"US Leadership In An Emerging Arctic" is the lecture topic next Tuesday in Anchorage, when Ambassador David Balton (NGP Photo) and former Lieutenant Governor Fran Ulmer (NGP Photo) will address the World Affairs Council. Reservations here. Various Arctic energy issues are certain to be addressed, including Arctic shipping, resource development, and sovereignty issues. -dh
"Alaska's Troubled Romance With LNG", by Dave Harbour. Here is this week's Xtra column, submitted for distribution to tens of thousands of households.
Note that these columns (see them all, here) are limited to about 1,000 words. Accordingly, it grieves us that much must be left out. With that limitation in mind, we encourage readers to support our goal of 100% accuracy by sending us additions/corrections here and we will make necessary adjustments to the archived story below.
North Slope Borough Breaks Ground For $90 Million In Utility Improvements At Prudhoe Bay
On Wednesday several dozen Alaska North Slope Native residents, service company managers and oil industry officials gathered at Prudhoe Bay to 'break ground' on for new utility facilities serving the large oil field.
Improvements now in the design stage will involve replacement and upgrading of the North Slope Borough's water and wastewater treatment plant and expansion of the landfill.
...more coming next week. We confess that priorities and a desire to provide readers with a good story required that we take the weekend to complete our work. Have a nice one.... -dh
After the Prudhoe Bay discovery (“the discovery”) in the winter of 1967-68, Alaskans learned that their great, Arctic oilfield was also the largest natural gas find in American history.
Then, in 1969, a Kenai Peninsula Liquefied Natural Gas (LNG) plant began cooling Cook Inlet gas to almost -260 degrees Fahrenheit, compressing it to 1/600th of its gaseous volume, transporting it by tankers to Japanese utilities. The Kenai plant introduced Alaska to its love affair with LNG. It was only U.S. LNG export facility for over four decades.
The larger, Prudhoe Bay discovery injected vigor into the 49th state: new jobs, new public services and amenities, and countless new business opportunities for a new age of pioneers.
Prosperity also produced political tensions. Politicians wanted tax money for constituent projects. Proliferation of social services increased state spending. Environmental activists sued developers. Petroleum investors –and the state treasury--wanted the lowest possible capital and operating costs to secure profitable returns.
* * *
After that discovery 45 years ago, companies began planning transportation alternatives for Prudhoe’s oil and natural gas reserves.
Investors wanted the most efficient transportation system, but politicians wanted a say, too.
In the early 1070s Congress concluded the oil line should run through Alaska to Valdez while a gas pipeline could move Arctic gas to Midwest and other markets.
Alaskan oil producers completed the Trans Alaska Pipeline System (TAPS) in 1977.
To build a gas pipeline, twenty-seven U.S. and Canadian oil and gas companies formed Alaskan Arctic Gas Pipeline Company in the early 1970s led by former Lieutenant Governor Bob Ward. Former TransCanada President Vern Horte led the sister company, Canadian Arctic Gas Pipeline Limited.
Arctic Gas chose a Mackenzie River Midwest pipeline route for Alaskan and Canadian gas, and rejected inefficient alternatives including LNG trucks, tankers, trains, dirigibles and submarines. It spent $250 million on technical studies and the most extensive environmental study in history.
Arctic Gas was well into its planning when El Paso Natural Gas began promoting a Gravina Point LNG project near Valdez. Alaskans loved it and a new LNG romance began.
A third challenger entered the fighting cage in the mid-1970s when Northwest Energy Company and Alberta Gas Trunk Line defected from Arctic Gas’ Consortium to promote a separate Alaska Highway routing for Alaska gas.
All three projects fought for Federal Power Commission (FPC, now “FERC”) approval in the United States while Alcan and Arctic fought for Canada’s National Energy Board (NEB) blessing.
Alaska’s governor, William A. Egan, and a budding grass roots organization called Organization for the Management of Alaskan Resources (OMAR) supported El Paso’s LNG Project. Most Lower 48 Governors and influence leaders favored Arctic Gas.
In 1977, FPC Administrative Law Judge Nahun Litt said, “The Arctic Gas application is superior in almost every significant aspect when compared to El Paso.”
The FPC decision supported either Alcan or Arctic; El Paso’s LNG scheme was dead!
Canada’s NEB rejected Arctic Gas and approved Alcan’s project which, ironically, was eventually taken over by TransCanada PipeLines Ltd. TransCanada now leads the Alaska gas project, along with Alaska producers. Its goal – also an ironic twist of fate -- now seems to favor moving Alaska’s gas, not via the Alaska Highway route which it had adopted, after opposing -- but via a pipeline-LNG system to Asian markets.
* * *
America and Canada had dismissed the Arctic and El Paso LNG alternatives but successive Governors worked to commercialize North Slope gas.
Governor Jay Hammond appointed Governors Hickel and Egan to co chair a gas task force. The 1982 group embraced LNG marketing of Alaska’s gas. Hickel later formed Yukon Pacific Corporation to sponsor an LNG project.
Governor Tony Knowles issued Administrative Order 188 forming another gas pipeline advisory group in 2001. His theme was, “My way is the highway”. Though a noble effort, a project could not go forward without producer ‘buy-in’ and producers hadn’t completed their own pipeline and LNG feasibility studies.
After Congress passed the Alaska Natural Gas Pipeline Act of 2004 to expedite an Alaska gas project, Governor Frank Murkowski negotiated a contract with producers to increase taxes in return for giving them “fiscal certainty”. The Legislature increased their taxes but didn’t deliver the fiscal certainty necessary to finance a giant, 30-year project.
Governor Sarah Palin’s “Alaska Gasline Inducement Act” (AGIA) in 2007 demanded benefits for Alaska from a pipeline project in return for subsidies. TransCanada became the State’s AGIA partner. But Palin also sponsored increased oil taxes that made Alaska investments very risky.
Meanwhile, back at the LNG ranch, two main suitors continued their own quest for an enduring relationship with Alaska.
The Hickel inspired, Yukon Pacific, closed its doors in 2011 after a valiant effort to collect permits and unsuccessful work to attract LNG buyers. Municipal entities, including the City of Valdez, formed the Alaska Gasline Port Authority in 1999 supporting another Valdez LNG project which many Alaskans still love to support to this day. But last March, the Energy Department rejected the Authority’s gas export application.
After 2007, US markets for Alaska’s gas evaporated with skyrocketing Lower 48 shale gas production. Today’s domestic gas prices seem too low to support a multi-billion dollar Arctic pipeline to the Midwest.
Happily, Japan’s catastrophic tsunami and nuclear meltdown of March 2011 did stimulate demand for more natural gas.
But Canadian, Russian, Indonesian, Middle Eastern and Australian gas producers are also hungrily eyeing Asian markets. Once Asian utilities have signed long term LNG contracts, latecomers will be locked out.
Will Alaska be locked out?
* * *
Competition increases and most of Alaska’s competitors don’t have to build an 800 mile Arctic pipeline -- on top of LNG costs. Most have lower costs of labor. Most operate in low cost temperate zones – except Russia.
Will Alaskans enthusiastically unify behind the AGIA gas project, helping it achieve the lowest possible costs in our high cost environment?
Or, will Alaskans continue fighting over routes, taxes and regulations as federal government rules proliferate and environmental opposition to all energy projects becomes more intense?
Alaska’s troubled romance with LNG continues.
One wonders, as opposition grows and competition mounts, if the aging romance will give birth to an LNG project or lead to a final break up.
Dave Harbour has directed external affairs for a variety of oil and gas companies in Alaska and consulted with many others. He is former Chairman of the Regulatory Commission of Alaska, the Anchorage Chamber of Commerce, the Alaska Council on Economic Education and the Hugh O’Brian Youth Foundation. He assisted in founding Arctic Power, Saturday Market, the Anchorage Downtown Partnership and the Alaska Support Industry Alliance.
Fairbanks News Miner by John Coghill (NGP Photo). Coghill provides answers to questions about oil and gas tax reform legislation and the current attempt by referendum to repeal tax reform.
We compliment Senator John Coghill this morning for two reasons: 1) his insight on oil and gas issues, and, 2) his political courage.
First, on the issue. Sunday's News Miner featured his Opinion piece wherein he provided 'Questions and Answers' about the recent passage of oil and gas tax reform legislation and the current effort to repeal the law by referendum. The questions were the main ones touted by the opposition and Coghill's answers were credible. Coghill came across as the adult in the room, supporting the 'long term good' for Alaskans as opposed to supporting the more selfish, 'short term gains' espoused by blog commenters who responded to his column.
Second, on courage. The News Miner, like other publications, permits blog commenters to opine on articles and issues without identifying themselves. Accordingly, we hear from the most vicious array of special interest commenters every time a common sense, free enterprise commentary is offered. These anonymous folks are often very impolite and their comment seems designed to intimidate, make fun of, or demonize more conservative voices. I almost always see this coming from the left side...seldom from the right. Since many of the commenters seem to be employed as interns, trainees, apprentices, or employees of special interest non-profit organizations with self-serving agendas, it is relatively easy to scare up a couple dozen nasty comments anytime someone from the pro-investment climate side of the aisle expresses an opinion. Faced with a barrage of such responses every time a conservative, elected official politely expresses an opinion, one can only conclude that leaders like Senator Coghill truly are courageous.
Voters are always saying, "I wish we had someone in there who would do the right thing rather than the expedient thing." Interior Alaska is lucky to have such a leader in John Coghill. -DH
Today's headlines from Energy in Depth:
Colorful, middle-aged women at the core of anti-HF campaign. Associated Press. Victor Furman, head of a pro-gas landowners’ group in Chenango County, said Rapp and Scroggins are part of a “fringe group” that relies on emotion rather than science to build opposition. “They hold meetings that are full of lies and misinformation,” said Furman, a retired technical writer for IBM.” Energy In Depth sometimes sends its own camera-toting representatives to tail Scroggins’ tours and rebut what she says. The group posted video on its website of Scroggins shouting personal insults and obscenities at Phelim McAleer, a filmmaker who tried to talk to Ono and Sarandon during their January tour. “I admit that I lost it that day,” Scroggins said. “It wasn’t my finest hour.”
'Gasland' sequel claims drillers corrupting gov't. Associated Press. "The real reason that shale development has expanded is not because of some nefarious plot on the part of industry leaders wearing black robes," said Steve Everley of Energy In Depth. "Rather, it's because people across the United States have recognized that there are massive environmental and economic benefits to be reaped. ... Both political parties are pushing for increased responsible natural gas production, and it's because of the facts, not because they've been `captured.’”
WHERE: Gorsuch Commons, University of Alaska Anchorage
WHEN: 2:00 – 5:00 pm on June 14, 2013
WASHINGTON BRASS GATHER IN ANCHORAGE TODAY.
Today Federal Administration officials will meet in Anchorage to discuss a National Strategy for the Arctic Region. Jim Egan (NGP Photo), of Commonwealth North, sent us a notice, "that on May 10, 2013, the President signed the National Strategy for the Arctic Region. At that time—recognizing that successful implementation of the National Strategy will depend upon productive collegial engagement with Alaska Natives, the State of Alaska, Members of Alaska’s congressional delegation, and other key stakeholders—the White House announced that it would host initial meetings in Alaska in June to discuss how best to move forward."
Commentary: With federal officials gathered en masse today in Anchorage, we suggest they consider yesterday's natural resource policy commentary (below).
We also suggest the visitors review the RDC position regarding one of many examples of EPA overreach, here.
We further urge readers to respond to the RDC summons and send in a comment today (Here is how).
- Penn West takes drastic measures The price of mounting a rescue mission for Penn West, one of the largest landholders in Alberta's tight oil plays, has climbed to the point where the senior producer has launched a strategic review, which usually means it will consider selling assets, finding a joint-venture partner or unloading the....
- BLM extends frack rule comment period Midway through the 30-day comment period on the Bureau of Land Management's revised draft rule to regulate hydraulic fracturing on federal and Indian trust lands, Secretary of the Interior Sally Jewell told the Senate Energy and Natural Resources Committee that the comment period will be extended an....
- Streamlining Bakken permitting The federal government's interagency Bakken Federal Executive Group, an advisory group representing 12 federal agencies involved in the federal oil and gas permit review process in the Bakken, met in Billings, Mont., on June 5 where, according to a June 6 Department of the Interior press release, th....
Huffpost Alberta. Hold on to your hats, Alberta, the Kennedy stampede is headed for the oil sands as a rich kid with few skills and nothing else to do heads north to criticize the very wealth production that has made North America great.
This video won't thrill our NGP readers but it is enlightening. -dh
Wilderness Society Doesn't Support Federal Cleanup Of Federal Drilling Messes In Alaska - New Interior Secretary Opposes Responsible Nearby Exploration. (NGP headline)
Our Comment: In recent Congressional testimony, Department of Interior (DOI) Secretary Jewell proclaimed that both the President and she were opposed to oil and gas development in the Arctic National Wildlife Refuge (ANWR) -- without explaining why.
Ironically, Wilderness Society spokeswoman, Lois Epstein (NGP Photo), in Anchorage defended DOI's Bureau of Land Management for not cleaning up earlier federal government drilling messes (AOGCC Photo, 7-28-10, NPR-A Knifeblade #1) in the National Petroleum Reserve - Alaska because, as she put it, "it’s extremely expensive to do so in the National Petroleum Reserve. It’s very remote, hard to get equipment there, and frankly there aren’t many people ...who are actually at risk....”
We wonder what Epstein and DOI would have said had the well mess been left by an oil company (i.e. companies require their truck drivers on the Alaska North Slope to place 'aprons' under the engine block to be sure and catch the escape of even one drop of oil. The hypocrisy is pungent.)
So, Alaska is too remote to require the Feds to timely clean up their own mess in NPR-A, too fragile to allow lawful oil and gas exploration in the best areas, but not too remote to require a continuing embargo on exploration in the nearby ANWR.
The inconsistent, anti-job creating position on natural resource issues is the most transparent reality of this administration.
While it would be difficult to find a soul without hypocrisy in some form, hypocrisy that invades national economic and security policy is particularly damaging to masses of constituencies and to the future of families and countries.
The Congress made the Arctic National Wildlife "Range" into a "Refuge" in 1980, rendering millions of acres off limits to natural resource development while preserving a small sliver for oil and gas exploration. The Obama Administration in a time of challenging economic recovery, is within sight of making America energy independent and creating hundreds of thousands of jobs yet opposes oil and gas development where Congress has intended it.
Likewise, if Oil Sands production in Alberta does not go to America via TransCanada's Keystone XL Pipeline, it will likely go abroad--taking hundreds of thousands of potential North American jobs with it. Professional environmental activists like Kennedy oppose the very wealth producing oil, gas and mining industries that made America and Canada great, while jetting to exotic locations and living carbon-luxurious lifestyles. Ironically, the hypocritical behavior of such citizens does not penetrate their own veils of wealth but cripples the promise and potential of the broad mass of citizens they hypocritically and meanly pretend to represent. -dh
Today's Energy Commentary from American Energy Alliance:
If complete control of a market is called a monopoly, what do you call mandated control of a market...? The Renewable Fuel Standard. PoliticoPro (6/11/13) reports: Sen. Tom Coburn used the nomination hearing for Office of Information and Regulatory Affairs nominee Howard Shelanski to rip into EPA’s renewable fuels standard…“We’re going to see ... two refineries in Oklahoma close within a year, year-and-half, because they cannot afford to buy the renewable fuel credits. So, we got a regulation out there that’s actually going to kill our ability to provide gasoline to the country even with an ethanol blend,” Coburn said at the hearing today… “It would take one adjustment to that regulation and all that’d go away and it won’t make any difference in the long-term in terms of our environmental consequences because we’re still going to have ethanol blended into our fuel,” he said, before asking Shelanski whether he had “any thoughts about that.”
On this issue, Jim Lankford is very solid. President Bush was not. That is all. NewsOK (6/12/13) reports: “FEDERAL renewable fuel mandates passed in 2005 and 2007 could create significant economic hardship, reducing citizens’ take-home pay without offsetting benefit… A recent U.S. House subcommittee hearing chaired by Rep. James Lankford, R-Oklahoma City, made clear the abundant flaws of the mandate. The Renewable Fuel Standard requires that 35 billion gallons of ethanol-equivalent biofuels and 1 billion gallons of biomass-based diesel be refined by 2022. However, those mandates were imposed when officials assumed that U.S. fuel consumption would continue increasing and that domestic oil production would account for a declining share of supply. Both assumptions were wrong.”
Just in case you were wondering what the reworked cost of carbon means. Bloomberg (6/12/13) reports: “And if Obama approves the pipeline, the higher carbon-cost estimate could to be a part of any lawsuit challenging the decision, according to Bill Snape, senior counsel for the Center for Biological Diversity... ‘It won’t be a game changer, but it would help’ in any legal challenge, he said. The increase in the estimate is being cheered by environmentalists as one small sign that President Barack Obama is going to make good on a pledge from his inaugural address to tackle global warming in the face of opposition from Republicans in Congress.”
Don't miss it!! Resources for the Future (6/13) reports: “This seminar is part of “Considering a Carbon Tax,” a research initiative in RFF’s Center for Climate and Electricity Policy… RFF invites you to learn more about these modeling results in a special half-day seminar featuring distinguished researchers and experts. In the first session, RFF researchers Rob Williams, Richard Morgenstern, Jared Carbone, and Dallas Burtraw will share model results and describe carbon tax impacts across a range of revenue recycling scenarios. In the second session, experts from the research and policy communities (see below) will comment on the economics and the politics of the model’s results.”
U.S. oil production soars (except on federal lands). IER (6/10/13) reports: “The Energy Information Administration (EIA) just released its report, Sales of Fossil Fuels Produced on Federal and Indian Lands, FY 2003 Through FY 2012.[i] This report shows that total fossil fuel production on federal lands is at a ten year low, natural gas production on federal lands is also at a ten year low, and oil production on federal land fell in fiscal years 2011 and 2012 ending two years of increase in fiscal years 2009 and 2010. Specifically the new EIA report shows:”
We agree. The federal government should allow for more exploration of our deep seas. Washington Examiner (6/11/13) reports: “Cameron, who says he has ‘always had an affinity for the ocean,’ commissioned the manned (or "personed," as Cameron pointedly noted, in deference to the many female oceanographers) submersible, which took seven years to build, and piloted it more than 35,000 feet below the ocean's surface… ‘Sending a piloted vehicle down gets a lot more media and public attention,’ Cameron said at a Capitol Hill briefing. ‘I don't have a degree in any of the sciences or in engineering, but I didn't have a degree in filmmaking either, and that didn't stop me.’… He told congressional staff members that he does not have a "specific call to action" on policy, but that it "boils down to funding" deep sea exploration. He and Dr. Susan Avery, director of Woods Hole, compared exploring the deeper ocean to exploring space -- but said the former has been neglected in comparison.”
ALERT: Plan today for three of the most important energy conferences to convene in Alaska this season: 1. The United States Association of Energy Economists Annual Conference, July 28-31, Anchorage, featuring a world-class line up of speakers. The impressive agenda begins with opening session speakers Fran Ulmer (NGP Photo, Chair, U.S. Arctic Research Commission), Thomas Barrett (NGP Photo-R, President, Alyeska Pipeline Service Company), and Roland George (NGP Photo, National Energy Board of Canada); and, 2. Resource Development Council for Alaska Annual Luncheon in Anchorage, June 26, with Keynote Speakers: Consumer Energy Alliance President David Holt and BP Exploration (Alaska), Inc. President, Janet Weiss. 3. The 9th Annual Alaska Oil & Gas Congress featuring your author and an all-star cast, September 16-19!
|CBC News. Two new liquefied natural gas facilities will be built in northwestern B.C. in the next two years by Malaysia's national oil company, Petronas, which announced Tuesday that it will spend up to $16 billion on the projects.|
A non-profit corporation, Arctic Power, continues to educate old and new Members of Congress about Alaska's oil and gas potential. In a recent letter (i.e. linked here), Charisse Millett (NGP Photo) discusses citizen support for developing a small, Congressionally approved section of the Alaska National Wildlife Refuge (ANWR) for oil and gas exploration and development. (Disclosure: your author was one of the three original incorporating citizens of Arctic Power, and suggested the name in memory of his previous employer, Alaskan Arctic Gas Pipeline Company.) -dh
Today's Energy News Links:
ALERT: On Friday we editorialized about a little advertised 'listening session' planned by Federal officials tomorrow in Anchorage regarding Arctic offshore oil and gas exploration and development. In the Friday piece, we asked questions that our readers may well want to explore tomorrow.
We have located this note that the agencies are 'reaching out to stakeholders'. We believe readers can be sure the Feds are talking with NGOs and groups opposed to energy developmen (i.e. Here is an example). We therefore encourage our readers to attend tomorrow's 'listening session'.
We also note that while Anchorage will be accorded one listening session and Barrow will be provided with two, Fairbanks and Juneau will receive no opportunity to be heard this week on matters that will directly impact the lives of all Alaskans.
We further hope the room is full of Democrat and Republican elected officials who wish to testify on behalf of their citizens! -dh
Commentary: This Frontier Airlines logo appears on the Wilderness Society website wherein the airline is referred to as a partner in keeping the Arctic National Wildlife Range (ANWR) closed to oil and gas activity--even though research has shown that the small percentage of land affected would have virtually no affect on bird and animal populations. "Our work aims to protect the refuge from oil drilling," the partners say on their webpage.
|We also note the Wilderness Society -- with support from its 'partners' has taken it upon itself to rename the lawfully named "National Petroleum Reserve - Alaska", the "Western Arctic Reserve." The Joseph Goebbels-like stragegy of groups like this would seduce Americans into believing NPR-A is an 'Arctic Reserve' rather than a 'Petroleum Reserve'. This, in turn, provides cover to environmental activist allies in the Interior Department for their recent efforts to restrict areas of oil and gas exploration in the the Nation's National Petroleum Reserve. It is an activist conspiracy designed to manipulate and misdirect the 'rule of law'. -dh|
The Wilderness Society/Frontier Airlines position is also in violation of the intent of Congress which, in the Alaska National Interest Lands Conservation Act, directed that a sliver of ANWR be used for reasonable oil and gas activity in the national interest. Since the state of Alaska's government and economy depend on reasonable oil and gas activity; and, since Frontier Airlines, a minor transportation player in the state, wishes to serve Alaska; and, since Frontier supports those dedicated to destroying Alaska's economy; and, since Alaska's oil production contributes to America's economy at large; we, therefore, believe it logical should readers decide to choose other means of transportation than Frontier for travel both to Alaska and within the other states. -dh
News From Around North America:
Calgary Herald by Dan Healing. Sweeping changes that could include breaking up the company have been announced by troubled Penn West Petroleum Ltd.