The Star, by John Spears. If Canada fails to develop its oilsands now — and fails to build the pipelines to move it to market — the opportunity could vanish for decades, two industry executives warned Wednesday. (Note: we continue to observe here that, from a gas marketing perspective, Alaska is in the same boat! -dh)
“Asia will figure out other sources to get supply from if they can’t get it from Canada,” Cenovus chief executive Brian Ferguson told a meeting of the Canadian Club.
Meet Alaska, Part III
(Meet Alaska, Part I, Here)
Senate Energy and Natural Resources Committee Communications Director Robert Dillon (NGP Photo), this morning, draws our attention with this link to growing support for Senator Lisa Murkowski's efforts to end the oil export ban and update American Energy policy. We couldn't agree more. For a video of her Senate floor speech yesterday on this subject, go here. For our earlier report on her Brookings Institution speech, go here. -dh
Today the House Natural Resources Committee voted to approve a motion to authorize Chairman Doc Hastings to issue subpoenas to Obama administrators on various issues, some of which affect energy and related natural resource issues. -dh
...last Friday at the Alliance's Meet Alaska Conference, CH2MHill's Tom Maloney (NGP Photo) and I were discussing the importance of Alaska's new production tax law.
We discussed the value of defeating a referendum on the upcoming August primary ballot that asks citizens to vote 1) to repeal the tax reform just passed last spring, or 2) to not repeal it.
If Alaska's new oil tax reform law is repealed a year after passage, Alaska's investment climate will be less inviting and more hostile to investors than ever.
When Tom began spouting off one liners to convey the importance of tax reform, I asked him to email me his creations.
Here they are for our NGP readers:
The NEED TO DRILL TO PAY THE BILL
NO DOUGH WITHOUT OIL FLOW
I AM NOT FINE WITH DECLINE
DON’T TAX BEYOND THE MAX
INCREASE PRODUCTION NOT MORE REDUCTION
Charlotte News Observer, by John Frank.
Gov. Pat McCrory met President Barack Obama on the tarmac Wednesday in North Carolina with a message: don’t be a stranger. (NGP Note: As we have observed here, McCrory serves on the OCS Governors Coalition with Alaska Governor Sean Parnell.)
“In the short time I had on the tarmac I took advantage of every minute,” McCrory said in an interview at N.C. State University, where he attended Obama’s speech. “I talked about wanting to build a relationship with the White House in dealing with complex issues from unemployment to Medicaid to food stamps and also offshore drilling.”
“He immediately, to his credit, introduced me to his energy secretary and I’m setting up a meeting in February with the energy secretary with other governors to explore and hopefully move forward offshore drilling, at least for natural gas off our coast,” McCrory continued. “So we are beginning that dialogue. We need to move forward with energy exploration in North Carolina and at least this first window of opportunity of dialogue and I look forward to building that dialogue.”
- Alaska Miners Association Reaction.
- Alaska State Chamber Reaction.
- Governor Sean Parnell said yesterday that, "This report is little more than a pretext for an EPA veto of the state’s permitting process, something the federal Clean Water Act prohibits. As my record demonstrates, I will not trade one resource for another, and every permitting application—when filed—deserves scientific and public scrutiny based on facts, not hypotheticals.”
- Mike Heatwole provided us today with a link to this statement from Pebble CEO, longtime Alaskan John Shively (NGP Photo). His statement below reacts to yesterday's EPA release:
“It is a disappointing day when an agency charged with upholding a science based regulatory process ignores its own rules and regulations, and does not take the time nor expend the effort needed to fully assess impacts in the vast Bristol Bay region. We had higher expectations for the EPA.
“It must be remembered that the report does not assess the effects of the Pebble Project as we have not finalized nor submitted a project for regulatory evaluation. The report is based upon a so-called ‘hypothetical mine’ of the EPA’s design. The hypothetical mines developed by EPA in their first two drafts did not employ the most advanced engineering and mining practices, as will most certainly be used at Pebble.
“And it does not consider the critical environmental safeguards and modern mitigation that state and federal permitting will require for Pebble. Even then, the EPA has grossly over-estimated the effects of its under-engineered project. PLP has spent many years and $600 million dollars on engineering and environmental studies to develop a plan for a 21st century mine. We understand the critical role salmon plays in this region of Alaska, both culturally and commercially. This is why we have dedicated significant time and resources to our environmental studies program and why we have taken time to design a responsible project for developing the mineral resource at Pebble.
“EPA did not take the time nor did it commit the financial resources to assess the potential impacts of development in an area the size of the state of Ohio. It is both a poorly conceived and poorly executed study, and it cannot serve as the scientific basis for any decisions concerning Pebble. We have noted throughout this process that the EPA has deviated from its own internal guidance for a report with ever changing objectives.
“Unfortunately the real loss is for stakeholders, especially those in Southwest Alaska who are seeking ways to fully understand modern mining and the range of issues posed by possible development of Pebble. We had certainly hoped that EPA would depoliticize this process and come back to its legitimate and important role of evaluating this project based on the best available science, an evaluation which should take place in the very comprehensive permitting process established by federal law. Clearly this report should not be used as the basis for any type of agency decision regarding Pebble.”
From: Alaska State Chamber of Commerce
Today the Environmental Protection Agency (EPA) released its final Bristol Bay Assessment continuing its disregard for its own long standing regulatory process.
While this decision clearly affects the Pebble Project and its efforts to research and design a 21st century mine, businesses throughout Alaska and the United States should take note.
Businesses rely on consistent application of state and federal laws. The EPA's action today continues to signal to the business community that it is willing to halt projects they don't like before a business even has an opportunity to submit permit applications.
The Alaska Chamber supports responsible natural resource development and encourages the Alaska State Legislature and the Parnell administration to uphold Alaska's strong regulatory and permitting laws and policies that will facilitate additional exploration, site development, employment, infrastructure, research and natural resource production in Alaska.
January 15, 2014
FOR IMMEDIATE RELEASE
Contact: Deantha Crockett
Alaska Miners Association responds to the EPA’s final Bristol Bay Assessment
Anchorage, AK – Today, the EPA released its final Bristol Bay assessment, titled "An Assessment of Potential Mining Impacts on Salmon Ecosystems of Bristol Bay, Alaska." While we will still need to review the full report, the Press Release issued by EPA Region 10 indicates that the agency continued to use hypothetical mining scenarios drawn from an aged economic report and NOT from a submitted or completed mine plan. They omitted current state and federal regulations that would be applied to any such project, and ignored modern mining practices. In addition, today's release of the report is further indication that EPA rushed this process, setting a dangerous tone for any development project in the United States.
"As a miner, a lifelong Alaskan, and an American, I am disappointed. First and foremost, natural resource development projects should always be evaluated by science and facts. Nothing more, nothing less,” said AMA Executive Director, Deantha Crockett (NGP Photo). “In its assessment, the EPA has done an injustice to all development projects by supposing scenarios of poorly designed mines, omitting real-life standards that mining projects must follow, and exaggerating the impacts resulting from what is an impossible scenario. EPA has also done an injustice to Alaskans who deserve to know the scientific realities of Pebble, realities that will come through a mine plan submitted in the formal NEPA process. It is in this process that we should determine our support for the project based on whether or not it can be done right. This highly flawed report does not give us the information we need to make such an important decision."
Read the full assessment here: http://www.epa.gov/ncea/pdfs/bristolbay/bristol_bay_assessment_final_2014_ES.pdf
- From: Office of the Federal Coordinator, Alaska Gas Pipeline
- From: U.S. Senator Lisa Murkowski: “I applaud the progress Gov. Sean Parnell’s office has made in advancing a natural gas development project,” Murkowski said. “I look forward to all parties working as quickly as possible on the engineering design of the project and to speed development of the financial framework for a project to proceed to construction.”
- From: Alaska State Chamber of Commerce
Like Governor Sean Parnell and many other Alaskans, the Alaska Chamber welcomes the news that a commercial agreement for an Alaska gasline has been signed.
"This agreement marks a major step in bringing Alaska's gas to market, but much work lies ahead. We look forward to supporting policies that will support project development and a strong economic future for Alaska," said Rachael Petro, Alaska Chamber President/CEO.
The agreement, also known as a Heads of Agreement (HOA), was signed by the commissioners of Natural Resources and Revenue, ExxonMobil, BP, ConocoPhillips, TransCanada, and the Alaska Gasline Development Corporation (AGDC). The HOA will be subject to public review by the Legislature this session.
"This commercial agreement, with its transparent set of terms, is Alaska's roadmap to developing our vast gas reserves," Governor Sean Parnell said. "This is truly a historic achievement. Not only have all the necessary parties aligned around a single project, but we're moving forward with a project that's on Alaska's terms and in Alaskans' interests. I extend my thanks to all of the parties for the hard work that went into this agreement, and look forward to working with legislators on laying the framework to best manage our gas resources."
In Part I, we gave a preliminary reaction to Governor Sean Parnell's dramatic announcement that the major Alaska North Slope gas pipeline/LNG project parties had reached 'alignment of interests'.
In Part II, we began to provide brief descriptions of presentations. After writing Part II, we learned more about the gas pipeline/LNG project documents Parnell described on the first day. On Monday, we'll explore the two documents.
Meanwhile, today we continue with the presentation briefings and add a few more participant photos here:
(Uploading this coming weekend....)
Meet Alaska Part II
THIS MORNING IN WASHINGTON: You Read It Here First!
U.S. Sen. Lisa Murkowski (NGP Photo) today sent a letter to President Obama urging him to lift the prohibition on exporting crude oil produced in the United States. Doing so, Murkowski wrote, will allow American producers to access global markets, which will boost production, protect jobs, and increase our energy security.
Murkowski called on President Obama to take a leadership role on lifting the export ban and offered her support in Congress.
“Your leadership will be critical to our success in this endeavor,” Murkowski wrote to the president. “In particular, I would draw your attention to the status of our nation’s hydrocarbon trade. While exports of our natural gas and petroleum products have grown, our work is far from finished, and our policies are, in some cases, far from adequate.
“Despite the obvious geopolitical, economic, and environmental benefits of building out our nation’s liquefaction capacity as soon as possible, the Department of Energy continues to slow-walk its approval of export licenses to our allies. The Keystone XL pipeline, which the State Department estimated would support over 42,000 jobs, remains unapproved even after years of delay. I once again urge you to take immediate action on these infrastructure projects, which you have generally promised to champion,” Murkowski continued.
The administration retains the authority to lift the ban on its own. The U.S. Commerce Department can authorize a swap if domestic crude cannot be marketed in the United States. The president can also issue a national interest determination.
“Lifting the prohibition on crude oil exports also presents us with a rare opportunity to work together in a bipartisan fashion to address this situation before it becomes a problem,” Murkowski wrote. “Together, we can send a strong signal to the world that the United States is ready to lead on energy, the environment, and trade. Lifting the ban will help create jobs, boost the economy, and keep our production at record levels.”
The full text of Murkowski’s letter to the president is available on the Senate Energy and Natural Resources Committee website. Murkowski sent similar letters to the State, Energy, and Commerce departments, and to the Federal Energy Regulatory Commission, which can be found in the documents section under letters.
Murkowski, the energy panel’s top Republican, released a white paper on energy exports last week. The paper, A Signal to the World: Renovating the Architecture of U.S. Energy Exports, is available on the committee’s website, as is supporting analysis by the nonpartisan Congressional Research Service.
See our 1-7-14 Story (You read it here first!)
Yesterday we pretty much focused on various aspects of Governor Sean Parnell’s (NGP Photo) announcement at Friday’s Meet Alaska conference, that all major gas pipeline/LNG project parties had reached, “alignment”.
Today, we recognize the people represented at the Alaska Support Industry Alliance’s annual “Meet Alaska” event -- and what they said -- for the benefit of our thousands of Asian, Canadian and US readers who were not present.
ConocoPhillips' Exploration & Production Executive Vice President based much of his presentation on Alaska's competitive positioning in the world oil and gas market.
Matt Fox (NGP Photo) told the audience that his company -- the largest oil & gas exploration company in the world -- would be spending most of its available capital on development and on major projects. (See Fox's slide presentation here.)
While noting his company's interest and investment in the Eagle Ford, Bakken, Permian Basin and other prospective oil & gas areas of the world, Fox also reminded the audience that, "International LNG is a global commodity as well as oil."
He said that the shale phenomenon has provided the United States with a hundred years of supply on a very flat supply curve, "...stabilizing the price range for a long time to come."
While Russian and North Sea gas supply sets prices in Europe, a recent $16 Mcf price in Japan -- still exacerbated by the nuclear accident -- provides Alaska with a window of opportunity.
However, he said, "we have to make sure that we have confidence in Alaska's fiscal regime."
"Competition is incredible," he said, adding that Alaska's recent enactment of production tax reform (SB 21) was already stimulating more investment in the state.
"You have to go back quite a ways to find where we spent more money on Alaska North Slope (ANS) than now, following passage of SB 21."
* * *
The Alliance also represents Alaskan mining support industries and National Mining Association president Hal Quinn (NGP Photo) addressed the state's competitive challenges.
Quinn emphasized the importance of allowing oil, gas and mining industries to be free to export and engage in the world market, noting that coal not only provides the U.S. with 40% of its electrical supply but coal supplies 40% of world electric supplies as well".
Maintaining a vibrant world market that supplies reliable energy is critical, he said, noting that India's labor force alone is projected to grow at a rate of 1 million/month.
Minerals provide 15% of America's Gross Domestic Product he said. (We further observe that reasonably priced energy supplies are the foundation upon which other mineral exploration and development and manufacture is based. -dh)
After Quinn criticized the EPA for exercising federal overreaching authority that could stop a lawful mining project before it has filed for a permit (See our earlier commentary), he also cautioned the audience about unjustified delays in the federal permitting process. "No one should ever confuse the rigor of the permitting process with its length," he said. (See Quinn's presentation here.)
ExxonMobil's Gina Dickerson (NGP Photo) provided an encouraging update of activities aimed at accessing the ANS gas and gas liquids potential at Point Thomson.
As project manager, Dickerson briefed the audience on the project's three wells (i.e. two for production and one for injection); the 17" pipeline to Badami facilities; the nearly $2 billion spent on the project to date, 70% of which has been spent in Alaska; a 48 mile winter ice road to the Endicott's accessible facilities, and the dramatic 2-year progress toward completing an airstrip and support facilities. (See Dickerson's presentation here.)
Today's Consumer Energy Alliance Clips:
90.5 WESA - NPR: Energy Alliance: Fracking Is Not a 'Four-Letter Word'. An energy supply and consumption watchdog group is taking its fight against a proposed moratorium on shale drilling in Pennsylvania to the lawmakers sponsoring the bill and to their constituents. The Consumer Energy Alliance sent a letter to State Sen. Jim Ferlo (D-Allegheny) asking him to pull the legislation from consideration. SB 1100 was introduced in September and was referred to the Senate Environmental Resources and Energy Committee where it has languished ever since. The bill calls for the state to stop issuing new drilling permits until a full assessment of the environmental, social and economic impacts of shale drilling can be completed.
Capital Soup: Consumer Energy Alliance-Florida Statement on Subcommittee Passage of Hydraulic Fracturing Legislation The Florida House of Representatives’ House Subcommittee on Natural Resources and Agriculture today passed House Bills 71 and 157, sensible hydraulic fracturing legislation sponsored by Rep. Ray Rodrigues (R – Lee County). Upon passage of the legislation, Consumer Energy Alliance (CEA) – Florida Executive Director Kevin Doyle issued the following statement: “Consumer Energy Alliance applauds both Representative Ray Rodrigues for sponsoring legislation that would lay the foundation for a transparent process for hydraulic fracturing in the State of Florida and the Florida House Subcommittee on Natural Resources and Agriculture for its passage today. As we continue to shift our energy reliance toward natural gas, Florida’s business community and consumers can be negatively impacted if we do not have the right policies in place to protect the benefits that our current energy situation is providing to our country.”
Consumer Energy Alliance’s The Energy Voice: Penn. State Senators asked to ‘Keep The Heat On This Winter’ It’s January. It’s Cold. No surprise there, but why in the middle of the harsh winter months are Pennsylvania State Senators working to advance legislation to put a moratorium on shale gas development in Pennsylvania? The bill is SB 1100 or the Statewide Natural Gas Drilling Moratorium Act. If made into law, Pennsylvania’s bustling shale gas economy would come to a halt. Who would be affected? In total 2.6 million people
Governor's Announcement Underlines The Importance Of The Alliance's "Meet Alaska" and Other Energy Conferences
|ADN by Governor Sean Parnell (NGP Photo).
For the first time in Alaska's history, we have the framework in place to build the Alaska liquefied natural gas (LNG) project on Alaska's terms and in Alaskans' interests.
We have the necessary parties to make the Alaska LNG project go: three producers, a pre-eminent Arctic pipeline builder, an entity that will carry Alaskans' interests (Alaska Gasline Development Corp.) and state agencies responsible for royalties and taxes.
Alaska and Canada are fortunate to host a number of northern energy/mineral natural resource conferences throughout the year.
These events bring government, industry, the media and public together providing updated information and technology advances along with networking opportunity.
In Alaska, the major natural resource conferences include the Alaska Support Industry Alliance's annual Meet Alaska conference; Resource Development Council for Alaska's annual Alaska Resources Conference; the Alaska Miners Association annual conference; and, the annual Alaska Oil & Gas Congress, among others.
We have seen major natural resource announcements flow from many of these meetings and last week's Meet Alaska gathering was no exception.
By now the public is pretty well aware of Governor Sean Parnell's announcement at Meet Alaska last Friday, that the state would seek equity participation in a pipeline/LNG project, that an earlier agreement with TransCanada would be discontinued and that all the major parties have aligned their interests.
While we joined most in the room -- responding enthusiastically to the Governor's announcement and initiative -- astute observers of gas pipeline politics over the years know that he and the Legislature face a number of remaining hurdles.
- The details of 'major party alignment' can only be reviewed and digested after an actual document is agreed to and made public.
- The alignment of parties is surely contingent on Alaska not repealing the tax reform act its Legislature passed last year. (See Stoel Rives, LLC bill analysis.)
- One would further expect alignment of interests among the major parties to depend on the structure of any new natural gas tax statute that might be created.
- For over a decade the major, potential gasline investors have reasonably reminded the public and public officials that fiscal certainty guarantees must be in place before a multi billion dollar gasline project can be sanctioned and financed.
- Will the state provide cash equity from its savings accounts, when those accounts even now cannot satisfy the unfunded liability of state pensions plus projected state spending/income deficits over the next few years? Or, will the state provide equity financing by selling revenue bonds (i.e. not putting the full faith and credit of the state on the line, requiring a higher interest payment), or via a voter approved general obligation bond, with a lower interest payment at the cost of the state's full faith and credit pledge?
- To know a project is real, observers generally expect some verification from buyers that a market exists --particularly with the Asian markets being wooed by multiple LNG projects from Australia, Russia, Indonesia, the Lower 48 and Canada. While market demand will be better known following a formal 'Open Season' process, when state financing is involved citizens might expect more in the way of affirmation that markets exist that fit the volumes and timeframes of this particular project.
- Do pipeline planners count on a certain amount of demand from in-state markets? Will utilities begin to plan for 'take or pay' agreements that obligate pipeline capacity? How will this affect existing relationships between Cook inlet gas sellers and utility gas buyers?
- Has any party petitioned the Alaska Oil & Gas Conservation Commission for its projection of North Slope gas volumes that will be available at the projected time of an LNG/pipeline project completion? Under Sec. 31.05.030 the AOGCC regulates "for conservation", "Environmental Conservation", and "for public health and safety purposes": "the quality and rate of the production of oil and gas from a well or property."
We are delighted to see the forward movement provided under Parnell's leadership with support from a majority of legislators. With Alaska's potential for equity investment in the project, however, we also know that such challenges as those noted above must be anticipated and resolved on the way to successfully monetizing Alaska North Slope Gas.
Tomorrow, we look forward to bringing readers our take on other Meet Alaska presentations -- and event photos -- from last Friday!
ADN By Lisa Demer. Gov. Sean Parnell (NGP Photo) on Friday announced that he was prepared to abandon the Palin-era natural gas pipeline law and set the state on a new path as an investor and partner in a long-dreamed-about natural gas project from the North Slope. (We'll have more report and photos for our readers on Monday. -dh)
Juneau Empire. Gov. Sean Parnell (NGP Photo) on Friday announced a new way forward on a long-hoped-for natural gas pipeline that includes scrapping the terms of a 2007 law he says no longer works well for the situation.
(We'll have more news links, our own report and commentary for readers on Monday. -dh)
Alaska Dispatch, by Frank Murkowski (NGP Photo).
I urge that we not continue to fund overlapping energy projects.
Over the last several years the administration and the Legislature have authorized the following:
While these funds are not all appropriated, they amount to $1.3 billion, a good portion which has already been spent. (Read More....)