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Northern Gas Pipelines is your public service 1-stop-shop for Alaska and Canadian Arctic energy commentary, news, history, projects and people. It is informal and rich with new information, updated daily. Here is the most timely and complete Arctic gas pipeline and northern energy archive available anywhere—used by media, academia, government and industry officials throughout the world. Northern Gas Pipelines may be the oldest Alaska blog; we invite readers to suggest others existing before 2001.  -dh

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Alaska Taxes

6-25-15 Uphill Road For An Alaska LNG Project

25 June 2015 8:18am

It's An Uphill Road For An Alaska LNG Project

Whether most Alaskans appreciate it or not, the best hope for a successful, Alaska LNG project is that Alaska's largest producers support it.  Today, we analyze why that so.

by

Dave Harbour

Alaskans have consistently supported higher taxes on Alaska's oil companies and higher spending on social services -- with some exceptions.  

The Alaska tax and spend model is not unlike the model employed nationally, in Washington D.C., except national leaders are capable of spending more than they take in by merely printing more money.  

Ultimately, that model taxes the public via inflation rather than directly, diminishing the value of the money as it lowers the value of individual savings and paychecks.  

The beauty of that model is that a future generation pays for the votes attracted by this generation of politicians.

As politicians increase tax levels, their overspending redistributes wealth to some individuals and to supporters able to maintain investments in real estate, land, capital projects and enterprises producing recurring revenue -- investments that benefit from inflation.

It can be and often is an intellectually dishonest, but effective formula for gathering reelection votes from some at the expense of others.  

Logically, that concept is unsustainable.  The concept is unsustainable because more and more taxation must end at some finite point and because ever higher government spending depends on that finite tax revenue.

As the unsustainable economy approaches, liberal lawmakers have historically found it quite tempting to unfairly demonize companies for not, "paying their fair share", and to embarrass fiscally responsible lawmakers for being, "uncaring and insensitive to the needs of...."

As we'll explain, the day of reckoning has now caught up with Alaska.  The state imposes high taxes, is depleting its remaining savings accounts while continuing its spending spree.  (No one can say Alaska's leaders were not warned!)

Background

Alaska's elected leaders tasted an addictive elixir of $900 million in bonus bids from the 1969 Prudhoe Bay Lease Sale.

In 1971 Congress approved the Alaska Native Claims Settlement Act, critical to the approval of a project to transport the immense Prudhoe Bay oil reserve to market. 

Congressional approval of the Trans Alaska Pipeline System (TAPS) in 1973, by the tie breaking vote of Vice President Spiro Agnew, coincided with mid eastern turmoil, including the Arab oil embargo and a later takeover of Iran's monarchy by Islamic extremists, still in power.

So, oil prices remained high, for a time.

Alaska's government spending and tax policies were mostly controlled by democrats and a few liberal republicans during the decades of the seventies and eighties, when the high oil prices magnified the value of high production, around 2 million barrels per day.  

Yes, the former 'pioneering state' had now become addicted to a growth in income and spending phenomenon that is probably unique in the history of American states.  (Other states, because of the blessing of advanced 'fracking technology' are encountering tax and spend challenges, too.)  We believe none have reached the level of tax and spend excesses adopted by Alaska -- though Alaska could serve as a role model for the need to avoid unsustainable tax and spend policies.

When oil prices began to fall in the mid-eighties, many oil field and support industry employees -- and those dependent upon them -- left the state.  However, production was still strong and the state pretty much continued its march toward becoming the most attractive welfare state in the nation.  We are not aware of any significant social program anywhere that is not replicated in Alaska, and, at a high per capita cost.  

From the 80s onward, Alaska has became the highest per capita taxing and spending state and with the highest number of not-for-profit organizations per capita in the U.S., a vast number of which came to depend on government largess -- 90% funded by oil taxes. 

So now, TAPS' North Slope crude oil throughput has diminished by about 3/4, even though companies are working hard to find and produce Arctic oil.  
 
Because of its spending policies, Alaska's government operating budget has become about 90% dependent on TAPS' North Slope throughput.
 
Unlike the 80s when throughput remained high during a low price period, Alaska is now experiencing low TAPS throughput and low prices for that throughput.
 
This double whammy, though it would not have been unexpected by prudent planners, has caused chaos in Alaska's political model that requires ever higher oil revenue for ever higher costs of government.  Unfortunately, such circumstances can lead to a phenomenon known as an, "Economic Death Spiral", wherein higher and higher taxes produce less and less revenue.  While Alaska has not reached that level of hopelessness, the fact that the condition exists is sobering incentive to make the best possible decisions, early enough.
 
The 48" TAPS oil pipeline traces a path from the Arctic, over the mountains of Alaska to the Valdez seaport, some 800 miles.  TAPS was built mostly above ground, and insulated against the cold, so it could move the otherwise viscous oil in a warm-fluid state...even during many sub-zero months.  (In contrast, a gas pipeline would be mostly buried in the cold ground with cold gas flowing through it.)
 
But the day surely approaches -- says the 'prudent planner' within us -- when the warm oil throughput is so little and maintenance costs are so high and winter temperatures are so cold, that production must cease.
 
Who would be the first to suffer?  Not the oil companies.  They would dismantle TAPS, revegetate the right of way and transfer exploration and production budgets to more attractive areas.  
 
Those suffering from a TAPS shutdown would be citizens dependent on programs funded by oil tax and royalty revenue.  Especially vulnerable would be Alaska Native villagers who value 'subsistence' lifestyles, lifestyles which have become tethered to the benefits of oil money: health clinics, schools, airports, ports, SUV's, snow machines, fuel subsidies and myriad social programs.
 
The foregoing demonstrates why Alaskans are so focused on the need to both find and produce more oil...but also to market Alaska's North Slope natural gas reserves.
 
From Oil to Gas
 
For decades Alaskans have lusted over a project that would monetize the huge natural gas reserves on the Alaska North Slope, at least 35 Trillion Cubic Feet (tcf).
 
In other places, we have documented the history of Alaska's gas projects, all of which have failed to prove economically feasible.
 
Today, Alaska's three major producers have committed to creating a feasible gas project but have maintained their position over decades that any multi billion dollar gas pipeline project must have fiscal certainty.
 
In other words, we could not imagine investors putting another 800 miles of pipe in Alaska, along with a tidewater LNG plant, with the risk that the state will then increase taxes on oil and/or gas.  This could dilute the value of the investment--perhaps even to the extent that politicians could render the investment infeasible after investment decisions were made based on current tax statutes.
 
The state Constitution requires that the taxing ability of the state remain unabridged and that no legislature can take action that binds a future legislature.  A Constitutional amendment is likely required in order for elected officials to be able to provide large project investors with appropriate evidence of fiscal certainty.
 
Just as the project led by Alaska's producers (AK-LNG), approaches final sanctioning decisions, the Governor and Legislature are faced with the challenge of obeying the Constitution while meeting the reasonable, fiscal certainty needs of major gas pipeline investors.  And, they must do so as dependent constituents cry out for the government to, "Feed me, feed me".
 
Recently, the Governor of Alaska presented a letter to producers stating his willingness to work on fiscal certainty for the gas project, but not for oil investments.  The letter also named other 'demands'.
 
This is troubling for a number of reasons.  One reason we are troubled, is the reality that the owners of the gas are also the owners of oil.  What's to prevent gas investors from spending $60 billion on an Alaska LNG project only to have a predatory legislature/governor swoop in for an increase of oil taxes?  The result of unpredictable oil tax increases could be equally damaging to a gas pipeline investor's bottom line.  In short, we must suggest to Alaska's governor that fiscal certainty for a gas pipeline investor not applied to that investor's Alaska oil and gas activity is -- in our opinion -- no fiscal certainty at all.
 
Meanwhile, Alaska's gas competes with everyone else's. 
 
Our mid-Atlantic energy analyst friend, who prefers to remain unnamed, warns us today that the LNG market is becoming increasingly competitive.  Many of the three dozen North American LNG projects investors are considering will simply not remain economically feasible for a number of reasons unique to those projects.  
 
How will Alaska fare with its competition when most competing projects have:
  • more moderate climate and terrain
  • more inexpensive logistical costs
  • better proximity to the markets
  • gas reserves closer to LNG tidewater facilities (i.e. no cost for an 800 mile Arctic/Sub Arctic pipeline)
  • lower labor costs
  • lower political risks 

 Conclusion

TODAY, the Vancouver Sun published this report that British Columbia Premier Christy Clark's government is recalling the legislature for a "rare summer session" to pass key legislation enabling a liquefied natural gas project.  
 
This would be BC's version of increased fiscal certainty.
 
Meanwhile, faced with this competition, Alaska continues to spend its depleted savings, allow run-away spending and make rather hostile demands on the oil/gas investors.  At the same time, the Governor and his Revenue Commissioner are hinting that oil tax increases are lurking behind the dark horizon.
 
Alaska's leaders from the Governor to every legislator better start accepting the fact that the large, North Slope oil and gas producers are Alaska's greatest economic friends.  They are the golden goose.  They are the human treasure which provides the money, technology and capability to explore for, produce and monetize Alaska's remotely located resources.  
 
Treating investors with courtesy, fiscal stability and good communication is the best way to both improve throughput of TAPS and entice a gas pipeline/LNG project investment.
 
The second best way to assure that prosperity is for elected leaders to do what they were elected to do: put Alaska's financial house in order.  Make the budget sustainable.  It may not be a pleasant job, but if today's crop of politicians can't do it they should make way for others who can do it.
 
Yes, the great, Alaska North Slope gas monetization project is on an uphill road.  Hazards abound as does competition and internal strife.  Great skill and determination are required to achieve the summit.
 
If Alaska's leaders can just rise to the occasion, summon the required diplomatic, communication and common sense attributes ... and recognize that their very best hope for success is a willing, capable and dedicated group of major producers ... great things can happen for all the participants.  
 
Otherwise, Alaska could find itself overtaken, outmaneuvered and outclassed by other oil and gas jurisdictions that have a greater ability to lead, cooperate, make wise decisions and act.
 
Will Alaskans snatch victory from the jaws of defeat, or will the gas monetization challenge be too great for this generation of leaders?
 
The AK-LNG project's window of opportunity seems still to be open.  For how long, we do not know.  We hope the state's elected leaders can muster the mighty effort required to accommodate the needs of investors to create the new gas project reality that Alaska's economy and citizens so desperately need.
 
 
 
 
 
_______________________________________
 

·        There are many global players trying to enter the market, including over 35 projects seeking ground-breaking in North America

·        Prices of the underlying commodities have slipped dramatically. This includes crude oil (Far Eastern LNG is linked to oil prices), natural gas for LNG, and land-based gas deliveries

·        Japanese nuclear power is re-emerging after being shut down, and China (among others) are seeking more nuclear plants

·        The rate of demand for power appears to be slowing, in keeping with slower global economic growth (see charts below)

A report CITI crossed our desk today, which underlines (and adds to the count of) growing pains being felt by the global LNG market. In particular, this raises serious questions about the ability of LNG exports from the US to have much impact on raising the price structure for domestic natural gas


 

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, former Chairman of the Anchorage Chamber of Commerce, and past President of the American Bald Eagle Foundation 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 solely those of the publisher and in no way reflect the opinion(s) of any affiliated company, person, employer or other organization.

 

Categories:

6-18-15 Why Shale Critics Have It Wrong

18 June 2015 4:21am

Oil Tax Commentary

 

WSJ.  Video interview, "Why shale critics are wrong."


Calgary Herald by Stephen Ewart.  With the NDP government’s first throne speech Monday, Premier Rachel Notley began disappointing the party’s core supporters in the environmental community by championing exports of Alberta oil to global markets as part of a Canadian energy strategy.

Recently, we commented on the onerous similarities between oil tax perspectives of Governors Kasich of Ohio and Palin of Alaska.  

Alaska has just now, after nearly a decade of economic downturn, managed to repeal and overcome some of the damage done by Palin's populist, anti-oil tax policy.  But Kasich would apparently prefer to learn about taxation principles from personal experience and the hard knocks school rather than history.

Today, our mid-Atlantic energy analyst friend updates us on the Kasich oil tax probe.
 
He wrote us that: " Governor Kasich’s effort to ram through an onerous and massively flawed severance tax through by wrapping it inside the state budget was pushed aside, thanks to the stalwart efforts of House Republicans."
 
"The statement by Senate President Faber that “we have never had everybody in the same room together” gets to the heart of a major impediment  to resolving this issue for over four years. Until now, there have been major players who saw this issue as a potential source of a “win” for political gain, rather than trying to find common ground for both the volume level and application of tax revenues.  
 
"The Ohio Oil and Gas Association (OOGA} has shown it is ready to work with both the Administration and the House and Senate to develop a plan that is fair to the people of Ohio, while providing adequate incentives to properly develop Ohio’s natural resources."  (Reference)
 
We note that elected leaders of both parties are tempted, during trying economic times, to unreasonably tax the few to benefit the many voters (i.e. Kasich and Palin are both republicans).  Though this practice can violate Economics 101 and damage citizens and their economies in the long run, it often benefits populist politicians in the short run.  It is the modern version of, "Lynch Mob Mentality", whose psychology or lack thereof discourages critical thinking.   -dh

 

Categories:

6-16-15 Is Alaska's Governor Seeking Control Of The Ak LNG Project; Or, A Governent Owned Project?

16 June 2015 1:11pm

Alaska Governor Bill Walker's June 8 Letter To AK LNG Participants Doesn't Exactly Radiate Cooperation 

by

Dave Harbour

(In fairness, we wish to provide this comment from an anonymous reader.  -dh)

Bill Walker, AK LNG, Governor, Alaska, 49th State, oil taxes, fiscal certainty, Photo by Dave HarbourToday, we ask if Alaska Governor Bill Walker (NGP Photo) is seeking cooperation with participants in the AK LNG project, or is he seeking to control those free market participants, or is he angling toward a separate, government owned project?  

Here is a letter Walker sent yesterday to House and Senate resource committee leaders which included the copy of a letter he dispatched back on June 8 to producer leaders of the AK LNG project. 

We hate to be judgmental; after all, we all have our own ways of doing business.  And, we should grant the Governor some leeway for lack of experience in dealing in the world of business and free enterprise.

If it were our call, we'd have met with Ak LNG on a regular basis to resolve ongoing issues; after all, there will be plenty more hurdles for participants to cooperatively overcome over the years if the project goes.  

In meeting with participants regularly, we'd have engineered a process like the governor "proposes/unilaterally mandates" in this correspondence, sought concurrence among the parties and made a joint announcement on how the project will proceed.  "Peace to all in an atmosphere of cooperation"....

Instead of a cooperative joint announcement, we now have a Governor presuming to call the shots, dictate the process.

In less formal circumstances, we would likely ask, "who in the blazes does this guy think he is?"

Readers will find one of the dictated matters occurring in the Governor's correspondence, item #3.  In it he acknowledges that one of the big issues to be resolved is "fiscal stability" (See our 4-part series).

Government bullying can turn a reasonably profitable project into a loser.  

The bigger the investment, the more need there is for assurance that property will not be expropriated by fiat, as in the case of Argentina, or more indirectly taken by predatory taxation occurring after investments have been made.  

Just think about this: if an investment goes south on a manufacturing plant or commercial fishing boat, there are often plenty of potential buyers.  But when you bury a pipeline into the earth and the investment goes south, statutes require you spend billions more dismantling and removing the asset, and restoring the right of way.

In our opinion, the AK LNG investors have no choice but to seek full fiscal certainty on all of their oil and gas assets in return for the big gas transportation system investment.

If the Governor wishes not to use his bully pulpit supporting that need with the Legislature and the citizenry, we think it obvious that he either does not believe that full fiscal certainty is needed or he holds back on offering fiscal certainty knowing participants will have a difficult time justifying the investment.

This does not mean "fiscal stability" of the oil companies.  It means, basically, that if the investors pour $45-$60 billion into the state of Alaska to build a gas pipeline/LNG project, they need to know that they will not be treated here like Repsol was treated in Argentina less than a decade ago.

Alaska has demonstrated in the past that in the 49th state, "A Deal Is Not Necessarily A Deal".  Readers can explore the link for background.  Basically, Alaska's elected officials have taught investors that they don't mind raising taxes after an investment decision is made and they don't mind doing it RETROACTIVELY.

Being hopeful, but not stupid, Alaska's oil industry has said for a generation that when and if a gas transportation project is built, the state will have to guarantee fiscal stability of the project.

In the June 8 letter, Walker, agrees that fiscal stability should be part of the process, but that it will exclude oil.

In other words, he is saying, "I'll agree to not tax gas after the investment is made but you'll get no guarantee from me regarding the oil."

So if one is trusting enough in Alaska's state government to invest scores of billions in a gas pipeline, one is not concerned that oil taxes will be raised after the gas project is built?

We have talked to no one about this correspondence, either in the Administration, Legislature or oil industry.  If we had, we'd have undoubtedly been smarter.

But we are compelled based on an independent reading of the correspondence to conclude that the Governor thinks he can charm or coerce industry into investing billions into a gas transportation project by providing only half a loaf of fiscal stability.  Either that, or he is trying to infiltrate so many skunks into the gasline parade that any rational investor would say, "Sorry, not today".  By multiple skunks, I refer to but do not have space to explore other troubling provisions of the correspondence, including gas marketing, government ownership and pipe routing issues.  

If you are an investor hoping for a cooperative government partner, read the June 8 letter and weep.

The June 8 letter, causes one to wonder if the Governor -- a lawyer who spent a undistinguished, quixotic career advocating a government owned LNG project -- will finally get his wish to be Master and Commander of some imagined, but not yet real, government-owned, Alaska LNG project.

We hope this is not Walker's motivation for the June 8 letter, nor his pipe dream.

If it were, we fear that to the innocent citizens of Alaska the dream will morph into a pipemare.

-30-

 

See reader comments below with my responses in red....

If I were an alien drop kicked to this planet; my main takeaway of a cursory reading through is that the author implicitly dislikes the Governor. I am unable to discern the GOA's motives.  I do not dislike the governor and am as 'charmed' by him as the next citizen; but my role here is to draw logical conclusions from actions.  If that discipline is judged to be personal or subjective, so be it.
 
Is he trying to dictate the process, or is this type of simpleton action an honest outworking of his character; further evidence of an acute lack of understanding/experience in matters of import.
 
By being public, should his motive be to blow up the JV, it may grant a certain cover for future unilateral actions by the administration undoubtedly. But as to his motive, I cannot speak. 
 
As to the point of oil tax stability vs. a single specific large scale activity and tax implications; I don't think it is appropriate to expect similar treatment. For the SOA to execute an agreement on fiscal terms for a specific project over a specific time period would be a difference of kind rather than degree in relation to oil taxation.  Nevertheless, stability for an oil and gas producer's gas and not his oil is no stability at all.
 
As a sovereign we do not execute contracts on projects or with companies, we have a broad base tax system and the premise that it would remain unchanged over a period of decades is untenable. Alaska better question its premises if it wants a gas project, particularly with the competition it faces and with its unreliable, predatory tax history.  Current activity in the oil patch is resplendent with renegotiations due to a changing market dynamic, but those center around specific contracts i.e. shipments of LNG pricing being renegotiated due to market conditions in the same manner service companies have renegotiated to maintain a position with producer companies. In fact, Apache reports their earnings are now greater at $60 bbl than previously under $90 bbl pricing. Both they and their service providers are profiting.   Perhaps Alaska should re-explore the idea of a Constitutional amendment to permit a fiscal stability 'contract' under certain conditions.
 
Ideally, the SOA would develop a taxing scheme that would be appropriate and applicable over wide market dynamic, lasting for decades; that would be a challenge, but perhaps ELF was a good example. When Frank gained office, pundits claimed that ELF was broken. I would posit it as being outdated under the conditions at that time. Even oil companies expected changes to be made. 
 

 

 


(Note: Editors are welcome to reprint our opinion pieces; attribution should occur and we would appreciate being sent a link.  Readers may send any thoughtfully written responses to this address and we will reprint them alongside this editorial for the Archives.)

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, former Chairman of the Anchorage Chamber of Commerce, and past President of the American Bald Eagle Foundation 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 solely those of the publisher and in no way reflect the opinion(s) of any affiliated company, person, employer or other organization.

 

Categories:

6-7-15 Oil Taxes Approach the Alaska Political Spotlight Again

07 June 2015 3:43pm

Comment.  Readers can be sure that when Alaska's governor calls a summit on the state's fiscal situation, the outlook for oil and gas investors becomes less certain.  (See ADN story, column left)

This is because the natural course of politics is to tax entities with the most cash and fewest votes and protecting large voting blocks of beneficiaries.

For example, the capital intensive oil industry employs very few, highly skilled masters of technology to produce great wealth.  Other industries, like commercial fishing and tourism are people intensive; they employ huge armies of mostly lower skilled workers --voters-- that produce insufficient tax revenue to fund the education, airports, social services, roads, docks and seasonal unemployment costs associated with their vocations.

So when the Revenue Commissioner talks about "changes" to an oil and gas tax regime that was reformed by the Legislature two years ago, then withstood a voters initiative to repeal the reform last year, investors must calculate a higher risk factor into their ongoing investment decisions -- including big projects like gas pipelines.

The way it will likely happen is that politicians will say, "...the fiscal crisis affects everyone and everyone will have to contribute a 'fair share' to the solution." What follows will be fairly insignificant spending cuts and modest tax hikes affecting large groups and proposals for more significant tax increases affecting oil and gas investors.

If it rolls out any other way, it will be a first for Alaska.

Alaska's deplorable fiscal crisis is decades old and self imposed by politicians and greedy constituents; it was not caused state's small cadre of highly efficient wealth producers. 

Yet we can expect in coming months misleading and demonizing rhetoric aimed at those investors to justify taxing them more; the rhetoric will also serve to cover the derrieres of the real culprits -- Alaska's current and past political bosses.  

-dh

ADN by Dermot Cole and Nathaniel Herz.   ...

“We’re going to have taxes that impact individual Alaskans. We’re going to have to look at changes to oil and gas taxes. We’re going to have to look at strategic use of our legacy assets,” (Revenue Commissioner Randy  Hoffbeck) said, referring to the Constitutional Budget Reserve, the Permanent Fund and other accounts.  

Hoffbeck said oil and gas tax changes could be part of the solution but “I don’t want anybody to misinterpret this as saying, ‘It’s time to go after the oil companies again.’  

“Is there room to modify oil and gas taxes? To make them more efficient, to make them work better, generate more incentives for investment, while still being fair? I think that’s an honest intellectual discussion that we need to have.”


More on gas pipeline from Petroleum News: 

Chenault bullish on LNG progress, prospects - 06/07/2015 House Speaker Mike Chenault has been busy dealing over the budget impasse that's approaching its fifth month. But the Nikiski Republican hasn't lost sight of recent significant oil and gas developments, be it repairing the Dalton Highway, protests from Washington state and Seattle politicians over S....


 

Categories:

6-2-15 New Alaska North Slope Discoveries!

02 June 2015 9:32am

Rebecca Logan, Alaska Support Industry Alliance, Armstrong, North Slope Discoveries, Dave Harbour PhotoNEW Alaskan Discoveries Are Significant: See TODAY'S NEWS!  (Note: we thank Rebecca Logan {NGP Photo}, Alliance General Manager, for alerting us to this important announcement!)


Robert Dillon, US Senate Energy Committee, Lisa Murkowski, Keystone XL, Photo by Dave Harbour

Keystone XL Commentary by Robert Dillon (NGP Photo), U.S. Senate Energy and Natural Resources Committee


TODAY'S RELEVANT ENERGY LINKS, COURTESY OF CONSUMER ENERGY ALLIANCE


 
 
British Columbia's energy projects lure companies stung by Alberta downturn
Still, all of the LNG terminals proposed for the British Columbia coast remain in the planning stage while gas and crude- oil pipeline projects face ...
 
 
Kinder Morgan Trans Mountain pipeline expansion could cost Canada $22.1B, says SFU study
"Investing some $20 billion in potentially empty pipeline space imposes a very large cost on Canada, to the oil and gas sector, to the Canadian public ...
 

WASHINGTON, D.C. – On Wednesday, June 10, 2015, at 11:00 AM, in room 1324 Longworth House Office Building, the Subcommittee on Indian, Insular and Alaska Native Affairs will hold a legislative hearing on the following bill:

  • H.R. 2387 Don Young, Alaska Congressman, Native veterans, Photo by Dave Harbour(Rep. Don Young, NGP Photo), To amend the Alaska Native Claims Settlement Act to provide for equitable allotment of land to Alaska Native veterans.

 

 

 
 
 
 

Armstrong Announces Significant Discoveries on the North Slope of Alaska

June 02, 2015 07:00 AM Eastern Daylight Time

DENVER--(BUSINESS WIRE)--70 & 148, LLC (Armstrong) announced today the successful completion of the 2014/2015 winter campaign.

“These new discoveries show the immense potential that still exists on the North Slope of Alaska”

Two Nanushuk wells were tested this year, including the Qugruk 8 (Q-8) vertical well, which tested a small portion of the net pay zone and flowed 30 degree API gravity crude at rates of up to 2,160 barrels of oil per day (BOPD). The Qugruk 301 (Q-301), two miles north of Q-8, tested a 2,000 foot horizontal lateral. The well flowed at tubing constrained rates as high as 4,600 BOPD with minimal bottom hole pressure drawdown.

In the East Alpine field, two new penetrations were completed in the Alpine Formation, adding to the previous two penetrations. Three of these wells have encountered oil productive Alpine sand in excess of 95 feet thick at a depth of 6500 feet with porosities ranging from 15% to 25%. Well control and seismic data indicates the oil pool covers an area in excess of 15,000 acres.

The successful drilling program is the result of a joint exploration effort underway since 2012. Repsol operates the consortium and holds a 70% interest, Armstrong holds a 22.5% stake and GMT Exploration Company has 7.5%.

The activity to date since the beginning of exploration has resulted in the discovery of several oil fields on the North Slope of Alaska. All 16 wells (including sidetracks) drilled by the consortium have found hydrocarbons, most with multiple pay zones. In the Nanushuk reservoir, the consortium has drilled seven appraisal wells to date and has proven an oil pool that covers more than 25,000 acres, at a depth of 4,100 feet, with an oil column of 650+ feet, and up to 150 feet of net pay with an average porosity of 22%.

Although additional drilling is needed to confirm the ultimate size of some discoveries, this season’s results justify moving forward with development, and two of the fields are in the process of being permitted for development -- one in the Nanushuk and another in the Alpine Fm.

“These new discoveries show the immense potential that still exists on the North Slope of Alaska,” said Bill Armstrong, President of Armstrong Oil & Gas. “We strongly believe that there are many great conventional oil projects yet to be found and developed in Alaska, and with the passage of the More Alaska Production Act (SB 21), the state has encouraged new drilling and future developments.”

 
 
 
 
 
TODAY'S RELEVANT ENERGY LINKS FROM CONSUMER ENERGY ALLIANCE....
 
Washington Examiner: Offshore drilling would continue under most 2016 hopefuls
A May poll of South Carolina voters by Consumer Energy Alliance, a coalition of business and energy industry groups, showed 63 percent supported Arctic drilling compared with 32 percent who opposed it. Eighty-five percent of the Palmetto State voters polled said energy issues will play an important role in the 2016 election.
 
Associated Press: Things to know about the Calif. oil spill
The May 19 spill occurred along the same stretch of Santa Barbara County coast as the devastating oil platform blowout in 1969 that galvanized the environmental movement. While the impacts of the latest spill have been far less severe, the episode has angered conservationists and residents who lived through the earlier disaster.
 
Los Angeles Times: Santa Barbara fisherman files suit against oil pipeline company
As Santa Barbara fisherman is suing the Texas owners of the oil pipeline that ruptured last month, spilling up to 105,000 gallons of crude along the coast near Refugio State Beach, for economic damages.
 
Huffington PostOpinion: U.S. needs to back oil, gas boom to strengthen job market
Federal leaders should support the oil and natural gas boom and ease the permitting process for infrastructure projects to continue bolstering the nation's strong job market, writes Sean McGarvey, president of North America's Building Trades Unions and chairman at the Oil and Natural Gas Industry Labor-Management Committee. Energy infrastructure expansion could add jobs and generate savings for the nation with about $1.14 trillion of investments through 2025, McGarvey notes, citing the American Petroleum Institute. "The family-sustaining jobs that the boom is creating are exactly the type of jobs we need to rebuild the great American middle class," he writes.
 
National Journal: EPA Climate Plan Sent to White House for Review
The Obama administration has teed up a busy summer on climate change, with the final review of its tentpole climate rule swinging into action.
 
The Hill: Obama climate rule nearly complete
The Obama administration is conducting the final review of its controversial rule to limit carbon emissions from power plants. The White House Office of Management and Budget (OMB) said it is putting the regulation into the final review process after receiving the texton Monday from the Environmental Protection Agency (EPA).
 
The HillFrench official says climate deal should bypass
 

The French foreign minister said Monday that any international deal that comes from a climate conference in Paris this winter should be written so it avoids needing ratification by Congress. "We know the politics in the U.S." Foreign Minister Laurent Fabius said, the Associated Press reports. "Whether we like it or not, if it comes to the Congress, they will refuse."
 
The HillKansas governor signs bill to comply with power plant rules
Kansas will formulate a plan to comply with the Obama administration's climate rule for power plants despite ongoing opposition to it within state government. Republican Gov. Sam Brownback signed a bill last week directing the state's Department of Health and Environment and the Kansas Corporation Commission to work on a strategy to meet the goals of the Clean Power Plan, which looks to cut greenhouse gas emissions from power plants.
 
E&E News: FERC commissioner says EPA carbon rule may usurp state powers
States complying with U.S. EPA's Clean Power Plan run the risk of ceding jurisdiction over energy policy decisions to the federal government, according to Federal Energy Regulatory Commission member Tony Clark.
 
Breaking EnergyFERC Advances Reliability Safety Mechanism in Final Clean Power Plan
On May 15, 2015, the Federal Energy Regulatory Commission (FERC) provided the Environmental Protection Agency (EPA) with a letter signed by all five Commissioners that details its role in implementing a Reliability Safety Valve (RSV) in the proposed Clean Power Plan (CPP). The CPP proposal, issued on June 2, 2014, aims to reduce power sector emissions by 30 percent by 2030 relative to 2005 levels. It provides state-specific, rate- or mass-based targets to reduce power plant carbon dioxide emissions and guidelines for state plans to meet the targets.
 
Bloomberg: Global oil companies refocus businesses, promote gas
Royal Dutch Shell, Total and other global oil producers said Monday that they are collaborating to encourage the use of natural gas as an alternative to coal. The companies are increasing their gas production to levels greater than those of their oil output as they refocus their businesses on gas.
 
Reuters: The U.S. oil HF’s dilemma: crouch or pounce?
U.S. shale oil producers, having weathered the worst price plunge in their industry’s brief history, now face a dilemma: whether to stay in a defensive crouch after slashing their rig fleets, or start drilling more wells to capture a partial recovery in prices.
 
Financial PostThe great HF revolution paradox
One of the great paradoxes of the fracking revolution is that its “father,” the late George P. Mitchell, was a fan of sustainable development. This might not quite rank with cotton manufacturer Friedrich Engels supporting Karl Marx, but it comes pretty close. That’s because if sustainability has one key tenet, it is that the fossil fuel industry must be killed to save the planet. Instead, fracking has revitalized it.
 
OilPrice.com: Why natural gas may become the fuel of choice in this coal state
Kentucky has long been a coal state, and as such has consistently resisted efforts by the federal government to limit greenhouse gas emissions from its coal-fired power plants. Nevertheless, Kentucky may end up complying with the new rules by default.
 
Environmental Leader: HF Drives New Water Management, Treatment Technologies
As the water footprint created by hydraulic fracturing and directional drilling continues to grow in the US, water management issues are projected to become more challenging, Industrial WaterWorld reports. Fortunately, technical advancements and new initiatives are beginning to address water access, reuse and recycling issues.
 
Roll Call: Dems should back offshore drilling expansion
Democratic members of Congress should stop using false arguments to rationalize restrictions on offshore oil and natural gas production and exploration, and instead overcome "the Arctic myth" and expand access to such activities, writes Randall Luthi, president of the National Ocean Industries Association. He notes that contrary to the beliefs of some lawmakers and groups, knowledge has been developed for decades on "nearly every aspect of the Arctic seascape" through technologies and research funding from the industry and federal regulators.
 
Bloomberg: Corn Ethanol Is Worse Than Keystone
For years, environmental activists have opposed the Keystone XL pipeline, claiming that development of Canada’s oil sands will be “game over for the climate.” But if those same activists are sincere about climate change, why aren’t they getting arrested outside the White House to protest the use of corn ethanol?
 
International Business Times: HF Resumes in Denton
Natural gas drilling is starting up again in Denton, Texas, despite the city’s 7-month-old ban on hydraulic fracturing. Vantage Energy resumed operations Monday at its Denton well just weeks after Gov. Greg Abbott passed a law prohibiting cities from banning fracking on their home turf. Three activists were arrested at the drill site Monday morning after attempting to block an access road.
 
VICE News: Denton, Texas Banned Fracking — But the Drillers Are Back
In November of last year, voters in Denton, Texas sent the oil and gas industry packing, passing with a 58 percent majority a referendum banning fracking within city limits. But now the frackers are back. Last week, Colorado-based Vantage Energy began operations — legally.
 
NBC DFW3 arrested in Denton HF protest
The return of fracking came with protests and arrests in Denton. On Monday morning, three members of the Denton Drilling Awareness Group, also known as Frack Free Denton, were arrested by police on criminal trespassing charges.
 
Fierce EnergyDOE driving tribal clean energy in Alaska
The Department of Energy (DOE) is giving select Alaska Native villages assistance to implement President Obama's Climate Action Plan through the Alaska Strategic Technical Assistance Response Team (START) Program, which provides federally-recognized Alaska Native corporations' governments with technical assistance to accelerate tribal clean energy projects and initiatives.
 
FuelFixNew lawsuit filed against seven-year-old Arctic drilling auction
A 2008 government sale of Arctic drilling leases to Shell and other companies is set to face fresh scrutiny in the federal courts, with a dozen environmental and Alaskan groups preparing to file a new challenge to the auction.
 
Associated PressCelebrity make splash with Calif. drought awareness
Cher, another Malibu resident, has also let her grass go brown and has talked about the water shortage on Twitter. In a post last month, she complained California used fresh water for fracking. "We’re in a catastrophic drought, water means life??" she wrote. "We can’t drink oil."
 
Associated Press: HF halt sought in N.W. New Mexico
Environmental groups Monday renewed their call to end hydraulic fracturing in northwestern New Mexico as part of an ongoing battle over oil and natural gas development and the protection of cultural and archaeological sites. The groups delivered a letter to the Bureau of Land Management in Farmington, saying increased development has led to more truck traffic and dozens of new well pads during the last year, and that is harming the region that includes Chaco Culture National Historical Park.
 
E&E NewsCourt keeps activists out of HF lawsuit
The Colorado Court of Appeals on Thursday upheld a lower court's decision that the grass-roots group East Boulder County United had no legal right to intervene in a lawsuit between the Colorado Oil and Gas Association and the Front Range city of Lafayette, which passed a fracking ban in 2013.
 
Post IndependentNo oil and gas in North Fork Valley
Most here feel that oil and gas development simply does not fit into the lands where we live, grow our food, have our businesses and recreate. If oil and gas development is to happen in some places, we need to see other places removed from the threat of it happening there in the future. We want to have a say and direct input into how, where, if and when this activity occurs.
 
Associated PressNatural gas drilling on upswing in Lincoln Parish
A Texas energy company has purchased or leased about 71,000 acres in and around Lincoln Parish, where it is operating as many as eight rigs with plans for perhaps 10 more by the end of the year. The News-Star reports Memorial Resource Development Corp. of Houston is drilling for natural gas and natural gas liquids.
 
Morning Journal News: Drilling severance tax off the budget table, House speaker says
Any plans to raise the state tax on shale gas production and earmarking some of the proceeds for counties impacted by the drilling boom appear to be on hold, at least for now. That was the message delivered by someone who should know - Ohio House Speaker Cliff Rosenberger - who was among state legislators attending a forum held Monday and hosted by state Rep. Tim Ginter.
 
Columbus Business FirstOhio shale gas production up in 2015, but growth slowing
Natural gas production increased more than 11 percent during the first three months of 2015 compared with the previous three months. Gas production had increased by 25 percent in the fourth quarter compared to the third, according to the Ohio Department of Natural Resources.
 
American City Business JournalsOhio shale gas output rose 11% in Q1, regulator says
Natural gas production in Ohio's Utica Shale in the first quarter rose over 11% from the previous quarter to 183.6 billion cubic feet, according to the state Department of Natural Resources. The figures indicate a slower output growth than that of the fourth quarter of last year, when production increased by 25% from the third quarter.
 
Pittsburgh Post-GazetteAnalyst: Proposed Pa. severance tax would be highest among gas-producing states
Pennsylvania would have the highest severance tax rate among seven natural gas-producing states if it adopts Gov. Tom Wolf's proposed severance tax on shale gas production, state Independent Fiscal Office Director Matthew Knittel said Monday at a joint hearing held by state Senate committees on environmental resources, energy and finance. The tax rate for both value and volume of output should average about 7.3% after the end of the decade, Knittel said. He added that about 80% of the tax would be paid by consumers outside of the state.
 
Patriot-News: Pa. severance tax would be highest among natural gas states, report says
Gov. Tom Wolf's proposed severance tax would take Pennsylvania from last place to first among major gas-producing states in taxing the extraction of natural gas, according to the Independent Fiscal Office. In testimony before a Senate committee Monday, IFO Director Matthew Knittel said the effective tax rate after all state taxes are accounted for would be 7.3 percent. Neighboring states like Ohio and West Virginia levy taxes of 0.8 and 5 percent, respectively, while Texas' taxes range from 3.1 to 3.5 percent.
 
Pittsburgh Post-Gazette: Proposed severance tax would be paid by out-of-state consumers, agency says
Gov. Tom Wolf’s proposed severance tax on shale gas would shift Pennsylvania from having the lowest to the highest effective severance tax rate among seven major gas-producing states, but most of the tax likely would be paid by out-of-state consumers, the head of Pennsylvania’s Independent Fiscal Office testified on Monday. Matthew Knittel, director of the non-partisan office that provides budget analysis, gave the new assessment of the tax during a joint hearing of the state Senate’s energy and finance committees.
 
Patriot-News: HF, severance tax issues will dominate Senate hearings
Questions about how Pennsylvania regulates and taxes the natural gas industry will dominate two Senate hearings, including the vetting of Gov. Tom Wolf's environmental secretary pick. On Monday, the Senate Environmental Resources & Energy committee will scrutinize the governor's proposed 5 percent tax on natural gas drillers. The following day, the same panel will consider the nomination of John Quigley to run the Department of Environmental Protection.
 
Legal IntelligencerWolf creates natural gas pipeline task force
Pennsylvania is missing an even bigger opportunity for a return on Marcellus Shale drilling due to an inadequate system of pipelines, business officials have repeatedly said. Now Gov. Tom Wolf has formed the Pipeline Infrastructure Task Force to help coordinate thousands of miles of additional pipeline needed to take advantage of all the markets for the shale gas.
 
Associated PressVa. panel recommends new HF regulations
A Virginia advisory panel is recommending that energy companies disclose the chemical ingredients they use in horizontal fracking, a type of natural gas drilling that has spawned environmental concerns. The proposal is among 14 recommendations that have been sent to Gov. Terry McAuliffe for review.
 
Charleston Daily MailDavid McKinley: Connecting the dots on regulations
Too much of anything is a bad thing. If you plug too many appliances into an outlet, it will blow a fuse. If you overload a boat, it will sink.
 
Orlando Sentinel: Advocate: Fla. can lead on energy
Central Florida faces stronger storms and population surges due to global warming, an advocate warns. Florida trails the nation in promoting renewable energy, says an advocate for more action on climate change. Promoting renewable and more-efficient energy won't kill jobs — it'll create them, and advocate says.

 


Keystone Commentary and Status Report

by

Robert Dillon

U.S. Senate and Natural Resources Committee

Keystone – Four (More) Months and Counting

Just wanted to bring to your attention that today marks four full months since the State Department’s deadline for interagency comments on the Keystone XL pipeline.

We’re sure that like all of us, you’re shocked – shocked! – that the project remains stranded in completely arbitrary regulatory purgatory.  And by that we mean, not shocked in the slightest.

In mid-January, during the Senate debate on bipartisan legislation to approve the cross-border permit for this long-delayed pipeline, the State Department announced a deadline of February 2 for interagency comments on whether it would be in the national interest. 

The Washington Post reported that as a result of this “tight deadline” the Department was “picking up the process where it suspended it last spring.”  And the State Department confirmed on February 4th that it had received comments from all eight relevant agencies.   

So, what has happened over the past four months?  By all appearances, a whole lot of nothing. The State Department could have spent two full weeks on the comments submitted by each agency. (We wish we had that sort of time to meander through our daily work.) Yet Keystone XL remains in limbo due to an administration that won’t make a decision.

The Keystone XL pipeline’s cross-border permit has now been stranded for more than 2,447 days and counting. The president has dismissed the project as a “single oil pipeline.” And the Quadrennial Energy Review spent hundreds of pages diagnosing our nation’s energy infrastructure needs and challenges. 

Somewhere along the way, you’d think that President Obama would make a final decision on Keystone XL, instead of validating the Senate’s decision to start the 114th Congress with a bipartisan bill on this subject. You’d think thepresident would recognize the project’s potential for job creation in a still-struggling economy. 

You’d think he would recognize that pipelines are a safe, clean, and efficient option for transporting the energy that America needs in an increasingly unstable world. But at four (more) months and counting, you’d be wrong.

CNN: As Keystone vote looms, it's crunch time for federal agencies to weigh in

By Kevin Bohn, CNN

Updated 1:28 PM ET, Sun January 18, 2015

Washington (CNN) – With the Senate expected to vote soon on the controversial Keystone XL Pipeline, the State Department is now giving eight federal agencies two weeks to weigh in on it.

The State Department on Friday notified those agencies have only until February 2 "to provide their views on the national interest with regard to the Keystone XL Pipeline permit application," a department official told CNN Saturday, adding that the department "continues its review" (More....)


 

 
Categories:

More Alaska Oil Industry Angst Approaches

19 May 2015 6:33am

Attend the Annual Alaska Oil & Gas Association Luncheon!  Show support for a sustainable future!


Our Instinct: Conservatives Must Seize Opportunity To Save Alaska's Economy 

by

Dave Harbour

Please read news items below

Lisa Murkowski, 75% chance of arctic oil spill, myth, Dave Harbour PhotoWe admire Senator Lisa Murkowski's vigilance on Arctic exploration issues -- and the initiative of her committee's Communication Director, Robert Dillon.  See TODAY'S COMMUNICATION AND VIDEO HERE.

Many moons will come before Shell Oil and other producers, under the most agreeable circumstances, can find and commercially produce oil and natural gas from Alaska's Arctic reservoirs in the Chukchi and Beaufort Seas.

Any Arctic discovery and production may not likely come in time to ameliorate diminishing Alaska production that funds 90% of state government and over 1/3 of the state economy.

The impressive but modestly increased production within the onshore National Petroleum Reserve-Alaska (NPR-A) is clouded by the Bureau of Land Management's decision to lock up half of its remaining potential and continuous/agenda driven EPA and Corps of Engineers efforts to deny and/or delay permits.  

The federal bureaucracy opposes the 1980 intent of Congress and is acting illegally to manage a Refuge like a Wilderness.  The Alaska National Interest Lands Conservation Act (ANILCA) re-categorized  the Arctic National Wildlife Range (into a more restrictive "refuge"), but allowed a future Congress to approve oil exploration and production in a small sliver of the coastal plain of ANWR.

We know that even existing, high cost projects can be lost overnight with imposition of new or increased taxes.

Meanwhile, Alaska's North Slope oil production continues its slide downward exacerbating negative impact on Alaska state government revenue during this low oil price era.

This week we observe that (below) the Governor's reaction to an austere budget is not using his bully pulpit to convince democrats to join the republicans in voting to access billions stored in the 'Constitutional Budget Reserve' (CBR) savings account to balance the budget.

Instead, he is joining the democrats, browbeating the republican leadership to agree to increasing democrat-desired government spending as a quid pro quo to democrats agreeing on a super majority CBR vote.

Together, the Governor and democrats are pressing for more spending, not less, in today's austere fiscal environment.

And, they know exactly what they are doing.  They are together trying to assemble popular support for increasing oil taxes during next year's legislative session, because 1) that would minimize the need for large spending cuts, and 2) THAT IS WHERE THE MONEY IS.  

The problem with increasing the already high Alaska oil tax burden, is that it would discourage if not devastate oil industry investment that could otherwise produce a sustainable amount of future production and financial support for a moderate spending taxing authority.

Our instincts all point to the need for more effective communication.

Conservatives better become better communicators if they hope to explain why their tough approach on the budget is best for Alaska now and for future generations.

They could start by requesting editorial board meetings and giving reporters their personal cell phone numbers.

If they don't quit dodging reporters and don't become superior communicators quickly they will find that the current name calling will escalate.  The Governor and democrats will likely initiate a summer program of constituent meetings around the state.  They will probably ask folks how they think Alaska will solve its fiscal shortfalls.

Renewed demonization of industry and the legislature's republican leadership can easily be reignited; as could a new voters referendum.

And community organizers can produce crowds for constituent meetings and listening sessions that will demand, "Increase oil taxes"!!!!   

Compelling conservative spokesmen need to articulate -- soon and often -- the wiser, approach to dealing with:

But making silk purses out of sows ears requires a miracle.  Our instinct further advises us that it is unlikely the republicans will successfully make the case for tax stability and fiscal restraint. If they wanted to or had the ability to, they would have been doing so every day and twice on Sunday for the last month.

While there are several very noteworthy exceptions, as a group the republican legislators are uncharismatic, unenergetic, unimaginative, uncompetive and rely on demographic majorities for reelection and support.  

While there are many noteworthy exceptions, their democrat opponents are aggressive, young, seek out the media, and have fire in the belly.  

As a group, democrats have the further advantage, as we've said, of believing and acting on the precept that, "The end justifies the means".

Political instinct teaches that democrats see a day ahead, when with aggressive and effective communications, they can seduce the entitlement generation into putting them into power throughout Alaska...and, indeed, the country.  They've already done so within Anchorage city government.

And, for republicans with memory, that will have been an opportunity mis-handled THIS YEAR and countless opportunities lost for the remnants of future generations.

How we hope our instincts are wrong!


ADN, by Dermot Cole.  

A state plan aimed at speeding the transition to natural gas in Fairbanks reaches a key decision point Tuesday, with the Alaska Industrial Development and Export Authority scheduled to consider a $54 million investment to move the project forward.

The AIDEA board, set to meet in Anchorage, is to hear a report recommending the agency buy Pentex Natural Gas Company LLC, the parent company of the Fairbanks Natural Gas utility, for $54 million, with a closing expected by the end of July. The sale price would be reduced by about $15 million through the spinoff of the company’s Point MacKenzie liquefaction plant and other assets to Hillcorp later this year.

ADN by Dermot Cole.  An annual multibillion-dollar debate between oil companies and local municipalities about differences in the taxable value of the trans-Alaska pipeline resumed in Anchorage Monday.

The oil companies argue the 38-year-old pipeline is worth $2.6 billion, while the municipal governments of the North Slope, Valdez and Fairbanks say it is worth about six times that much, in large part because billions of barrels of profitable oil remain to be pumped to Valdez in the decades ahead. The state is arguing for a value three times higher than that favored by the companies.


Bill Walker, Dave Harbour PhotoNews Miner.  Gov. Bill Walker on Monday vetoed much of the underfunded operating budget sent to him by the Alaska Legislature and warned state employees that 15,000 of them could be without a job on July 1 if the Legislature can't come up a fully funded budget.


Peninsula Clarion by Phuong Le.  (Note our extensive coverage by scrolling down through last week's postings.  -dh)

Neither a protest by hundreds of demonstrators nor a permit violation notice from the city will halt Royal Dutch Shell's use of a Seattle seaport terminal as it prepares for exploratory oil drilling in the Arctic Ocean, spokesmen say.

The violation notice issued Monday by the Seattle Department of Planning and Development said use of Terminal 5 by a massive floating drill rig was in violation of the site's permitted use as a cargo terminal. The 400-foot Polar Pioneer and its support tug Aiviq must be removed from the terminal or Shell's host, Foss Maritime, must obtain an appropriate permit, the city indicated. 


Robert Dillon, US Senate Committee on Natural Resources and Energy, Murkowski, Photo by Dave HarbourToday's Note From Robert Dillon (NGP Photo), Communication Director, U.S. Senate Committee on Energy and Natural Resources:

There’s been lots of misinformation out there about what the Bureau of Ocean Energy Management (BOEM) has said about the safety of offshore Arctic development in Alaska. Let the attached fact sheet from BOEM set the record straight – it is not accurate to say there is a 75 percent chance of an oil spill from Shell’s Arctic exploration. Period.

The fact is that Alaska has a long history of safe and responsible oil and natural gas production in the Arctic. Some 35 wells have been drilled in Alaska’s Arctic waters since the 1980s. But you wouldn’t know that by listening to the opponents of oil production who claim Arctic drilling can’t be done safely. Hogwash.   

To date, Alaska has produced and shipped more than 17 billion barrels of Arctic oil through the trans-Alaska oil pipeline. We’re already producing oil from federal waters at the Northstar field, which was discovered in 1984 and has produced more than 150 million barrels of oil since 2001.

And our state – with an estimated 46 billion barrels of conventional oil reserves and 430 trillion cubic feet of natural gas reserves – has much more to offer the nation. Studies suggest that increased leasing and development in Alaska’s Beaufort and Chukchi seas and in Cook Inlet could, by 2035, create nearly 840,000 jobs, raise more than $200 billion in revenue for the government and increase U.S. energy production by 3.5 million barrels.

Even President Obama agrees that Alaska production is good for America: “I would rather us – with all the safeguards and standards that we have – be producing our oil and gas, rather than importing it, which is bad for our people, but is also potentially purchased from places that have much lower environmental standards than we do.” – President Obama, May 14, 2015.

 


Our friend, Julie Hasquet offers this heads up about the upcoming luncheon of the Alaska Oil & Gas Association (AOGA).

"This annual event is the best place to learn all of the latest information, facts & figures about what is happening in Alaska’s oil and gas industry.  This year’s opening remarks are from U.S. Sen. Lisa Murkowski,  and the keynote speaker is Adam Sierninski, Administrator of the U.S. Energy Information Administration.

The 2015 luncheon is Thursday, May 28 at 11:30 am at the Dena’ina Center in Anchorage. If you haven’t already, please take the opportunity to  consider buying a table for you and clients...or individual tickets. You can register at www.aoga.org.


 

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