Miss a day
Miss a lot

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.

 

Commentary

9-4-14 Mining and Oil & Gas Have Much In Common: Sustaining Canadian & American Lifestyles

04 September 2014 6:01am

Mining.com.  Here, "Visual Capitalist" helps us to grasp the enormous breadth, depth and wealth of Canada's Oil Sands, which makes a conduit (or, pipeline conduits) through the United States and other Canadian provinces even more valuable to those areas due to associated jobs and property tax benefits.  

Citizens of both states and provinces should not be fooled by environmental activist tomfoolery which seeks to isolate and lock up that wealth for both current and future generations.  Demonizing and then snapping a ball and chain around the legs of reasonable natural resource development can only cripple job creation, economic opportunity and associated North American lifestyles for this and future generations.  

We are grateful to reader, Steve Borell for bringing this lucid analysis to our attention.  

Yesterday we urged readers to consider attending and supporting both mining and oil and gas conferences where policy decisions often originate and achieve decision-maker consensus.  The oil sands project is a perfect example of how mining and Oil & Gas share symmetry.  

Other examples include Alaska's Pebble Project challenges, which, if lost, will eviscerate America's 'rule of law and Constitutional due process guarantees', and empower the EPA through precedent to PRE-EMPTIVELY BLOCK any agricultural, commercial fishing, petroleum, mining, forestry, hydroelectric, federal highway or state bridge or municipal right of way project -- BEFORE THAT PROJECT HAS EVEN FILED A PERMIT APPLICATION OR PRESENTED A DEVELOPMENT PLAN.  -dh

Mining.com.  There’s no shortage of discussion on Canada’s oil sands. Even Leonardo Dicaprio has recently toured them while subsequently providing commentary that ruffled the feathers of the province of Alberta.

As a whole, the oil sands are about as big as the state of Florida. The mineable portion makes up about 3% of that total, which is for bitumen deposits less than 75 metres below ground. For perspective, this is about 6x the size of New York City. Meanwhile, the rest (about 97%) must be recovered by “in situ” methods such as SAGD where heavy oil is pumped to the surface.

Surely something with this size and scope must have a big impact in other places – and it does. The oil sands produce more than 56% of Canada’s oil and contains over 98% of Canada’s proven reserves. Over the next 25 years, $783 billion in royalties and taxes will be paid to the government.  (More....)


Consumer Energy Alliance Energy Clips:

The Lufkin News: Keystone XL pipeline a boon for tax rolls The Keystone XL pipeline will funnel more than black tar sands through Angelina County now that it’s on the 2014 tax rolls.
 
Omaha.com: Ruling on Keystone XL could come down to 2 key points The nearly six-year odyssey of the Keystone XL pipeline could turn this week in 30 minutes. The Nebraska Supreme Court will hear oral arguments Friday morning on a constitutional challenge involving one of the most bitterly fought environmental battles in a generation. President Barack Obama is awaiting a ruling from Nebraska before moving closer to deciding the fate of the massive oil pipeline.
 
Bloomberg: Keystone Redux Haunts Trans Mountain as Fight Shifts to Climate
The next fight over oil pipeline development in Canada is starting to look like Keystone XL version 2.0. This time the target is a $4.9 billion project by Houston billionaire Richard Kinder’s energy empire.
 
The Canadian Press: Leonardo DiCaprio visits Alberta oilsands to research documentary
Actor Leonardo DiCaprio is the latest celebrity to visit Alberta's oilsands. Sources involved with the visit say DiCaprio is doing research for an environmental documentary.
 
Inside Climate News: Keystone Ads Mislead on Canada's Deep Cuts to Environmental Monitoring
Canada has cut nearly $3 billion in spending and up to 5,000 jobs from its science-based departments, according to a union representing federal scientists.
 
KETV- Omaha: Gov. Heineman voices opinion on Keystone XL pipeline's slow process
Later this week the Nebraska Supreme Court will hear arguments about the Keystone XL Pipeline.
 
The Globe and Mail: TransCanada’s Energy East faces hurdle as U.S. oil boom swamps market
As TransCanada Corp. prepares to file for regulatory approval for its $12-billion cross-country pipeline project, booming U.S. oil imports are creating a new challenge: a domestic market saturated with low-cost crude.
 
The Guardian: As Shell gears up to drill the Arctic, investors must ask serious questions
The oil company has filed plans for offshore drilling but past safety blunders and operational failings in the region make it a high cost, high risk venture.
 
Huffington Post: No New Oil Drilling in Our Oceans
Labor Day represents the end of summer-- and nothing says summer quite like a trip to the beach. At the beginning of summer, my family spent a few wonderful days exploring the beaches lining a small South Carolina coastal town. Enjoying the catch of the day at a local crab shack, we gazed at a sign across the road at a grocery store that pleaded "Don't ruin our ocean with sonic cannons." As we talked to long -time residents, we were struck by the deep concern they have that drilling for oil offshore would kill this community's tradition of great seafood, clean beaches, and sea turtle nesting.
 
The Beaufort Gazette: SC policymakers push for offshore drilling despite environmental, tourism concerns
When Beaufort Mayor Billy Keyserling scans the horizon of his city, he doesn't see a place for oil rigs. He fears the impact offshore drilling operations could have on South Carolina's coastal tourism.
 
Bloomberg BNA: McConnell to Intensify Push to Roll Back EPA Regulations if Republicans Flip Senate
Sen. Mitch McConnell (R-Ky.) will make it a top priority to derail Environmental Protection Agency regulatory efforts through the appropriations process if Republicans retake the Senate this fall, the senator and several former congressional aides say.
 
The Energy Collective: EPA's Clean Power Plan: Texas's Last Stand or Last Hope?
August has been an eventful month here in Texas. And, no, I’m not referring to news about Governor Rick Perry, rather some of his appointees. The Texas Public Utility Commission (PUC), Texas Commission on Environmental Quality (TCEQ), Railroad Commissioners (RRC) Barry Smitherman and Christy Craddick, and State Representative Jason Isaac held a joint session to discuss the Environmental Protection Agency’s (EPA) new Clean Power Plan (CPP).
 
Reuters: From Seoul to Mexico City, pressure mounts to ease U.S. oil export ban
Washington is facing growing international pressure to ease its long standing ban on crude oil exports, with South Korea and Mexico joining the European Union in pressing the case for U.S. oil shipments overseas.
 
The New York Times: Desperately Dry California Tries to Curb Private Drilling for Water
The small prefab office of Arthur & Orum, a well-drilling outfit hidden in the almond trees and grapevines south of Fresno, has become a magnet for scores of California farmers in desperate need of water to sustain their crops. Looking at binders of dozens of orders for yet-to-be-drilled wells, Steve Arthur, a manager, said, “We’ve got more stacked up than we’ll do before the end of the year.”
 
Reuters:  Why the shale revolution is not about to end
Doubts about the sustainability of the North American oil and gas boom center on rapidly declining output from many shale wells after they are initially drilled. Shale skeptics point to the need to drill an ever-increasing number of new holes just to replace the declining output from existing wells, let alone expand production. At some point it will become impossible to keep up, they argue.
 
The Hill: White House reviews federal-land HF rules
The White House Office of Management and Budget (OMB) has started to review new regulations for hydraulic fracturing on federal land, the last step before the rules can be made final. The rules for the oil and gas drilling process, also known as fracking, were proposed last year after a mid-2012 proposal was pulled back.
 
Houston ChronicleWater resources a problem worldwide, report finds
The great conundrum of the drilling revolution unfolding in the United States and now being exported to other nations is that some of the countries with the biggest oil and gas resources also have the least amount of water to dedicate to extracting them. According to the analysis by the World Resources Institute, 38 percent of the earth’s shale gas and tight oil resources are in areas that are either arid or under high levels of water stress already _ a scenario that does not mesh with the high water demands of today’s extraction techniques.
 
Saint Louis Post Dispatch: 'Fracking' one step closer to breaking ground in Illinois
Friday, the Illinois Department of Natural Resources officially released proposed rules to govern the controversial oil-extraction process. It now will be considered by a state legislative committee, which will decide within 90 days whether to go forward with the proposed rules—which have already garnered some 30,000 comments from the public.
 
The State Journal: Hydraulic fracturing could improve geothermal energy
A recent issue of The Economist had an article titled “Geothermal Energy, Hot Rocks, Why Geothermal Is the New Fracking.” The month before, a New York Times article titled, “Geothermal Industry Grows, With Help from Oil and Gas Drilling.”
 
Philadelphia Inquirer: Marcellus Shale gas boom sparks land disputes
The Marcellus Shale natural gas discovery has triggered an associated boom in Pennsylvania land disputes, as formerly valueless mineral rights are now potentially worth millions.
 
State JournalWV workforce lacks oil and gas expertise — for now.
“It is amazing to consider how rapidly production has risen in recent years: For instance, the 33 percent rise in production that occurred just between 2012 and 2013 is significantly higher than anyone would have expected a few years ago,” said John Deskins, director of the Bureau of Business and Economic Research at West Virginia University. “More generally, performance has been consistently outstripping expectations in recent years.
 
Longview News-Journal: Texas shale keeps gas prices affordable.
Whenever overseas turmoil has pushed energy prices higher in the past, John and Beth Hughes have curbed their driving by eating at home more and shopping locally. But the crises in Ukraine and Iraq did not stop the Hughes family from making the two-hour drive to San Antonio to visit the Alamo, have a chicken-fried steak lunch and buy fish for their tank before driving home to Corpus Christi.
 
Houston Chronicle: As more oil travels along rail, safety concerns come up.
Across the country, intense scrutiny has descended on rail transit of crude, a partnership that built the national energy system in the age of John D. Rockefeller and Standard Oil. As traffic has surged, a series of accidents, including a spectacular derailment that killed dozens of people last summer in Canada, has led to outcry from fire marshals and assurances from rail industry officials.

Categories:

9-3-14 Top Energy Summits Coming

03 September 2014 6:17am

While we draw special attention to the following, upcoming meetings, we also urge readers to explore links to resource development, chamber of commerce and other similar groups in the U.S. and Canada which are linked above, and in the right-hand column.  -dh

"A Plethora of Organizations?"

I've heard some say, "These organizations are duplicative!  I can't support them all!"

But this mindset ignores that free enterprise is under attack from a massive and well-organized ​Enviro-Industrial-Governmental Cabal.  

The foundations, political activists and Soros-supported 'not-for-profit' organizations do not suffer from stingy donors.  As we have proved here in numerous instances, they will spend vast sums to 'fundamentally change countries and societies'.

We do sympathize with those with very limited budgets.  To those, we say, "Please consider reordering priorities.  Give to organizations that support you."

Let's ask, "Do organizations we support, support us at the ballot box, at federal hearings, at state legislative committee meetings?"

By using "enlightened self interest" when making charitable contributions and supporting organizational memberships, we might find that the culture of freedom, the principle of 'due process' and the overall protections of a strong "rule of law" will become more and more dominant over the dangerous trend in the world's democracies toward, "rule of man".

And, if we fail, we would at least have fought the good fight!

-dh

10th Annual Alaska Oil & Gas Congress, 9-15/18-14, Cathy Giessel, Photo by Dave Harbour, Alaska Senate, Alaska Oil and Gas CongressAnchorage.  The Cogress is Co-Chaired by Hon. Cathy Giessel (Alaska State Senate) and Anchorage Economic Development Corporation CEO, Bill Popp (NGP Photos).  Bill Popp, Photo by Dave Harbour, Anchorage Economic Development Corporation, Alaska Oil and Gas CongressCongress sponsors say, "Proudly celebrating its 10th anniversary, the Alaska Oil and Gas Congress promises to deliver valuable awareness into the progress and challenges around oil and gas development in Alaska."  We believe it is a premier, multi-day, annual energy event in northern, North America--sharing that distinction with the annual Arctic Oil & Gas Symposium in Calgary.  (Your author has chaired both events over the years.  -dh)

2014 Interstate Mining Compact Commission Mid-year Meeting, 10-15/17-14, Washington, DC.  We strongly urge oil & gas representatives to attend and support this meeting since issues affecting federal regulations on mining can and do apply to oil, gas and other natural resource permits.  Here's what sponsors say: "In addition to our regular agenda, as part of this year’s Mid-Year Meeting we are hosting a day of federal and state discussions on October 15. The program will consist of short panel introductions to the agenda topics followed by roundtable discussions. Officials from the U.S. Corps of Engineers (confirmed), U.S. Environmental Protection Agency, U.S. Bureau of Land Management, and U.S. Fish and Wildlife Service have been invited to participate in separate sessions on that day." 

2014 Consumer Energy Alliance Energy Day, 10-18-14, Houston.  This festival puts an educational focus on "all of the above" energy technologies of interest to children and adults alike.  Hosted by CEA President David Holt (NGP Photo), a David Holt, Consumer Energy Alliance, Photo by Dave Harbourfrequent participant in energy events nationwide -- including Alaska -- sponsors say, "The festival hosts nearly 70 interactive demonstrations and exhibits teaching students and their families about the various forms of energy, science, technology, efficiency, conservation, and careers in the energy industry. The exciting exhibits and interactions with energy experts help spark students’ interest in science, technology, engineering and mathematics (STEM).  Attendees include students, educators, families and business leaders who see a range of exhibits highlighting energy sources and opportunities in the industry. Additionally, more than 75 students are awarded each year for their achievements in STEM-related competitions. Guests are also treated to music and numerous interactive games and displays.

2014 Interstate Oil & Gas Compact Commission (IOGCC) Annual Conference, Columbus, Ohio, 10-19/21-14. Hosted by Phil Bryant, Governor, Mississippi, Photo by Dave Harbourchairman, Governor Phil Bryant (NGP Photo) of Mississippi, sponsors say, "we will explore current issues and operations influencing the U.S. oil and natural gas industry.

"Participants will have the unique opportunity to interact with state regulators, government officials and industry professionals and learn about some prevailing environmentally-sound practices whilst focusing on the expansion of North American energy resources. 

"The 2014 IOGCC Annual Conference is bound to be both informational and enlightening to any individual wanting to learn more about the exploration and production of oil and natural gas."

126th Annual Meeting, 2014 National Association of Regulatory Utility Commissioners (NARUC), 11-16-19, San Colette Honorable, NARUC, Photo by Dave HarbourFrancisco.  State and federal regulatory commissioners confer on many of the leading energy/environmental issues du jour, under leadership of Hon. Colette Honorable (NGP Photo) - NARUC President, Arkansas.  

Canadian Energy and Utility Regulators meet with NARUC commissioners and also convene their own annual meeting in the spring.  The next CAMPUT Annual Conference is scheduled for:  May 10 – 13, 2015, Hyatt Regency Hotel, Calgary, Alberta.

 

Categories:

8-21-14 LNG Competition: What We Can Do To Help!

21 August 2014 6:41am

Is The Alaska LNG Project In A Race With Canada's Painted Pony?

Commentary on, "A Brave New World of LNG Export Competition", by Dave Harbour

Our friend, James Halloran (below, right) advises his newsletter recipients this morning that LNG Project competition is intense.  This is why Alaska cannot take its resources for granted--cannot just assume that they will be both marketable and marketed.  And, we can help!  In a Brave New World of LNG export competition, Alaska's government and people need to work with and support reasonable natural resource development in the State.  Alaska's Constitution (Para. 2) demands it.  The Alaska Statehood Act depended upon it.  And, the future of Alaska and her coming generations absolutely require an economy sustained by reasonable resource development.  We don't know if the Alaska LNG Project will ultimately be both marketable and marketed.  We do know that its sponsors will need exceptional support of Alaska's citizens to overcome the awesome forces of competition, augmented by Alaska North Slope Gas natural marketing obstacles: remoteness, climate expenses, labor expenses and logistics expenses.  We also conclude that our Canadian friends face some of the same, man-made competitive obstacles and natural resource advantages.


Governor Sean Parnell, Alaska, LNG, Nikiski, Land Purchases, Photo by Dave Harbour

LNG Competition!

Commentary by Energy Consultant, James Halloran.

There are over two dozen proposed LNG export projects in the US that, if all enacted, would involve shipping 38 Bcf of gas per day (over 50% of current domestic production).

Obviously, the actual number will be much smaller than that. The best guess (and it is no more than that) is that US LNG export capacity may reach about 8-10 Bcf/day.

About 2-4 Bcf will represent “swing capacity” for such majors as Exxon, arbitraging between the Atlantic and Pacific basins (and not operating full-time).

The total capacity ultimately built may actually go higher, but at that point some of it will be excess supply.

But the US situation can hardly be looked at in a vacuum. There are a number of major inputs to the LNG supply/demand equation. One of the biggest involves efforts by British Columbia to develop a number of LNG export terminals. The note below describes the critical issues that are headwinds to that effort. We will not repeat what is accented below. But the bottom line is that, while Canada’s only real advantage over the US at this point is closer proximity to the Asian market, with several disadvantages, this does not mean that Canada will cede the market to the US. The BC projects are highly likely to lead to overbuilding in the North American LNG export business.

This is especially likely, given BC’s dream of tax revenue riches from these projects. Rational behavior rarely accompanies government greed. The Canadian natural gas that will supply the BC projects will not come from fields that would go anywhere else, but this only accents the likelihood of competition for the Asian markets that will hold LNG prices down.

(Note: Should Halloran later add into this mix the prospect of an Alaska LNG project, competition becomes even more intense.

Tax greedy Provinces like British Columbia and States like Alaska will have to restrain the temptation to tax their golden eggs out of existence; if not, less greedy, more reasonable, producing area governments will create new nests of golden eggs at the expense of Canada and Alaska.  -dh)

On his Face Book Page, Governor Sean Parnell (NGP Photo) writes: Progress on the natural gas pipeline for Alaskans: ‪#‎Alaska‬’s LNG Project secured more than 120 acres of land near Nikiski and has nearly 100 more acres under contract. This bodes well for a liquefied natural gas plant, which would be the largest integrated LNG project ever constructed . Some good reporting here: http://goo.gl/KOIU5J 


Bloomberg News by R.  The race to build natural gas export terminals on Canada’s Pacific Coast is inspiring another competition as producers including Painted Pony Petroleum Ltd. (PPY) position themselves as potential takeover targets.

Developers of the gas-rich Montney shale that straddles Alberta and British Columbia are among the best-performing Canadian energy stocks this year, including Painted Pony, Crew Energy Inc. (CR) and Birchcliff Energy Ltd. (BIR) Regulators estimate the Montney, the supply source closest to the sites of proposed LNG terminals, contains 145 years worth of Canadian gas consumption.

As oil majors from BG Group Plc to Royal Dutch Shell (More here....)


TODAY'S CONSUMER ENERGY ALLIANCE ENERGY LINKS HERE


TODAY'S ENERGY IN DEPTH ENERGY LINKS BELOW:

NATIONAL

As oil boom continues, there's no end in sight for job growthDallas Morning News. “We have a lot of production increasing in the shale areas of Texas and North Dakota. And we’re seeing an upswing in the number of rigs in the gulf,” said Paul Caplan, president of Rigzone, which runs an online job board for the industry. “The competition for people is getting tough.”
 
Bottleneck keeps Permian oil price far below benchmarkHouston Chronicle. Five years into an oil production revival in the Permian Basin, producers tapping the West Texas formation are selling their oil for $21 below the benchmark U.S. price because it's difficult to get thecrude to market. NOTE: Bloomberg also reports.
 
New Book Documents Hydraulic Fracturing's Promise for AmericaHeartland Institute (Blog). The new book Groundswell is a highly recommended read. It is more an economics and politics book than a science treatise, and there are plenty of issues in fracking economics and politics to discuss. In an easy conversational writing style, Ezra Levant powerfully debunks a litany of myths regularly asserted by anti-fracking activists.
 
BP Hires Chief to Run its U.S. 'Lower 48' Onshore BusinessWall Street Journal. Mr. Lawler, most recently an executive vice president and chief operating officer of Sandridge, will take over a new business with "separate governance, processes and systems" from the rest of BP, the company said in a statement. He will report to BP's exploration-and-production chief, Lamar McKay. BP said in March that it would put its lower-48 onshore assets into a new business in an effort to become nimbler and "compete more effectively with the independents," BP CEO Bob Dudley told an investor meeting at the time.
 
Energy fight advances in North CarolinaWashington Post. North Carolina is down to the final weeks of a hydraulic fracturing battle that has consumed the state government for nearly two years. The state’s Mining and Energy Commission will kick off public hearings this week on the controversial drilling practice, which Gov. Pat McCrory (R) legalized in June.    (Click Below For More International and Stateside News....)

 

Categories:

8-20-14

20 August 2014 5:30am

 

Yesterday's Election Results: Scroll down for yesterday's analysis.

KTUU.  The outcome of Ballot Measure 1 decided whether Alaska should keep changes the Legislature made earlier this year to the state's oil tax structure.  Controversy surrounded the divisive issue from the time legislation was proposed through the days leading to the election.

Categories:

8-19-14 Today Alaskan Voters Determine Their Future!

19 August 2014 5:34am

Primary Election Day In Alaska

A Historic Day Whereupon Alaskan Voters Will Determine the Future Of Their State and Their Country!

by

Dave Harbour

​(Responses to commentary)

Alaska: Where A Deal Is A Deal?

Last Spring we wrote a four part series, here, on Alaska's oil tax history going back to forty years.  We also explored Alaska's current status as a competitive investment climate and coined a phrase: "In Alaska, Is A Deal A Deal?", and variations on that theme.

In one column, below, we explored the concept of a competitive investment climate/tax policy in an ideal world, which, on this Primary Election Day, might interest our gentle readers.


So, question: rather than just be relegated to the critics' peanut gallery, what would we be inclined to do were we to have absolute power?

Answer: We would sell oil and gas leases in the private market for the highest price.

We would loudly proclaim that, "in reliable Alaska, a deal is a deal and we put great value on protecting our reputation".  

While our constitution gives us the sovereign power of taxation, we are loathe to use that power selfishly, negatively or in ways that diminish our integrity as a respected, sovereign state.

We would endeavor to never change the tax/royalty/regulatory rules of the game affecting an investment for at least 20 years--except to moderate the impact of those burdens in response to logic and our competitive position with respect to competing markets.  

We would control the nearly insatiable appetite for increased spending beyond our means, knowing that run-away spending could force us to raise tax burdens and decrease our competitive ability to attract investment.

We would not impose any unnecessary costs (i.e. "must haves") on energy projects that diminished the maximum monetary returns; we would then be free to consider use of those maximum returns for social or capital needs of our citizens.

In this way, we would seek to not add an unnecessary and burdensome straw to the back of a project that needed every possible advantage to compete in the world energy marketplace.  

We would not risk adding one single incremental project cost that could kill a project.  

We would not flirt with disaster.

And that, Dear Reader, would lead us to become a place in the world where investors have confidence that, "a deal is a deal".  -dh

Today is a historic Alaska Primary Election Day whereupon voters will decide their own future and, more importantly, the future of their children. 

Our position has always been that high Alaska oil taxes may increase short term gains for this generation but cause a withdrawal of investment at the expense of our children’s generation.

We have written extensively on this subject (i.e. see sidebar links).  We have concluded that for this and future generations our goal should be a reliable and competitive investment climate that produces maximum natural resource and employment returns for this and future generations. 

But there are those who would skim as much as possible from our natural resource potential today no matter what ill effect that might have on future Alaskans.

Today, voters will decide whether to repeal SB 21, a reform bill passed a year and a half ago.  That bill reforms many of the most objectionable aspects of an oil & gas production tax increase passed after little debate by the Legislature and applied RETROACTIVELY nearly a decade ago.  We’ve seen over the past year of reform, how investment to keep the Alaska economic lifeline (i.e. the Trans Alaska Pipeline System {TAPS}) functional has been increasing.

Now, put yourself in the place of a legislator who supported SB 21.

It must be very hard for a politician to avoid temptation. 

Temptation to bow to constituent demands for subsidy.

Temptation to bow to business and campaign supporters for tax moderation.

Temptation to bow to economic realities and a sense of, “doing the right thing”.

Fairbanks Senator “Click” Bishop is an example of a fellow caught between a rock and a hard place.

Some of his union constituents want to repeal reform which could siphon more money into government and public utility unions that could expect to profit from taking maximum oil tax money now in spite of any effect that might have on the future.

Some of his union constituents depending on business generated jobs support reform and the effort to “Vote No On One”, the slogan for pro-SB 21 reform advocates.

Some of Bishop’s constituents are directly depending on oil company investment and jobs while some are involved with Interior Alaska, subsidized utility projects requiring huge expenditures of capital dollars from a diminishing state treasury.

So, what does Bishop do?  He supports SB 21…conditionally.  In this August 17 Op-Ed he assured his local readers that he voted for tax reform but didn’t trust investors and would make them pay dearly if they didn’t invest what he expected, though his expectation is undefined.

He says, “Here’s how my concerns were reported on the night I voted in favor of SB 21: "Bishop was cautiously optimistic the cuts would result in a change on the North Slope, but was adamant that he needs to see a ‘marked investment’ of billions of dollars per year if the industry hopes to hold onto SB 21’s changes. 'Do I trust the oil industry? No, they haven’t proven it to me yet,’ he said. ‘I’m just putting them on notice, right here and right now. They got one free pass with me tonight, and if I don’t see increased production, I’ll be the first one to file a bill to put it back on them, end of story.’ When asked when he would make that determination, he said three years."'

*     *    *

“But”, Bishop continued, “I want to stress -- the burden of proof is not on me or any other Alaskan -- it's on the industry. I want to see increased spending and I want to see increased production. So, I am on the record, just as I was on the record during my campaign and my time in the Legislature. I will take this leap of faith, but if it's not producing the promised results within three years, I will lead the charge to change it.”

“I will also note that if we have to return to ACES or something like it because the producers have not produced, I will be leading the charge for that too, including a claw-back provision to return those dollars to Alaska,” he concluded.

In short, Bishop is like other public officials who kowtow to the public in the quest for reelection by demonizing investors.  It is unfortunate that even if today's effort to repeal tax reform fails, and even if resulting industry investment is massive, the Senator's hostility will remain a matter of public record and a matter of investor concern.

We might have been more understanding had the good Senator opposed SB 21 and courageously stood by his guns or supported and defended reform because he believed the policy best for Alaska--for certain well-articulated reasons.

But Bishop's “on-the-one-hand/on-the-other-hand” rhetoric makes him appear to be unstudied, incapable of decision and far short of the wisdom required of one elected to analyze and act decisively on complex matters affecting the lives of all Alaskans, if not all Americans.  We have seen Bishop in action, like him and appreciate his best of intentions.  We don't mean to pick on the man but his attitude attracts critique.  Why would you support reform for the very investors whom you attack and threaten?

Bishop’s psychology is not unique.  In his defense, he probably does faithfully follow the diverse pressures of constituents.  He has likely chosen to be a “follower of constituent concerns” rather than a, “leader of Alaska”.  That approach might be best calculated for popularity and reelection but falls short of true leadership, diplomacy and business acumen.

Where does this leave Alaska on this historic, Primary Election Day?

We believe that should Ballot Proposition #1 fail (i.e. thus reaffirming passage of SB 21), Alaska will continue to see its investment climate attract more investment.  That investment will lengthen the life of TAPS and thus best secure economic prosperity for this and future Alaska generations.

Should Proposition #1 pass (i.e. thus repealing SB 21 and tax reform), we believe the event will be followed by investor statements indicating, “disappointment” that a well-studied plan by the Legislature and Governor to improve Alaska’s investment climate has failed through operation of a voters initiative.

We believe that under either scenario, the citizens of Alaska and the nation have big challenges to overcome.

  1.  Scenario: Initiative Fails.  Celebration will and should be muted.  Oil tax reform will continue forward.  More investment can be expected.  But investors will remain cautious for several reasons:
    1. The subjective, demanding and hostile attitude of, “invest to my satisfaction”, projected by Senator “Click” Bishop and a large percentage of other Alaskans will be calculated when future investment decisions are discounted for political variables.  Yes, tax reform is safe for the time being, but a large block of voters and elected officials remain hostile to investors—and they know it.
    2. Investors have just witnessed how Alaska’s voter initiative process can emasculate the carefully developed policy of elected officials.  While the initiative may fail today, the process remains alive and well for another day—and investors know it.
    3. With reaffirmation of tax reform, expectations will be high for the oil producers to, “make the gas pipeline/LNG project reality”.  The big producer investors have always said that a durable, reliable “fiscal regime” is required before investors commit $40 to $60 billion into marketing the 35 Tcf + of  Alaska North Slope natural gas reserves.  A decade ago, Governor Frank Murkowski developed an agreement with producers that provided ‘fiscal certainty’ for their big gas pipeline investment in return for a production tax increase.  The Legislature balked and, instead, gave investors no fiscal certainty but rope-a-doped them a tax increase that is the subject of today’s SB 21 tax reform repeal ballot question.  In short, once today is done, the North Slope producers’ gas pipeline project will be under increased scrutiny, accompanied by residual hostile attitudes which surfaced during the SB 21 debate process.  Investors, therefore, know that while production tax reform is real (at least for the time being), new challenges await them.
    4. If Alaskan leaders do not restrain their appetite for continuing, increased spending the pressure will soon build to again increase oil taxes—and, investors know that, too.
  2. Scenario: Initiative Passes.  Governor Sean Parnell (NGP Sean Parnell, No On One, Production Tax, ACES, reform, sb 21, Photo by Dave HarbourPhoto), some legislators, business leaders and oil companies will express varying degrees of disappointment.  Expect to see somewhat restrained comments by oil company taxpayers.  After all, they will once again be living under one of the worst investment climates in the free world—and their assets and operations will still fall under dominion of an unreliable taxing sovereign with regulatory muscle to boot.
    1. We believe investors will throttle back on LNG gas project planning or put the project on hold.  They will, however, be careful about their public responses knowing Alaska is capable of mobilizing further hurtful voters’ initiatives, including a natural gas ‘reserves tax’.
    2. Alaskans can expect to see some projects now being constructed, abandoned.
    3. Real estate investors will be hard hit, beginning this coming fall and winter, as producer companies engage in reductions in force and terminate or downgrade scores or hundreds of service agreements with Alaskan contractors.  New “big box” retail investors will be facing a dangerous, demographic slide.  Nonprofit organizations heavily dependent on general business donations can expect to see a dry desert appearing before their eyes, with few oases of private financial support in view, other than the occasional mirage.  Hoped for new oil and gas investment will fade away, adversely affecting the state and municipal budgets depending on income from the (i.e. discriminatory, since no other business pays it) special oil and gas property tax.
    4. Less oil, than with tax reform, will be transported down TAPS.   This will lead to an earlier shutdown, removal and restoration of the great oil conduit, than would have occurred with tax reform.  This will cause increased prices for oil shippers and their customers at Alaska refineries and on the U.S. West Coast.   The end of TAPS will end oil and gas exploration and development on the Alaska North Slope for, at least, the remainder of our generation.
    5. Finally, one has to ask: If SB 21 is repealed and the negative investment climate produces an outmigration of citizens, will massive state subsidies still be spent to produce the multitude of new energy projects now on the drawing board—in preparation for a growing population.  If so, it is likely that much of that spending will be wasted.  If not, many state employees and their contractors will also experience reductions in force.

Finally, whether the initiative passes or fails, Alaska will still have to contend with two very big challenges:

  1.  Alaska will still face the overreaching, hostile and anti-development actions of a federal government that controls most of the land in Alaska directly, and all of the state, Native and other private lands indirectly.
  2. Alaska will still have to resolve whether it wishes to encourage investors with a truly positive attitude.  Or, will we continue to reflect a small-town, suspicious and hostile attitude toward the very investors whose perseverance and treasure produced for Alaska and her citizens a 50-year age of prosperity?

Tomorrow we’ll know.  Today will be history.


Responses to above commentary:

  • Dave,
     
    My comments from the other side of Pacific (i.e. one of our Australian readers.  -dh).
     
    From a country which is normally considered more collectivist than the U.S. I find the implicit belief of the “high taxers” (including Commisar Palin) to be surprising, but like all socialists everywhere, they believe: "the economy just happens and all of its output belongs to the State other than the bit we chose to leave to you.”    A "Yes" vote will kill the Alaska LNG Project - perhaps forever (though the Producers will be too polite to say so) - and that’s a $50B project!
     
    Cheers,
    N.
  • Our email alert drawing attention to this commentary was entitled: "This Primary Election Day Will Change Alaska's History".  Our first response came from highly respected Alaskan leader, A.G.C., who replied, "Hopefully for the better, but I doubt it."
  • Dave, really good job on the editorial today.  I think you have fairly depicted either outcome, which I fervently hope is a no vote. Looking forward to seeing what you write tomorrow…  -N
  • Thanks, Dave; I voted on Saturday.  -K.E.
  • Looking at the Vote Yes on One Campaign I see the same tunnel vision that I experience on the highways every day. A driver only looks forward in the lane he occupies and comes up behind another driver, tailgating, thinking this will make the trip faster. When this doesn’t happen the driver swerves into another lane without looking to both sides and rear to see what danger may lurk. Many accidents and near accidents occur because of this behavior.  Voting Yes is exactly the same where the voter only looks at the immediate rewards and not the risks and damage to others their actions may bring. The trickle-down effect from discouraging investors will be a severe blow to Alaska’s future.

I urge all Alaskans to Vote NO on One to keep the Alaska economy moving forward now and in the future.

Ken Bauer, Operations & Sales Manager

Spill Shield Inc.

2000 W International Airport Road, D-2

Anchorage, Alaska  99502


 

 

 

 

 

Categories:

8-14-13 Yes, Russian Eyes Are On Canada, Alaska and the Lower 48

14 August 2014 2:01am

Commentary: We can't help wondering about wandering Russian eyes, now turned more than ever toward the Arctic, shared by Canada and U.S., among others.  With more incursions of Russian bombers into our airspace, with Russian aggression and energy blackmail occuring in Ukraine, with Russian interest in Exxon's Point Tompson Field, with increasing Russian involvement in North American energy projects, and, now, with Russia lobbying against exports to Europe, we wonder -- as do our good readers -- at how entangling energy alliances involving Russia will affect Alaskan and Canadian energy colleagues.   

So what is our purpose?  Our purpose today is to remind ourselves to be ever alert, "lest we forget" the chilling days of the cold war.  We cannot afford to ignore movements of the Russian bear in this direction, due to his proclivity toward hostility and not peace--particularly when U.S. leadership is more inclined toward diplomatic appeasement than serving as freedom's guardian.    -dh


   
Spyglass sells assets, cuts dividend by a third
Calgary Herald, By Dan Healing.   Spyglass Resources says second quarter output continued to be reduced by pipeline leaks ... formed in a three-way merger last year of Calgary juniors Pace Oil and Gas ...
 
Categories:
Syndicate content