Comment: Premier Notley, like President Obama is taking actions that can be touted at the upcoming Paris Climate Change Conference where the top UN climate change official has said the true goal of environmental activism is to "destroy capitalism". -dh
Calgary Herald by Stephen Ewart.
Alberta Premier Rachel Notley effectively put the first limits on unchecked growth in the oilsands — through a 100 mega-tonne annual cap on greenhouse gases....
Can A "Business As Usual Attitude" Overcome Alaska's Financial Crisis?
Can Alaska be known as a place where, "a deal is a deal" and as a state not known to be, "its own worst enemy"?
At a time of Alaska state fiscal crisis, maintaining high state and local government employment is counterintuitive if not obvious.
Additionally, the Governor has brought in a new Medicaid entitlement program whose costs may ultimately be supported by Alaskan businesses and perhaps individuals -- and which will be sure to attract even more "ne'er-do-well" beneficiaries to the state at unknown additional costs.
Additionally, the governor is working with the Obama administration to bring dubiously vetted Syrian immigrants to the state, five year resettlement expenses of which are estimated to cost taxpayers almost $65K each. For Alaska, because of its remoteness and high costs, that number is probably understated.
"You Can't Make This Stuff Up"
Then, last month, the Governor called the Legislature into special session.
To deal with an enormous annual operating budget deficit? No.
To work toward a sustainable annual budget by cutting low priority programs and trimming others? No.
To pass "fiscal certainty" legislation, providing Constitutional protection to the Ak-LNG project sponsors? No.
He called legislators into session to have them consider a new tax on those wishing to invest in one of the world's largest ever LNG export projects, then withdrew that proposal.
And, he had them consider increasing the state's equity stake in a risky pipeline/LNG project whose feasibility is unproven, whose customers are uncommitted and whose cost to the state, conservatively, would ultimately exceed $15 billion.
And, he provided legislators with no packet of information clarifying the purpose of their special session.
And, he neglected to inform them that he had dictated to the 'independent' Alaska Gasline Development Corporation board his desire to form subsidiary corporations.
And, he refused to permit certain state officials to sign acceptable Ak-LNG confidentiality agreements -- a defiant act that could well stop progress on the entire project.
And, this was on top of his earlier 'request' of the patient producer-sponsors that the Ak-LNG project study the option of building a 48" vs. the planned 42" pipeline, an initiative that likely cost the project 6 months of delay and an overall price increase.
Here are the most recent monthly employment statistics posted by the Alaska Department of Labor (AKDOL).
Today we will explore some relationships between responsible / irresponsible state budgeting vs. energy and other investments.
We note in these AKDOL statistics, the familiar, annual Alaska trend of increased school employment as summer ends and decreased commercial fishing, processing, construction and tourism employment as winter begins.
We are not economists, but have absorbed AKDOL stats for many years.
Anyone who has, knows that Alaska is a very seasonal place of employment for "labor intensive industries" like tourism, commercial fishing, construction, etc.
Therefore, to see post-summer season declines in these categories is no great shock though we know that a continuing, gloomy world economy could affect demand for their products and services as well and affect Alaska's economic health in a coming season.
Oil and gas industries are "capital intensive" and typically have fewer albeit more highly compensated employees filling positions that are not very 'seasonal' at all.
We never forget that those few employees create great wealth for the state and national economies, as well as for their employers.
In fact, these employees' labors pay for most of the infrastructure used by the "labor intensive industries" ... also, the education and local government sectors.
As world wide commodity demand decreases, Alaska can be hit hard where it hurts. Fewer, highly paid non seasonal oil and gas jobs affect the year-around economy.
In a low demand, commodities environment, the investors make less but they also pay less tax and royalty revenue to the state, due to slowing production and lower prices per unit.
In a state choosing to become 90% dependent on oil and gas taxes and royalties, small changes in the price per barrel of oil can lead to large government deficits (i.e. as now), or unexpected, windfall surpluses.
Elected officials, therefore, need to be particularly concerned about and protective of the health of this oil and gas category--the very source of state wealth.
Alaska is in a challenging position now with oil prices hovering at below 50% the price levels of 18 months ago.
Thus, we would have expected responsible state and local government leaders to have begun cutting significant numbers of employees as well as shaving program costs to a sustainable level nine months or a year ago. Some have said, "You can't cut yourself out of this predicament!" What we've seen, however, is an increase in government employment from the beginning of the fiscal year to the present time--whose relationship to seasonal employment is not clear. A minimal effort would be to -- at least -- not add any new programs or employees.
For the most part, this AKDOL report, viewed in isolation, seems to reflect a 'business as usual' attitude on the part of state and local budget policy makers. They* are confronting a huge budget deficit by spending the last dollars in the State's available savings accounts--and counting for the long term on current, short-term low interest rates to fund debt. (*We say, "they" because so much of certain local municipal operating and capital projects are funded from the unsustainable state operating and capital budgets.)
Perhaps a budgetary discipline escaping our untrained eyes has already been put into motion and will become more visible in future AKDOL reports. However, the annual state operating budget shortfall ($3.5 billion, v. 750k population) is so serious and public news releases of government cuts and fiscal discipline are so muted that we fear the worst.
We fear that insufficient steps are being taken to create a balanced, sustainable state budget and at the same time retire a nearly $10 billion unfunded liability of the state employee pension program.
We fear that this scenario -- if not immediately and decisively corrected -- creates a toxic, anti-investment climate in Alaska that could repel investment of all kinds for decades at a time when government needs to build an investment climate based on logical and not political economic principles.
As to a major Alaska north slope gas monetization project, such as Ak-LNG, one logically concludes: The producer proponents of the Ak-LNG project have demonstrated extraordinary patience, diligence and dedication in dealing with government while trying to evolve the project into feasibility. We also observe that while the Ak-LNG project, if proven feasible, could someday begin transforming gas reserves into wealth, it could not do so before 2025. This economic injection would come too little and too late to be of much help in facing the current financial crisis.
As we evaluate State of Alaska actions related to the Ak-LNG project, we believe most of that activity would fall into categories like 'not helpful' and 'self serving' and 'time wasting'.
The best, good faith effort Alaska could now contribute to the Ak-LNG project, would be to get its own financial affairs in order -- and not at industry's expense.
It could also begin cooperating with Ak-LNG sponsors in meaningful ways:
- conforming to private confidentiality agreement terms
- eliminating threats of increased taxation
- not being the cause of project delays
- providing a Constitutionally protected cloak of fiscal certainty to gas and oil producers that invest in the Ak-LNG project.
In short, why wouldn't Alaska want to become a reliable investment climate that transforms its 'Business As Usual Attitude' into a focus on 'Can Do!'
AGDC Accepts President’s Resignation; Approves TransCanada Acquisition
State of Alaska Full 25% Equity Partner in Alaska LNG Export Project
November 21, 2015 Anchorage, AK – At a special meeting held today, the Alaska Gasline Development Corporation (AGDC) board of director’s accepted the conveyance of TransCanada’s interests in the Alaska LNG export project and authorized a payment of $64.6 million to TransCanada for those interests. The board also accepted the resignation of AGDC President Dan Fauske (NGP Photo) who tendered his resignation prior to the start of this morning’s meeting.
More On AGDC Turmoil:
AGDC already holds the State of Alaska’s equity interest in the Alaska LNG project’s liquefaction facility planned for Nikiski on the Kenai Peninsula. With today’s action, the corporation will assume TransCanada’s interest in the project’s 800-mile pipeline and North Slope gas treatment plant giving the state a 25% interest in the entire integrated LNG project. Today’s approval was expected following the board’s November 12th decision to postpone the payment to TransCanada until after the Department of Natural Resources had executed a Purchase and Sale Agreement. The state’s transaction is now expected to close onNovember 24th.
In a written letter to the board, Mr. Fauske said “I am proud of my time as President of the Corporation. During that time we were able to put together a corporation that not only met, but exceeded, all expectations. As an Alaskan for many years, I strongly desire that a natural gas pipeline project will come to pass. In that pursuit, I wish the Governor and this Board of Directors success.”
“Dan Fauske has done an incredible job founding, building and maturing this organization” said acting board Chairman Dave Cruz. “Under Dan’s leadership, Alaska has made more progress on a natural gas pipeline than ever before. I want to personally thank him for his dedication to this incredibly important project and for his years of service to the State of Alaska. He will be missed.”
With the administration's mishandling of the Alaska LNG project (i.e. Project delay due to resizing study demand; amateur handling of confidentiality policy; inept AGDC/state organizational management and personnel disruptions: 1, 2, 3, 4, 5, and as exposed during 11-15 Legislative Hearings, etc.) we are surprised that the three national credit rating agencies have not dealt more rapidly and more harshly with Alaska's credit rating already. -dh
Mr. Fauske’s resignation is effective January 1, 2016. The board directed its governance committee to engage an executive recruitment firm to initiate a worldwide search for a new corporate president. The board indicated that they will appoint an interim president to facilitate an orderly transition of leadership between Mr. Fauske and his successor. Until then, Mr. Cruz will perform those responsibilities.
In other action today, the board postponed a decision regarding the Alaska LNG project’s Work Program and Budget for 2016 until December 3rd. The project’s Management Committee is scheduled to meet on December 4th at which time a unanimous vote of all venture partners will be required to continue preliminary front-end engineering and design. A public notice of the December 3rd meeting will be forthcoming.
FOR IMMEDIATE RELEASE No.. 15-151
Governor Walker Appoints Former Fairbanks North Star Borough Mayor to AGDC Board
November 20, 2015 ANCHORAGE – Governor Bill Walker announced his new appointments to the Alaska Gasline Development Corporation Board of Directors today. Luke Hopkins of Fairbanks will join the seven-member board, which oversees the agency’s efforts to build a natural gas pipeline and liquefaction plant in Alaska. Mr. Hopkins is the former mayor of the Fairbanks North Star Borough. He will fill the seat vacated by former AGDC Board Chairman John Burns.
“I am pleased to welcome Luke Hopkins to the AGDC Board of Directors. As the mayor of the Fairbanks Borough, Luke was instrumental in creating a new municipal gas utility for the Borough, and directing major funds to develop lower cost natural gas supply for Fairbanks residents,” said Governor Walker. “I also want to thank John Burns for his service to the AGDC board and the state. John is a talented attorney and I hope to utilize his skills in a different capacity of this project going forward.”
A resident of Fairbanks for nearly 50 years, Mr. Hopkins has an extensive background in local government and project development. He served on the Fairbanks North Star Borough Planning Commission for seven years, and was a Borough Assembly member for more than five years. In October 2015, Mr. Hopkins completed two terms as the Borough mayor, where he was actively involved in keeping military troops at Eielson Air Force Base and bringing major economic growth to the Fairbanks region. Mr. Hopkins has been involved in a wide variety of local and statewide boards and commissions, including the State of Alaska Municipal Advisory Gas Project Review Board, the Association of Defense Communities, the Alaska Municipal League, and the Alaska Gasline Port Authority.
Governor Walker also appointed Department of Transportation and Public Facilities Commissioner Marc Luiken to the AGDC Board today. Commissioner Luiken will fill the seat vacated by Department of Commerce Community and Economic Development Commissioner Chris Hladick. As the head of DOTPF, Commissioner Luiken oversees the planning, design, construction, and maintenance of Alaska’s transportation system, public buildings, and facilities.
“As the state transitions to play a larger role in the Alaska LNG project, it is absolutely critical that we have strong leadership in place to guide our endeavors. I also plan to work on direct communication between the Governor’s office and the legislature, and I will continue to look for opportunities to include them in discussions about the project,” Governor Walker said. “I look forward to working with the AGDC Board and the legislature in the coming months and years as we work to bring Alaska’s natural gas to the world market.”
AGDC is governed by a seven-member board of directors, which includes five public members and two commissioners. Mr. Hopkins and Commissioner Luiken will join AGDC board members Dave Cruz of Palmer, Rick Halford of Dillingham, Joey Merrick of Anchorage, Hugh Short of Girdwood, and Department of Labor and Workforce Development Commissioner Heidi Drygas.
FOR IMMEDIATE RELEASE
Contact: Miles Baker, VP External Affairs & Government Relations (907) 321-8650
AGDC Clarifies Status of ASAP Project
Federal Environmental Work on In-State Gasline Project Ongoing
September 28, 2015 Anchorage, AK – The Alaska Gasline Development Corporation (AGDC) released a statement today clarifying the status of the Alaska Stand Alone Pipeline (ASAP) project. In the last few days, several media outlets have incorrectly reported that the corporation’s board of directors took action to suspend work on the ASAP project during their September 23rd meeting in Anchorage.
In a prepared statement, AGDC President Dan Fauske said:
The Alaska LNG project continues to be this corporation’s number one priority. However, our board’s direction to management has been clear – continue to maintain the viability and readiness of the Alaska Stand Alone Pipeline (ASAP) project as the state’s backup plan. The corporation is prudently managing the state’s resources by eliminating duplication of effort and cost, but intent on preserving ASAP’s knowledge base and readiness in the event the Alaska LNG initiative does not progress to project sanctioning. At our September meeting, the AGDC board received a progress update from the ASAP team, but issued no directional change to management regarding the project.
In January, AGDC completed FEED and delivered a full Class 3 cost estimate for the ASAP project. The milestone was the culmination of a substantial body of work, conducted over several years and it was achieved on-time and under budget. However, in response to the State of Alaska’s decision to prioritize the Alaska LNG project, the AGDC board prudently adjusted the future work plan, budget and timeline of the ASAP project to bring it into alignment with key Alaska LNG decision milestones. This included postponing additional commercial activities pending an outcome on the Alaska LNG project. With principal ASAP engineering work completed, AGDC has concentrated its work efforts on continuing the U.S. Army Corps of Engineers (Corps) Supplemental Environmental Impact Statement (SEIS) process so that federal permits and right-of-ways for the ASAP project can be secured.
During last week’s board meeting, the ASAP project team confirmed that AGDC filed a revised Section 404 Clean Water Act permit application with the Corps on September 10th and would also be submitting an updated right-of-way lease amendment to the State of Alaska within the next several weeks. The team also highlighted that it has recently posted a new interactive map viewer to the ASAP website in support of the SEIS process. The map viewer allows the public to explore the project’s alignment, geographic footprint, facilities and design components in order to better visualize the project and its potential impacts.
The ASAP project is designed to deliver utility grade natural gas from Alaska’s North Slope to Fairbanks, Anchorage and as many other communities within the state as possible. The project consists of a gas conditioning facility, a 36-inch diameter pipeline from Prudhoe Bay to ENSTAR’s existing gas distribution system near Anchorage at Big Lake; and a 30-mile lateral to Fairbanks.
YOU READ ALASKA GOVERNOR BILL WALKER'S ANNOUNCEMENTS HERE FIRST, YESTERDAY
BELOW IS TODAY'S UPDATE
(Scheduled for completion this weekend)
I always enjoy your newsletter, but your recent re: the NG issues one is special.
In my nearly 60 years in Alaska I have witnessed "many positive", and "too many negative" uses of the resources found within the boundaries of Alaska (not the boundaries of the State of Alaska) but nothing, not fish plants, not bridges to nowhere, not barley farms, etc., come anywhere near the Natural Gas fiasco that got underway with the El Paso group so long ago.
I have many observations and opinions on what has transpired over time, and will not list them.
But I continue to marvel at the way our "leaders" (elected and not) and the consultants, have been able to relieve the bank accounts (and the money goes somewhere!)!
Thanks, keep up the good reporting.
Terry T. Brady, MS (wood science), for
The Governor's Bombshell
We call Governor Bill Walker's actions this week a 'bombshell' because just as they create a new relationship with Alaska's largest investors so do they change Alaska's reputation as an investment destination. While the Governor has created "change he surely hopes Alaskans will believe in", at the same time, he has destroyed Alaska's attempt over the last few years to make itself more attractive to investors.
Here is, 1) what the Governor did and, 2) how we react to those actions after nearly 45 years of experience in Alaska as a regulator, educator, journalist, small business owner, municipal employee, oil industry executive and non-profit sector volunteer.
What The Governor Did
- Alaska Governor released a "Summary Report on the Review of the Alaska LNG Project Process"
- The "review" should be read in context of his very personal transmittal letter sent to legislators.
- Above is a video he released yesterday.
- Here is a bearish oil price report provided by the Governor
- Here is the Governor's proclamation calling for a special session to, among other things, establish a 'reserves tax' on industry investors applying to gas that is available but not committed to a market.
- Here is the Governor's news release, discussing the above actions.
- Alex DeMarban's ADN review of events.
- We think Alaska's leaders may sometimes forget that sophisticated observers are watching, from all over the world! Here's an example, our Australian oil and gas industry analyst friend who is quite candid about his view of Alaskan leadership and its LNG project.
- Here is our recent and highly relevant review of the Alaska investment climate.
Our Reaction To What The Governor Did
General. Governor Walker assumed office knowing the economic challenges were awesome.
Oil prices ranged at half the level the state operating budget required and that operating budget, in turn, was 90% dependent on Prudhoe Bay oil production. The entire economy of Alaska is over a third dependent on this sole source of income. Annual deficits of $3.5 - $5 billion will deplete the state's available savings within two - three years depending on the level of spending cuts politicians are ready to approve. Still, an almost $10 billion state employee retirement program unfunded liability awaits full funding.
Alaska's oil income flows from a 1/8 royalty share of the oil; a discriminatory, statewide 20 mil oil and gas property tax; one of the highest production (i.e. 'severance') taxes in the free world; and, a corporate income tax.
While the royalty rate was one of the lease terms agreed upon during the famous 1969 Prudhoe Bay lease sale, the bulk of oil taxation was added after the lease holders began making their massive investment in developing the ANS reservoirs and building TAPS. For the dozen years following the lease sale, taxes were increased about a dozen times. At least twice in Alaska's history, higher tax rates were applied retroactively for the sole purpose of clawing into state coffers, more money.
While Alaska got away with its unfair and predatory taxation for a long time, even the great and prolific Prudhoe Bay reserves would dwindle, age and continue need massive reinvestment in order to spawn new production. The trouble is that with the highest oil taxes in the free world, Alaska's political leadership had created the highest per capita taxing authority in America, the highest debt per capita state in the nation characterized by some of the most lavish social programs devised by man. Alaska even has more non-profit organizations per capita than any other state.
In the early 1990s, Dr. Scott Goldsmith (NGP Photo) of the state university's Institute of Social and Economic Research began warning that if Alaska were to begin slowly cutting the growth of spending its economy could arrive at a "soft landing", meaning a sustainable, long term economy.
Common Sense for Alaska, a public interest non-profit organization, sponsored government-spending conferences leading to powerful recommendations for a constitutional amendment limiting government spending increases to an inflation/population formula.
All public officials paid lip service to both Dr. Goldsmith's warnings and Common Sense's recommendations, to no effect. Spending continued to explode.
Alaskan apologists justified their high oil taxes and high spending in this way: "We are a large state with a small population and our cost of living is higher than elsewhere; therefore, it costs more for us to maintain government services."
Problem with that argument is that no matter how much a person, family or government wants to spend more money, one simply can't spend more than one brings in without sacrificing credit worthiness. (Of course, the Federal government has shown that it can spend over $18 trillion more than it takes in, but even its citizens pay for its irresponsibility when, ultimately, inflation devalues the currency) Recently the rating agencies, as we have long predicted, began putting Alaska on notice that its cost of borrowing is likely to increase since its economic risks have now become too large for analysts to ignore.
In addition to the low price era in which Walker finds himself, production has been steadily declining for years at a 5-7% rate.
In the mid 80s, Alaska produced over 2 million barrels per day to feed about a fifth of America's domestic oil needs. The Trans Alaska Pipeline System (TAPS) which transports Alaska North Slope (ANS) oil to tidewater now operates at only about a quarter of its capacity. Nearly three-quarters empty is another way to put it.
Governor's Background. Governor Bill Walker was born, raised and spent most of his life in the state. We believe that many who know him would agree he is a gifted public speaker with charismatic qualities. He knows the state well.
These attributes would benefit one's role as governor.
But being governor of a State dependent on oil investment requires a studied, wise, world view of the opportunities, the competition, the alliances leading to a successful term of office.
As a lawyer, much of his professional background, counter-intuitively, dealt with politics and marketing. He held elective posts in Valdez, site of the major, 1989 oil spill, and served as the general counsel and major marketer of a municipally-owned authority.
The Alaska Gasline Port Authority (AGPA) was designed to promote (i.e. and then finance, build and own) a gas pipeline/LNG export project.
During this time, Walker continually criticized other parties (i.e. like the oil industry) for not cooperating with AGPA's or predecessor LNG project efforts.
An observer might conclude Walker's AGPA was never successful for logical reasons: 1) From the early 80s to the late 90s, the Lower 48 gas price was too low to support any project and the world LNG trade was in its infancy. 2) During the years, before the shale phenomenon, when the Lower 48 needed Alaskan gas, the most economical way to monetize ANS gas was to send it by pipeline directly down to those markets, and not to try to send it via tankers to Asian markets. 3) When the shale revolution produced massive gas supply for North American markets, Asia looked more promising, especially after the Nakashima tragedy in Japan lessened interest in Nuclear power and increased interest in natural gas fired power plants. At that point, the major gas owners rather quickly shifted their sights to Asia and with ample expertise and contacts had no need for a 'middle man' like AGPA to market their gas.
Others may view it differently, but this scenario provides a very understandable backdrop for this governor's 'Alaska-centric' judgment and decision making.
While his AGPA attempts failed to monetize ANS gas, now he is governor and, again, he may be viewing the oil companies as roadblocks when, in fact, their diligent efforts have brought an ANS gas monetization project farther forward than ever before.
We believe it ironic that Walker's zeal to be the man at the helm of an LNG project may, in fact, be clouding his judgment and sabatoging the project.
Insisting on certain state control of and equity in a mega project perverts the private enterprise system to begin with. Then, to be criticizing the investors, refusing to talk about a comprehensive fiscal security package for them and threatening them with a gas reserves tax radiates a hostility sufficient to dampen the ardor of any Alaska investor, current or potential.
In fact, we would be not the least surprised to someday read an announcement from one or more producers to the effect that, "The governor has indicated his desire to own and operate an ANS gas pipeline/LNG system. We respect that desire and, accordingly, are withdrawing from our plan to construct such a project. Instead, we stand ready to sell the state the research and planning material we have developed and will support the governor's efforts in any reasonable way. Our efforts had led Alaska closer than ever before to launching a successful ANS gas monetization project and we were completely on schedule with that effort, but for the governor's demand that we spend additional time and money studying a 48" pipeline alternative. The time honored adage that, 'too many cooks spoil the soup', is as true now as it was in the old days. Rather than face a continuingly critical state administration for what we believe has been our on-time, on-budget, good faith gas monetization effort, we conclude it prudent to transform our project support into support for the governor's state-ownership idea, whatever that turns out to be. Meanwhile, we shall shift the majority of our focus now on investing in expanded throughput of TAPS, upon which the state government and the people of Alaska depend."
Please check back this weekend; much more coming....
|KTVA Video/story by Liz Raines. The Alaska Stand Alone Pipeline (ASAP) was almost ready for construction after more than five years. At a board meeting Wednesday, members of The Alaska Gasline Development Corporation (AGDC) decided to mothball it, saying they didn’t want to run parallel projects. Instead, the agency plans to focus efforts and funding on AKLNG, the larger pipeline project that involves large oil companies like Exxon Mobil, BP and ConocoPhillips.
ADN by Alex DeMarban. ... concerned with public apathy about an effort the state has pursued unsuccessfully for decades -- to tap and sell gigantic volumes of North Slope gas -- the Alaska Gasline Development Corp. has proposed launching a communication campaign to educate the public about Alaska LNG.
(John) Burns, the chair, said there’s a lot of “gas line fatigue” in Alaska, with people confused about the process. Some don't understand that the large sums the state is putting into the project are investments that will one day yield income, he said.
An education campaign could help unify the state’s messages that currently come from multiple sources, including the governor's office, AGDC and agencies working on the effort, officials said.
“The general public has to know what’s going on. It’s Alaska’s pipeline,” said board member Dave Cruz.
Miles Baker, vice president of external affairs and government relations, said the campaign could probably cost “several million dollars” over the next couple years.
(AGDC President Dan) Fauske said that's possible, but a final plan has yet to be presented to the board.
"We really have no clue," he said, referring to the potential cost.
FRIDAY'S EARLY REPORT: MORE TO COME, INCLUDING OUR VIEW OF WHY WE CHARACTERIZE THE GOVERNOR'S RELEASE ON THURSDAY AS A BOMBSHELL REPORT (I.E. NOT MEANT AS AN ENDORSEMENT.) MEANWHILE, WE WANTED YOU TO HAVE THIS MATERIAL AS SOON AS POSSIBLE. PLEASE REVIEW IT AND DEVELOP YOUR OWN REASONED PERSPECTIVE. -DH
Reference: Governor Bill Walker's transmittal letter to Legislators
Reference: Governor Bill Walker's, "Summary Report on the Review of the Alaska LNG Project Process"
We will provide our dear readers with commentary later in the day on Friday.
Here is the copy of an email alert we also issued Thursday on this subject:
- A Governor who has endured a quixotic journey of several decades to force private industry to build a project of his own dreams, and
- Legislative leaders who created a several hundred million dollar state-owned "Alaska Gasline Development Corporation" (AGDC) to deliver North Slope Gas to citizens in case a larger interstate project did not materialize, now run by Walker's appointed board members, and
- Alaska's largest investors, the North Slope Producers, who purchased leases, found oil and gas and have the right to market it while providing a royalty in kind (RIK) or royalty in value (RIV) to the state, and
- Fairbanks citizens and politicians anxious to benefit from a state-financed -- and to this point state managed -- natural gas distribution system concept, enabled by Walker appointed members of a state investment corporation, and
- Politicians from all over the state who are thinking, "How can my constituents and I benefit from any of the horse trading going on", and
- Frightened citizens whose leaders have created a $4-5 billion ANNUAL deficit in the state operating budget which is almost 90% funded by North Slope producers -- at a time when production is declining, world oil prices remain depressed and state spending continues rising.
Regular readers will know that this blog considers the Alaska LNG (AKLNG) project to be the Aesopian tortoise of the LNG project world – not as flashy as some, but plodding towards first gas next decade.
However, that tortoise carries a heavy shell that would be familiar to LNG project proponents in most locations around the world – a Government that wants to maximize its share of something that does not as yet exist – and therefore risks getting a larger share in nothing rather than a reasonable share in something.
Australian readers of this blog will likely be familiar with only one Alaskan Governor – the surprisingly socialist (when it comes to taxing oil companies) Sarah Palin. Her populist instincts live on in the State and even the Russian news service Interfax today points out that AKLNG risks being bogged down by politics (http://interfaxenergy.com/gasdaily/article/17647/alaska-lng-could-be-left-out-in-the-cold).
Alaskan based website Northern Gas Pipelines (http://www.northerngaspipelines.com) today provides an update on the latest Government meddling in AKLNG and asks the reasonable question – “with so many government cooks in the LNG kitchen, really, what could possibly go wrong?”
Dave Harbour, publisher of Northern Gas Pipelines, is a former Chairman of the Regulatory Commission of Alaska and a Commissioner Emeritus of the National Association of Regulatory Utility Commissioners (NARUC). He served as NARUC's official representative to the Interstate Oil & Gas Compact Commission (IOGCC). Harbour is past Chairman of the Alaska Council on Economic Education, Anchorage Downtown Partnership, and the Anchorage Chamber of Commerce. He served as President of the American Bald Eagle Foundation, Common Sense for Alaska and the Alaska Press Club. He is Chairman Emeritus of the Alaska Oil & Gas Congress.
Opinions or viewpoints expressed in this webpage or in our email alerts are completely independent. They are solely those of the publisher and are not intended to reflect the opinion(s) of any affiliated company, person, employer or other organization which or who may, in fact, oppose the views stated herein. -dh
Governor Bill Walker today applauded the House and Senate for passing his Gas Pipeline Right-of-Way bill with unanimous support. Once signed into law, SB70 will authorize the issuance of a right-of-way lease for a natural gas pipeline through a corridor in the Denali State Park, Willow Creek, Nancy Lake, and Captain Cook State Recreation Areas.
“I want to thank the legislature today for passing this important piece of legislation,” said Governor Walker. “This right-of-way is a necessary component to building a future natural gas pipeline in Alaska. By setting the wheels in motion now, we will be better prepared down the road.”
SB70 allows of the leasing of a corridor that will be adequate for either the AKLNG or ASAP project. The right-of-way within the authorized area will be approximately 120 feet wide for construction and 53 feet wide for operation under the ASAP project, and approximately 180 feet wide for construction and 100 feet wide for operation under the AKLNG project. Additionally, the bill requires the corridor to be managed as parkland and recreation areas until a lease is issued, and returned to original park and recreation land upon termination of the lease.
Right-of-way leases under SB 70 must be issued by January 1, 2025 and, construction of the pipeline must begin within 10 years of the effective lease date.
-Grace Jang, Office of the Governor