsula and Russia's northern coast are hundreds of miles from Alaska, so they wouldn't be easy to maintain. They include Wrangel Island, where American naturalist John Muir once landed as part of an expedition that claimed the island for the U.S.
AOGA informs citizens that the Senate Resources Committee has proposed SB 192 as a "place holder" for oil taxes. This week the committee has scheduled several hearings on this issue. Watch the hearings by clicking here: gavelalaska.org or www.alaskalegislature.tv.
Kinder Morgan to decide on TransMountain expansion by March - Financial Post, Rebecca Penty - Kinder Morgan Energy Partners LP said Tuesday it has received commercial support to decide by the end of March on a $3.8-billion expansion of the Trans Mountain oil pipeline that could double existing capacity to connect growing Alberta oil sands production with Canada’s West Coast.
Interior Alaska senators seek gas line from Cook Inlet – Fairbanks Daily News Miner - The bill would draw on work already done under the mothballed Beluga to Fairbanks line studied by the Alaska Natural Gasline Development Authority and the Alaska Stand Alone Pipline. Because of lower costs of building a shorter line, using existing infrastructure and lower construction costs, the senators said they believe this plan would be the fastest, cheapest way to deliver natural gas to the Interior.
Canadian oil: Could some of it be headed for California? - Los Angeles Times, Kim Murphy - Analysts say California could see as much as half of the oil transported out of the tar sands of northern Alberta to a port on the coast of British Columbia, where it would be loaded onto tankers for destinations as yet unknown.
Oil firm may go with the flow - The Province, Scott Haggett - Kinder Morgan Energy Partners LP said on Tuesday it has received enough binding commitments from shippers to begin design work on a proposed $3.8 billion project that would double the size of its 300,000-barrel-per-day Trans Mountain oil pipeline from Alberta to Vancouver.
How to Play the Potential of LNG Exports - InvestorPlace, Aaron Levitt - As prices continue to hover around these historic levels, U.S. producers have begun the process of either idling wells or looking outward for other sources of demand. One answer could be found in Asia. The region’s unquenchable thirst for energy could be the key for the United States to unlock its potential as powerhouse natural gas exporter. For investors, playing these exports could be the best way to bet on the domestic natural gas sector.
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 ...
2-21-12 - President Usurps Congressional Authority and Seeks to Zone and Restrict Ocean Use Before Election Day!
Another Critical Deadline for Comment; Please Do. Here's Why:
The Obama administration threatens to approve and implement a "Zoning of The Oceans" -- by this Spring, well before the presidential election -- and further hinder our freedom and ability to create jobs and achieve energy independence by developing our own fossil and renewable energy, commercial fishing, recreational and other resources and activities (i.e. like ocean transportation). See our earlier comments on this Obama initiative taken by Executive Order without Congressional authorization and which places an additional regulatory overlay across our (i.e. already highly regulated) oceans and water systems flowing into them. It is truly a case of, "Freedom Supressed and Government Gone Wild", 1, 2, 3. While the White House says, "Need for Congressional Authorization is a Myth", the President and his chicken house full of crafty, activist foxes are truly annexing Congressional authority by calling his zoning initiative a restructuring of government services. It is like a belligerent, passive-aggressive teenager who says, "I was home by midnight. Technically, I didn't disobey you when I drove with my friends to Chicago. I didn't tell you we wouldn't go there and, remember, I was home by midnight."
The National Ocean Policy Draft Implementation Plan proposes more than 53 federal actions and nearly 300 milestones that call for, among other things:
The National Ocean Council, which spends many millions of dollars of agencies Obama has ordered to participate is currently accepting comments on the Draft Implementation Plan. The National Ocean Policy has already been cited as justification in part for not allowing any Outer Continental Shelf oil and gas leasing to take place outside the Gulf of Mexico and limited areas in Alaska until at least 2017. Implementation of the National Ocean Policy, as currently proposed, will limit domestic energy development and other valid and responsible use of the oceans -- including wind energy projects -- and will further harm our nation’s economy.
IS THE CONGRESS SLEEPING AS ITS AUTHORITY IS BEING USURPED BY AN OVERREACHING EXECUTIVE?
Make sure the National Ocean Council hears from you before its comment deadline, next Monday, February 27. Copy Members of Congress. Put your comment in the comment space below or send it to us for later publication. Feel free to edit the Consumer Energy Alliance letter here as you see fit. For more information on how these policies may affect you, listen to the National Ocean Policy Coalition.
Never give up.
Northern Gas Pipelines
Canadian Natural Gas Declines as Mild US Weather Pares Demand, Bloomberg - Pipeline Flows Gas was flowing at a daily rate of 2.53 billion cubic feet at Empress, Alberta, where the fuel is transferred to TransCanada's main line. At McNeil, Saskatchewan, where gas is transferred to the Northern Border Pipeline for shipment to ...
ADN. BP says it's working to meet customer demand as its Cherry Point refinery in Washington state remains idle following a fire.
Bloomberg: Oil profits slide fastest since Lehman collapse on gas - Profits for the biggest U.S. energy producers including Exxon Mobil Corp. (XOM) are poised to decline the most since the financial meltdown of 2008-09 as the drilling technique known as fracking collapses natural gas prices. Exxon and Chesapeake Energy Corp. (CHK), which today reports 2011 earnings, will see net income in 2012 slide about 8 percent and 10 percent, respectively, according to the mean of analyst estimates compiled by Bloomberg.
How they voted - Chicago Post-Tribune - OIL EXPORTS AND KEYSTONE XL PIPELINE: The House rejected an amendment sponsored by Rep. Edward Markey, D-Mass., to the Protecting Investment in Oil Shale the Next Generation of Environmental, Energy, and Resource Security Act (H.R. 3408). The amendment would have required oil transported by the Keystone XL pipeline to be used in the U.S. unless a presidential waiver was granted on the grounds that exporting the oil would not increase prices or would not increase dependence on imports from hostile nations. The vote, on Feb. 15, was 173 yeas to 254 nays. (The House of Representatives passed out significant energy legislation last week. We will see what the Senate does. - AG)
Tax advice: Fundamental reform is needed in the oil patch – Fairbanks Daily News Miner, Editorial - “The three major oil companies are in a ‘harvesting mode,’ which means their main objective is drawing cash out of Alaska to invest elsewhere,” van Meurs told the committees during his presentation Tuesday. “The reasons for this are: No large and attractive projects available in Alaska under current fiscal terms for major oil companies (and) attractive opportunities outside Alaska.”
Alaska must sustain oil production: Falling investments should be reversed – Fairbanks Daily News Miner, Cynthia Henry - The reason is Alaska’s high production tax, ACES. Under ACES, there is little incentive to invest in the legacy fields, which hold much of the oil. As ConocoPhillips’ chief economist told Meet Alaska: “Alaska has the highest tax rate of any of the developed countries that ConocoPhillips might operate in. And of course that tax rate goes up substantially as the oil price goes up. So there is no upside for investment in Alaska.”
Domestic production eyed as gas prices head toward record-breaking height - Fox News - Nationally, gas prices are $3.53 a gallon, up 25 cents since Jan. 1, and likely headed to $4.25 a gallon by late April. Republicans have demanded more oil production at home, as well as building the Keystone XL pipeline across the middle of the U.S. to allow oil from Canada to reach Texas refineries.
Canada threatens trade war with EU over tar sands - The Guardian, Damian Carrington - "Canada will not hesitate to defend its interests, including at the World Trade Organisation," state letters sent to European commissioners by Canada's ambassador to the EU and its oil minister, released under freedom of information laws.
Mitsubishi to Invest in Encana's Natural Gas Development Project in British Columbia, Canada - Market Watch - MC has established a wholly owned subsidiary company Cutbank Dawson Gas Resources Ltd that will become the Partner to CRP. Under the transaction agreements, MC will pay CAD$1.45 billion as an upfront payment upon closing, and will also pay another CAD$1.45 billion over the coming five years that will be used to fund an incremental 30%, in addition to MC's 40% of the Partnership capital investments, to develop CRP's asset in accordance with an agreed-upon development plan.