Miss a day
Miss a lot

 

      This is your public service 1-stop-shop for Alaskan and Canadian Arctic energy commentary, news, history, projects and people. We update it daily for you. It is the most timely and complete northern energy archive 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 name others existing before 2001.  -dh

 

ConocoPhillips ad, Northern Gas Pipelines, Logo

Arctic Policy

8-18-15 Outrageous Decisions

18 August 2015 3:00pm

Bill Walker, governor, Alaska, Standard and Poor's, downgrade, oil, taxes, john donne, ernest hemingway, for whom the bell tolls, Photo by Dave HarbourGovernor Bill Walker's Outrageous Decisions

by

Dave Harbour

RATING AGENCY WARNS ALASKA: A VERY SIGNIFICANT AND VERY BAD OMEN. THIS ACTION WILL AFFECT THE COST OF MONEY AND, THUS, INCREASE ALASKA'S DEFICIT.  WARNING OF A RATING DOWNGRADE PORTENDS MORE BAD NEWS TO COME ABSENT A SIGNIFICANT TURNAROUND IN STATE POLICY.  -DH

STORY BY ANDREW JENSEN, JOURNAL OF COMMERCE

Standard and Poor’s Ratings Services lowered the outlook on the State of Alaska’s credit rating from “stable” to “negative” on Aug. 18, and gave politicians one year to reorganize the fiscal house before the downgrades accelerate.

Standard and Poor’s wrote that the current budget deficit is inconsistent with the state’s “AAA” rating on its general obligation bonds and its “AA+” on appropriation-backed bonds, but cited the state’s still healthy budget reserves as a bridge that could maintain the high ratings.  (READ MORE HERE).

Note: Circa. 2007 your author (i.e. a regulatory commissioner at the time) had the responsibility of briefing approximately 20 investment companies and the three rating agencies in NYC on Alaska's fiscal challenges.  Approximately two dozen of those professionals have remained on our email alert list over the years.  These analysts are the best and the brightest in their financial fields and Alaskans should never be so provincial as to think that what is said and done here is not noticed by investors, analysts and lenders in New York and throughout the world.  

Alaska is not an Island unto itself....

-dh

Immediately after the November election Governor-elect Bill Walker (NGP Photo) assured assembled members of the Resource Development Council for Alaska that he was not their enemy.  

We suspected his poor performances over the years in a quixotic representation of the so-called "Port Authority" would be reflected in his governorship.  

But, we held out hope that performance of his new duties would match his significant charisma and public speaking talents.

Alas, to this watcher of Alaska's slumping economy, the new Governor has engaged in a pattern of poor decisions.

He announced opposition to the Alaska Gasline Development Authority (AGDC) concept of being a back up plan to deliver Alaska North Slope (ANS) Gas to the state's residents.

Then, he began to criticize the large gas transportation project aimed at both monetizing ANS gas through exports and providing taps along a pipeline right-of-way to residents.

We commend the major Alaskan investors/oil producers and Trans Canada for maintaining a stiff upper lip and good attitude as they continued their multi million dollar effort to prove the feasibility of the Ak-LNG project amid a volatile world economy and a failing and unsustainable Alaska economy.

Meanwhile, appearing to do everything possible to discourage the state's largest investors, he began touting his ability to use AGDC as a vehicle for competing with the major Ak-LNG project.  Many of us were bewildered at the strategy, or lack thereof, that could lead a Governor to support investment in one project, then advocate using another state organization to compete with it.  
 
Today, we are not bewildered by such decisions; we conclude them to be outrageous behavior by a public official.
 
In the early part of the year, the Governor began to hint that increased industry taxes might be part of the answer to Alaska's deficit budgeting.  Most savvy observers have long observed that in order for Alaska to become solvent again it must encourage more oil development, not discourage it.

With Alaska failing to balance its budget or even enact significant cuts in its spending, the state's governor proposed even more deficit spending: expanding Medicaid.

Following the Legislative session, earlier this summer, he vetoed legislative expenditures to fund tax credits lawfully accrued by oil producers for investments in the state.

He then championed expanded state involvement in creating a natural gas utility for Fairbanks but urged his 'independent board appointees' to the Alaska Industrial Development and Export Authority (AIDEA) to switch gas sources.  AIDEA now seeks to obtain expensive natural gas reserves (i.e. 3x higher than current, Lower 48 prices) from the limited Cook Inlet supplies serving the major population in South Central Alaska while abandoning the world class reserves on the ANS where gas could be obtained cheaper.

As we noted in yesterday's posting, Walker is now beginning to threaten the oil industry with a reserves tax -- an outrageous and hostile act that would tax private sector energy investors for NOT producing gas even if market timing indicated caution and prudence in project sanctioning.

Today, we note that Standard and Poor's has begun the process of downgrading Alaska's credit rating (i.e. story right column above).  Three ANS oil industry taxes and a royalty payment fund about 90% of Alaska's state government operating budget and support over a third of the state's economy.  The 40-year-old Prudhoe Bay field responsible for most of that wealth has been declining in recent years at a 5-7% annual rate.  The trans-Alaska pipeline transporting that crude oil to market is nearly 3/4 empty.  Major transportation difficulties are now on the horizon and without significantly increased oil throughput, the pipeline could shut down within just a few years--or sooner.

Meanwhile, Alaska will have burned through all of its major savings accounts within the next two-three years.  While a $55 billion Alaska Permanent Fund is a tempting source of cash, the state's Constitution prevents easy access to it.  In any case, spending that savings would not lead to a sustainable economy; it would just prolong the point of no return.

On top of the fact that the state is not earning what it spends...using its savings...and its governor wants to increase spending...three other factors portend economic disaster for Alaska absent masterful management of money and resources: 1) A nearly $10 billion unfunded liability in the State's employee retirement programs; 2) a steadily declining level of oil production; and 3) an average oil price this summer that is half of what it was last summer.

Were we advising the Governor, we would:

  • urge action that would support investment in the state--and honest partnership with investors.
  • We would significantly cut spending in America's highest per capita spending and debtor state.  
  • We would seriously attempt to wean the highest per capita population of not-for-profit corporations in America from state government largess.  
  • We would cut virtually all capital spending, save for maintenance (i.e. which really is in the operating category).
  • We would undertake whatever legislative changes that could lead to not overspending on public employee overhead.  
  • We would also cut all higher education spending that worked counter to Alaska's resource development priorities (i.e. mandated by Alaska's constitution), and
  • we would energetically fight the Federal government every step of the way as it, and its environmental allies, seek to scuttle the 49th ship of state.

Somehow, we think this Governor to be incapable of such decisiveness, though we are still open to being pleasantly surprised.  But we'd better be surprised quickly because a 'drop dead' date quickly approaches and to survive, Alaska needs a major policy overhaul.

If this doesn't happen, we are mindful of John Donne's 1624 observation, later made more famous by Ernest Hemingway, who predicted and then lived the reality of really tough times: the Spanish Civil War.  We hope Governor Bill Walker takes history to heart, for he, too, is no island unto himself.   Outrageously bad decisions can not only create a bad governor's legacy, but can forever injure the economic future of an entire state, our hopeful offspring and coming generations of our descendants.

"No man is an island, entire of itself; every man is a piece of the continent, a part of the main. If a clod be washed away by the sea, Europe is the less, as well as if a promontory were, as well as if a manor of thy friend's or of thine own were: any man's death diminishes me, because I am involved in mankind, and therefore never send to know for whom the bell tolls; it tolls for thee."  -John Donne

Amen.


 

Categories:

8-16-15

16 August 2015 11:35am

Petroleum News: 

SAExploration seismic programs approved - 08/16/2015 (Login to read Full story) SAExploration has received approval from the Alaska Department of Natural Resources, Division of Oil and Gas, for two seismic surveys, both on state land and waters in the Beaufort Sea, one in the vicinity of the Colville River Delta and one within the Prudhoe Bay area. The permits, both marine-base....

Categories:

7-27-15

27 July 2015 5:18am

Alan Bailey, Petroleum News, Shell, BSEE, Burger prospect, Chukchi Sea, Photo by Dave HarbourPetroleum News by Alan Bailey (NGP Photo).  On July 22 the federal Bureau of Safety and Environmental Enforcement issued permits allowing Shell to drill the top hole sections of two wells in the Burger prospect in the Chukchi Sea. Shell now has all of the permits that it needs to start drilling.  However, BSEE is prohibiting Shell from drilling into hydrocarbon bearing zones until....

Categories:

7-24-15 Northern Pipelines, Economies, Alaska Native and Canadian Aboriginal People Are Interdependent

24 July 2015 8:51am

Write us here to request a free, email alert subscription

Northern Pipelines, Economies, Alaska Native and Canadian Aboriginal People Are Interdependent

Our Comment:

Dave HarbourAlaska Natives, Canadian Aboriginals and Northern economies depend on oil and gas development and the transportation systems moving the resources to market.

Transportation systems like pipelines require rights of way.  Rights of way and subsistence hunting and fishing and agricultural areas very often overlap proposed pipeline routes.

All stakeholders care about the safety of pipeline operations.  For sure, all stakeholders wish to maximize their own income streams.   Without access to natural resources, natural resource companies cannot survive.  

Without the revenue provided by natural resource companies, rural, regional and even national economies would have difficulty sustaining their citizens' ways of life.  We could think of this economic cycle of life as, "mutually assured sustainability".

Some legal gladiators, like environmental groups, however, may have multiple goals of minimizing ecological effects of (or flat out stopping) development, fund raising, member recruitment and crisis management as a key to attracting new and greater levels of contributions.  

However, one should carefully note that the total disapproval of a project that environmental activists  oppose may enrich their far-away NGO coffers while impoverishing citizen stakeholders in all directly affected rural, regional and national economies.

This excellent Calgary Herald story by James Wood demonstrates the a laudable appreciation of both developers and traditional peoples to create sustainable models of cooperation and development.

In Alaska, we are encouraged by Alaska Native Corporation relationships with Shell's Arctic OCS program--and other natural resource projects.  But, as above, we note that environmental activists seeking destruction of the project could seriously diminish the entire future economy of Alaska, with negative impacts, as well, on the national treasury and national security interests in the Arctic.

-dh

Calgary Herald by James Wood.  The head of the Assembly of First Nations told a Calgary business crowd Wednesday the energy industry must do a better job on safety and protecting the environment if it wants to earn the trust of Canada’s aboriginal people.

Perry Bellegarde, speaking at a Calgary Chamber of Commerce luncheon, said First Nations are watching the recent spill of bitumen from a state-of-the-art Nexen pipeline south of Fort McMurray.

“They have the best technology in place. What happened? That shouldn’t happen,” said Bellegarde, who comes from the Black Bear First Nation ....

First Nation opposition has been a major factor in stalling Enbridge’s Northern Gateway pipeline proposed to connect Alberta’s oilsands to Kitimat, B.C., for shipment to Asia. Resistance by aboriginal groups could also hamper TransCanada Corp.’s proposed Energy East line to the Atlantic coast.

Bellegarde noted there is a vast difference of opinion among individual First Nations toward pipelines, with some interested in the economic potential of the projects and others fiercely opposed.

“If the industry can assure people there are systems in place — better systems — they will be more open to transportation, to the pipelines,” he said.

...

Bellegarde said the oilpatch needs to engage with indigenous people, suggesting a system in which resource companies must demonstrate their commitment to aboriginal economic development and employment before development permits are issued.

...

“We’re not opposed to development, but we want to make sure the footprint’s not like this,” he added, holding his arms wide.

Greg Stringham, vice-president with the Canadian Association of Petroleum Producers, was in attendance for Bellegarde’s speech at the Hyatt Regency and said it was “inspiring.”

(Note today's Petroleum News Alaska article by Gary Park.  A new report cites urgency in getting LNG projects approved.)

...

Blaine Favel, another former FSIN chief who is now the executive chairman of Calgary-based One Earth Oil and Gas Inc., told the chamber crowd that “the old way of doing things can’t work anymore when it comes to energy issues.”

....

Excerpts above; read full story here.  -dh

With files from Deborah Yedlin, Calgary Herald and The Canadian Press.

jwood@calgaryherald.com    Twitter.com/JamesWoodHerald

Categories:

7-23-15

23 July 2015 9:44am

Senator Lisa Murkowski by Dave HarbourU.S. Sen. Lisa Murkowski, (NGP Photo), yesterday issued the following response to the Interior Department’s approval of two conditional permits to Shell to resume its exploratory drilling in Alaska’s Chukchi Sea:

“Today’s approval by the Department of Interior of the permits Shell needs to resume drilling in the Chukchi Sea is good news for Alaska and our country. However, it is not the final regulatory hurdle Shell faces and it is important that the agencies continue to work in good faith and in a timely fashion to complete the remaining regulatory requirements.

“With an estimated 25 percent of the world’s undiscovered conventional oil and gas resources and active exploration by countries like Russia, it’s critical that the United States set the standard for responsible development in the Arctic. America will only truly assume that role when it actively engages in developing its resources.

“My attention remains focused on ensuring exploration proceeds safely this season and that Alaskans benefit from the development of our resources through revenue sharing.”

Categories:

7-22-15 Arrogant EPA Refuses To Testify On ESA

22 July 2015 7:13am

"Investment In Arctic Is Paramount", by Anne Seneca, President, Consumer Energy Alliance-Alaska


Politico: House GOP launches fresh salvo at EPA on endangered species

By Elana Schor

House Natural Resources Committee Republicans say EPA is snubbing their request to testify next week on whether it abided by Endangered Species Act rules that the GOP hopes will provide a new weapon against the Obama administration’s power plant emissions rules.

The House Natural Resources Chairman Rob Bishop’s species protection probe began in the spring, when Fish and Wildlife Service Director Dan Ashe admitted that EPA had not sought FWS input on the upcoming climate regulations despite evidence that the expected retirement of a Florida coal-fired power plant would eliminate a warm water habitat for some manatees.   

To view full story online:
https://www.politicopro.com/go/?id=50325


Today's relevant energy links from Consumer Energy Alliance:

Norman TranscriptIndustry official responds to oil and gas regs *Tommy Foltz Quoted

Consumer Energy Alliance Executive Vice President Tommy Foltz reacted to a decision by the Stillwater City Council this week to pass a new oil and gas ordinance that has been the subject of debate since January.

 

Tulsa Public Radio: New Stillwater Drilling Rules Also Being Questioned *Tommy Foltz Quoted

Stillwater imposes new rules on oil and gas drilling, but there are those who aren't sure it will meet the legal test under a new state law.

 

Tulsa Public RadioTulsa Morning News *Tommy Foltz Interview

 

Alaska Dispatch News: Investment in Arctic is paramount *Anne Seneca LTE

Shannyn Moore’s July 19 column on Shell’s offshore program was nonsensical gibberish. As Unalaska Mayor Shirley Marquardt commented to ADN after the incident: “So many things like this happen in the marine industry in Dutch Harbor and people just go, ‘Oh they were lucky.’ But when it’s Shell, people who have no marine experience whatsoever or have never been to Dutch Harbor say, ‘See they don’t know what they were doing.’ ” Moore’s litany was an unnecessary and incomprehensible diversion from a real and meaningful issue: the importance of increasing the nation’s investments in the Arctic.

 

Consumer Energy Alliance: Consumer Energy Alliance Welcomes New Member: West Virginia Oil and Natural Gas Association

Consumer Energy Alliance (CEA) is pleased to welcome the West Virginia Oil and Natural Gas Association (WVONGA) as its newest affiliate member. Chartered in 1915, WVONGA is one of the oldest trade organizations in the state, and is the only association that serves the entire oil and gas industry. The activities of its members include construction, environmental services, drilling, completion, gathering, transporting, distribution and processing.

 

Wall Street Journal: Western oil companies will face competition in Iran

European and U.S. oil-and-gas companies drawn to Iran as sanctions ebb can expect to encounter not only opportunities, but also capable Iranian companies offering tough competition or joint ventures.

 

Washington Times: Nonsensical 'fractivist' pipeline hysteria

The anti-fracking movement has moved beyond the realm of the petty and unseemly into the ridiculous. Led by Yoko Ono, the avant-garde artist and widow of musician John Lennon, fracktivists are trying to stop construction of pipelines that would carry natural gas from the Marcellus Shale region in Pennsylvania and West Virginia, and the Utica Shale region in Ohio to markets in New York and New England.

 

Washington Examiner: Obama climate pledge on 'very shaky legal ground,' critics say

Republicans and industry officials on Tuesday contended the Obama administration's climate pledge heading into global negotiations was on "very shaky legal ground"

 

Bloomberg: Oil Drillers Retreat from Shallow U.S. Gulf in Turn to Shale

Energy producers are retreating from the search for oil and natural gas close to shore in the U.S. Gulf of Mexico as drilling budgets shrink and exploration migrates to land-based shale fields.

 

BloombergGlut of gas heading south as shale boom reaches Florida

A glut of cheap natural gas trapped in the U.S. Northeast will be heading south by the end of the year, radically changing the price differences between the regions.

 

BloombergAnalysts: Gas pipelines to shrink price gap between Northeast, Southeast

New pipeline capacity in the Northeast is expected to bring more natural gas from the Marcellus Shale play to the Southeast, prompting the price difference between the two regions to narrow over the next three years, analysts predict.

 

The Hill: First attempt to advance Senate highway bill falters

A Senate bill that would sell off a portion of the Strategic Petroleum Reserve to fund highway projects failed to advance Tuesday. Another vote is expected today.

 

Sioux Falls Argus Leader: PUC: No new pipeline testimony on tribal stewardship

South Dakota utility regulators won’t allow testimony on tribal land stewardship next week in the latest round of Keystone XL pipeline hearings.

 

Aberdeen News: PUC sets final processes for TransCanada hearing

The state Public Utilities Commission on Tuesday rejected most of the limits that TransCanada wanted on opponents for the permit hearing next week on the Keystone XL oil pipeline.

 

Oil & Gas Journal: Study examines methane emissions from gas facilities

Natural gas transmission and storage facilities in the U.S. released 1,503 gigagrams per year of methane emissions, according to a Colorado State University study. The figure is 27% lower than a government estimate but statistically similar, according to the study.

 

Huffington Post: Dear Mr. President: Prove Your Climate Rhetoric and Stop Arctic Drilling

Dear Mr. President: I've often been struck by your soaring rhetoric on combating climate change, transitioning to clean energy sources, and protecting the natural environment. Clearly on some level you get it, as you've demonstrated in speech after speech. That's why I don't understand how you could even consider approving Shell's dangerous plan to drill for oil in the Arctic Ocean this summer  and why I'm imploring you to stop this reckless and short-sighted project.

 

E&E News: Crude exports not in House energy proposal

The House Energy and Commerce Committee on Monday introduced a bipartisan energy bill that did not include a repeal of the ban on crude exports. A subcommittee markup is planned for today.

 

Associated PressWilmington the latest to oppose offshore drilling

Wilmington has become the latest city in the Carolinas to oppose offshore drilling for oil.

Wilmington City Council voted unanimously on Tuesday to oppose both seismic testing to find oil and natural gas, and the actual drilling for oil off the North Carolina coast.

 

The Roanoke TimesCutler: Industry attempting to bypass review procedures

“Now, think what might happen if (a) legislation under active consideration now by the U.S. Congress (H.R. 2295, S. 411, S. 1196) were to pass that gives the secretary of the Interior (instead of the Congress, as is currently the case) the power to issue oil and gas pipeline rights of way through national parks and (b) another person with Jim Watt’s world view were to be appointed secretary of the Interior?”

 

Akron Beacon JournalOil company mergers are down, federal agency reports - Drilling – Ohio

The second quarter of 2015 exhibited the largest amount of oil companies' merger and acquisition (M&A) activity by value since fourth-quarter 2012. The announced merger between Royal Dutch Shell and BG Group in early April accounted for $84 billion of the $115 billion quarterly total.

 

Oil & Gas JournalComment period on Colo. gas proposal extended

The Bureau of Land Management has given the public until Aug. 4 to submit comments on a preliminary environmental assessment of Gunnison Energy and SG Interests' proposed natural gas project in Colorado. The project would entail up to 25 gas wells on five well pads.

 

Durango Herald: Colorado faces clean-air rule from EPA

A final rule from the Environmental Protection Agency is expected in the coming days, aimed at a 30-percent reduction in carbon-dioxide emissions nationwide by 2030. The proposal is state-based, with a target of 35 percent proposed for Colorado.

 

San Antonio Express-News: HF, HB 40, and concerns about liability

In late 2014 the citizens of Denton voted to ban fracking in the city and its extraterritorial jurisdiction. The proponents felt that fracking was a dangerous and polluting practice that does not belong in their community. Many other cities in the nation have passed similar ordinances.

 

San Antonio Express News: Engineering to the rescue in the Eagle Ford

Engineering and innovation can save the Eagle Ford Shale amid six-year low oil prices, participants at the Unconventional Resources Technology Conference said Tuesday. More than 3,000 oil industry professionals are at the Henry B. Gonzalez Convention Center in downtown San Antonio for the conference until Wednesday. And with oil prices hovering around six-year lows, many of the conference's panels are focused on technology to improve productivity and efficiency.

 

Akron Beacon Journal: New power plant seen as game-changer in Ohio

A big change is coming to Ohio: Coal is on the way out and cleaner-burning natural gas is moving in. That switch was behind the ceremonial groundbreaking Tuesday southeast of Canton in tiny Carroll County, where a new, $899 million natural gas-fired power plant is being built in the heart of Ohio’s Utica Shale.

 

Times LeaderNew Ohio well rules in place

Ohio Rep. Jack Cera believes new state Department of Natural Resources rules will help prevent accidents at Marcellus and Utica shale drilling pads, such as those in Monroe County that displaced residents and killed thousands of fish last year.

 

Columbus CEO: Anxiety hits Ohio’s industry. Columbus CEO. First was the shale oil and gas boom

Eastern and southeastern Ohio saw a surge in lease activity, pipeline projects and hiring. New wealth trickled through the economy to car dealers, hotel operators and restaurants. Now, Ohio’s shale country is an uncomfortable place, with elements of the boom still in place, and some companies facing what can only be described as a bust.

 

NorthCentralPa.com: Even Higher Energy Taxes Threaten Pa. Jobs

Shale development in the Commonwealth continues to benefit our economy and environment. From providing regional building trades unions with thousands of good-paying jobs to delivering consumer savings for families and improving air quality, these clear benefits touch all corners of Pennsylvania.

Categories:
Syndicate content