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      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



7-21-15 Presidential Candidate Kasich Wants High Oil Taxes To Cover Ohio Overspending

21 July 2015 7:16am

Calgary Herald by Alicjaa Siekierska.  Carbon & dust emissions from oil sands activity stimulates forest growth.

 “...a pillar in President Obama's energy legacy of failure.”  

-Congressman Rob  Bishop


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BP Hires Vets


Consumer Energy Alliance Relevant Energy Links


John Kasich, presidential candidate, ohio governor, severance tax, oil tax, predatory taxation, failure to communicate, tax and spend

Commentary: Today, 2-term Ohio Governor John Kasich announced his presidential bid (Photo credit: LA Times).  He began his term with a multi-billion dollar deficit and now enjoys a $2 billion surplus.  

But Kasich's embrace of Medicaid could put more pressure on the budget every year as federal support diminishes.

Aside from freedom itself, energy production is the basis of wealth and prosperity in America.

Kasich has recently reflected a propensity to offset tax decreases and spending with higher sales and oil & gas severance taxes.  (Here is our earlier report and commentary.)

Kasich has many admirable qualities: good family man, plain talking, faith, patriotic and more....  

Sarah Palin, Alaska governor, oil tax, Kasich, Photo by Dave HarbourBut some of our readers will detect in his presidential announcement a turn toward populism reminiscent of former Alaska Governor Sarah Palin's (NGP Photo) anti-industry rhetoric.  After all, big oil has fewer voters than everyone else who enjoys Kasich's income tax decrease and the beneficiaries of increased Medicare subsidies.

And his failed push for higher Ohio energy taxes could be a troubling characteristic of a new president, a propensity that could lead to a further weakening of America's job force, wealth, national security and future prosperity.  


Weak energy production on federal land will serve as “a pillar in President Obama's energy legacy of failure,” the top Republican on the House Natural Resources Committee said.

Rep. Rob Bishop (R-Utah) slammed the Obama administration over a Friday report from the Energy Information Administration (EIA) that shows energy production on federal and Indian lands increasing just 0.2 percent in 2014. 

Bishop said the government should encourage more energy production on those lands, especially given the prospect of Iranian oil entering the market after sanctions on the country are lifted.

“The government's report on energy production on federal lands is astonishingly dismal,” he said in a statement. “The EIA found minuscule growth in oil and natural gas production on federal land — less than a percentage point — the same week that the President welcomes Iranian oil to the market with open arms.”

The EIA reported an overall decrease in energy production on federal land in 2014, primarily in natural gas offshore and in Wyoming. That decrease was offset by a 5.7 percent increase in fossil fuel production on Indian land and a 7 percent rise in oil production, primarily in the Gulf of Mexico, North Dakota and New Mexico.

The small increase in federal land production comes as energy extraction on private land is booming. According to an April Congressional Research Service report, production of oil (an 89 percent increase since 2010) and natural gas (37 percent increase) on private land has surged even as federal land production has fallen.  

“Producers operating on private and state lands are powering our energy economy, but we deserve better from the federal government,” Bishop said. 

“The Obama administration should be expanding access to federal lands and offshore waters and opening up American oil markets — not only for the sake of our economy but for the sake of national security.”

CEA's Energy News Links:

Washington Examiner: Fight over Atlantic drilling wells up *CEA Mention
The governors of all those states want offshore drilling. So, too, do most of their federal lawmakers. That's certainly true. A May poll by industry group Consumers Energy Alliance found 85 percent of the state supports offshore drilling, viewing it as a potential boon to the economy.
ShaleMag: Energy Day *CEA Mention 
With the need for students to be knowledgeable in science, technology, engineering and mathematics (STEM) more important than ever, the Consumer Energy Alliance (CEA) and Consumer Energy Education Foundation (CEEF) are hosting the fifth annual Energy Day on Saturday, October 17, from 11 a.m. to 4 p.m. at Sam Houston Park in downtown Houston.
Associated PressObama plans Alaska trip for climate change conference
The White House has confirmed that President Obama will travel to Alaska next month for a climate change meeting. White House spokeswoman Hallie Ruvin in a statement says the president on Aug. 31 will visit.
MSNBCWhy Shell had the worst week ever
This should have been one of Shell’s best weeks ever. Instead, it shaped up like the corporate equivalent of “The Hangover Part III.” And a happy ending is nowhere in sight.
Fuel FixShell-contracted drill ships begin final Arctic journey
Two Arctic drilling rigs have sailed away from Dutch Harbor, Alaska, beginning the final leg of their journey to the Shell’s drilling sites in the Chukchi Sea. The Noble Discoverer left Dutch Harbor on Thursday, and the Transocean Polar Pioneer followed suit on Friday. Both will take about a week to reach their destination: Shell’s Burger prospect in the Chukchi Sea.
Alaska Dispatch News: Cold receptions for Shell in Lower 48 ports mean opportunity for Alaska
A dynamic event is underway in Arctic Alaska today: one that, if successful, could have a profound effect on our state's economy. Shell Alaska is preparing to drill for oil this summer in Alaska's offshore continental shelf. To date, Shell has expended over $7 billion in gearing up for their effort. They anticipate substantially advancing their delineation effort by the end of this year's drilling season.
UPI: TransCanada uses legacy to explain touted benefits of Keystone XL
The shipment of the 1 billionth barrel of oil through the Keystone oil pipeline system shows commitment to U.S. energy security, TransCanada said.
Reuters: Canada provinces agree to strategy on pipelines, climate change
Canada's provinces reached a long-sought deal on Friday over an energy plan for the country, agreeing broadly to curb greenhouse gas emissions while also promoting the use of pipelines.
Washington ExaminerBills on tap from House, Senate energy panels
The energy committees of both chambers of Congress expect to offer draft energy bills before the August recess, committee leaders said. The bills are expected to cover oil and natural gas infrastructure expansion, energy efficiency and other concerns.
Fox News: EPA 'secret science' under the microscope as GOP lawmakers seek ban 
The Environmental Protection Agency for years has issued costly clean air rules based, in part, on two '90s-era studies linking air pollution with death. But, critics say, the same agency has stymied efforts to access the data behind them. The transparency concerns have Republican lawmakers on a new campaign to end the use of what they dub "secret science."
Roll Call: Iran deal may give Americans a break at the gas pump
The tentative deal designed to limit Iran’s nuclear program led to a quick — though modest — decline in oil prices, raising the possibility American drivers may see a prolonged break from high gasoline prices and creating an opening for Republican lawmakers to step up efforts to end a ban on exporting oil produced in the U.S.
Roll Call: API: Iran deal another signal for U.S. to end crude-exports ban
The congressional campaign against the ban on crude oil exports is gaining momentum after the U.S. and other countries reached a tentative nuclear deal with Iran, according to the American Petroleum Institute. "By lifting self-imposed sanctions, we can give U.S. producers access to global markets and protect our competitive edge," said Eric Wohlschlegel, a spokesman for API.
Fox News: As US energy output surges, Republicans lead effort to lift decades-old oil export ban
Congressional Republicans are leading a bipartisan effort to lift a decades-old ban on oil exports, arguing the recent surge in domestic-energy production and other factors have pushed the embargo past its prime.
CNN: Super-charge the solar power boom  
There's a solar power boom in America. But so far, not enough Americans are seeing the benefits of clean energy.
Associated Press: More unused oil, gas wells linger without permanent seals increasing risk
Five years after the Obama administration promised to move swiftly to permanently plug unused oil and gas wells in the Gulf of Mexico, even more shafts are lingering for longer periods with only temporary sealing, an investigation by The Associated Press shows.
Fuel Fix: Schlumberger CEO: New technology appetite growing amid oil downturn
The CEO of Schlumberger says American oil producers are purchasing a lot more new technology in this year’s oil downturn than in previous rough patches, with new tools making up almost a quarter of the company’s revenue. That’s because the oil bust happens to intersect with a change in what the oil companies want to get out of new technology.
The Oklahoman: Investors keep funding oil, natural gas development
A survey this month from the Federal Reserve of Kansas City found that energy companies reported that private equity was more available than it had been in recent months, while financing from banks and other sources were less available. “They’re still confident in the long-term prospects for the oil industry.
The Oklahoman: A quiet milestone that's worthy of celebrating
But it also makes sense to use more of the cleaner natural gas, along with policies that encourage the development of renewables, the conversion of more vehicles to compressed natural gas and the facilitation of natural gas exports. Most of these aren’t on the agenda of our garden-variety environmentalist. Let him tilt at his windmills. We’ll celebrate the gas milestone.
MIT Technology Review: Where is the global shale revolution?
The United States is not alone in having massive shale gas resources: shale formations rich in gas can be found all over the world. But so far no other country has come close to replicating the U.S. boom that has led to relatively cheap natural gas and helped curb yearly carbon dioxide emissions.
OilPrice.com: Can U.S. Nuclear Plants Operate For 80 Years?
The nuclear industry in the United States has been at a standstill for several decades. After an extraordinary wave of construction in the 1960s and 1970s, the nuclear industry ground to a halt. A confluence of events killed off new construction, including high interest rates, cost overruns, delays, and the Three Mile Island incident that scared the public and turned it against nuclear power.
The Hill: Court dismisses Oklahoma lawsuit against Obama climate rule
A federal judge on Friday dismissed Oklahoma’s second lawsuit against the Obama administration’s climate rule for power plants.
Houston Chronicle: Oil industry critical of planning offshore drilling rules
The oil industry is taking aim at an Obama administration plan to better safeguard offshore exploration, arguing the Deepwater Horizon-inspired proposal imposes costly and "ill-advised" mandates that could make some wells impossible to drill.
BloombergAnalysis: Saudi Arabia oilfield is a Bakken competitor
Oil production in the Bakken Shale costs nearly six times as much per barrel as the Ghawar oilfield in Saudi Arabia. This makes the Saudis a formidable competitor, although production is affected by the country's budget concerns, which seek a market price of at least $89 per barrel.
The Union: HF and the California drought
There are certain measures being considered in California that would ban fracking or at least keep the water from being put back into the water supply. Groups like the Natural Resource Defense Council and Environment California are working to get voters motivated and to put pressure on the state’s legislators. Get involved or even send a letter to your representative and urge them to deal with this fracking issue.
Imperial Valley News: Toward cheaper water treatment - HF matters
Hydraulic fracturing, or “fracking,” produces a lot of wastewater. Drilling one well requires millions of gallons of water that’s injected into the ground to loosen rocks and release oil. While some is reused, much of the produced water is discarded into deep injection wells, and clean water is purchased again and again.
The Denver Post: Stop the EPA's carbon power grab, Colorado
When the U.S. Supreme Court remanded the Environmental Protection Agency's (EPA) Mercury and Air Toxics Standards recently, it set a clear precedent that costs matter and that the EPA does not have a blank check on the wallets of energy consumers. The EPA's claim that the $10 billion pricetag was "irrelevant" failed to withstand judicial review.
Durango Herald: Gas overtakes coal
Energy companies in Southwest Colorado say hydraulic fracturing and looming carbon-pollution regulations are responsible for natural gas overtaking coal for the first time. The Energy Information Administration’s monthly report for April revealed this week that natural gas surpassed coal as the primary source of electrical power generation in the United States. The monumental moment marks the first time ever that natural gas has powered more electrical generation than coal.
Reuters: Okla. regulators expand scrutiny of disposal wells
The Oklahoma Corporation Commission has issued a directive expanding the state's earthquake "areas of interest" with regulations for 211 disposal wells. Well operators will need to show they are not performing water injections under the Arbuckle formation, while some will need to reduce the depth of their wells. The Oklahoma Oil and Gas Association said the directive would lead to positive results.
Observer ChronicleThe Texas town that banned HF (and lost)
Denton Law enforcement Sgt Scott Jenkins warns protesters at the web-site of a new fracking properly. When a Texas town voted to ban fracking within city limits, it was a shock to the oil-pleasant condition. But the reaction from the Texas legislature and power business has people questioning what electricity they have remaining. The hydraulic fracturing has started out yet again in Denton, and so also have the protests.
San Antonio-Express News: Permian's pancaked rock layers make it the U.S. oil patch king
In West Texas, the king of the U.S. oil fields is proving to be the safest investment for explorers.
Midland Reporter-Telegram: Permian Basin petroleum contraction continues
The Permian Basin petroleum industry continues to contract amid crude prices that are sharply lower than year-ago levels.
Big Ten NetworkNorthwestern researchers drill into HF
It’s been driving rapid job creation and an investment boom for a few years now in the Midwest. And experts say it has the potential to make the U.S. energy-independent within the next couple of decades. You and other researchers at Northwestern have spent several years now examining the shale gas production process and how it can be improved. And they recently shared a few ways in which the environmental effects can be mitigated in a study published in the June issue of the scientific journal ACS Sustainable Chemistry & Engineering.
The Courier JournalKentucky wins a battle, but War on Coal ongoing
Kentucky has won a battle in the War on Coal. Last month, the U.S. Supreme Court decision said the Environmental Protection Agency violated the Clean Air Act when it issued burdensome new regulations on power plant emissions.
The Columbus DispatchODNR sets rules for HF well pads
The Ohio Department of Natural Resources announced on Thursday that it is implementing new rules for the construction of horizontal well-pad sites. Horizontal well pads are used for fracking, when a well is drilled vertically but then goes horizontally underground, allowing for more than one well.
Athens MessengerAthens County and Ohio deserve better HF regulation
And guess which of Ohio’s 88 counties is going to be getting the most — Athens County. This is made possible by the opening of an injection well at Torch by S&H Partners. It will more than double the amount of wastewater brought into Athens County to something in excess of 6 million gallons a year.
Pennsylvania Business Daily: Lawmakers call on Wolf to end pursuit of higher taxes
State Reps. Jeff Wheeland (R-Dist. 83) and Garth Everett (R-Dist. 84) vehemently called on Gov. Wolf to end his quest for higher taxes and cooperate with legislators to create a realistic budget.
Tribune-Review: Public being misled on projected use of shale tax funds, critic of Gov. Wolf argues
The Wolf administration and its allies are misleading the public by implying a proposed severance tax on natural gas would exclusively fund education, the president of an industry group said Friday.
Pittsburgh Post-Gazette: Put kids first, not gas companies
The venerable Pennsylvania Republican, portrayed so vividly in the movie “Lincoln” by Tommy Lee Jones, was a man ahead of his time. He helped establish tax-financed public education in our commonwealth — a massive expansion of government at a time when many believed government had no obligation to educate its citizenry.
Scranton Times-Tribune: House returns to budget impasse
The House returns to session Tuesday as the stalemate over the state budget starts to resemble trench warfare.
York Daily RecordRep. Gillespie: Natural gas impact fee stands to help York County
York County is in the process of receiving more than $420,000 in revenue from the collection of an impact fee on natural gas drilling activities in the Marcellus Shale. Pennsylvania's abundance of natural gas and the fees required by Act 13 of 2012 are the reasons we as a county stand to benefit, even though we are not part of the formation. The four-year total distributed to York County comes to more than $1.5 million.
Bradford EraBill looks to Marcellus Shale drilling for economic boost
Looking to parlay the Marcellus Shale drilling boom into even greater economic gains, one state representative has announced new legislation promising a decade of tax breaks to Shale adjacent businesses willing to give Pennsylvania a try.
Times Herald-Record: HF studies show the fight must continue
Just because fracking is prohibited in New York is no reason to let your guard down. Those who want to keep their skills sharp should consider some news from California where protecting the water supply is an honest-to-goodness crisis. According to a study just conducted by the California Council on Science and Technology, fracking in the state consumes about 2.6 billion gallons of fresh water each year, an impressive amount at any time, a sure attention-getter in the fourth year of a drought with no end in sight.
Albany Bureau: E. Rochester lawyer challenges NY HF ban
A legal challenge to New York’s ban on large-scale hydraulic fracturing has been hidden in plain site since May. East Rochester attorney David Morabito quietly filed a lawsuit two months ago against the state Department of Environmental Conservation, challenging the agency’s decision to prohibit him from fracking on land he owns in Allegany County.
Fox 8: Geologist: Samples show signs of shale in Walnut Cove
John Skvarla, the secretary of N.C. Commerce Department, pushed for more spending on shale-gas exploration during a state energy-panel meeting this week after state geologists said samples recently taken from Walnut Cove property indicated unconfirmed signs of shale gas, according to conservationists and commerce officials.
Valley News: Prehearing on Valley Green Natural Gas Proposal Slated for Concord
The New Hampshire Public Utilities Commission has set a prehearing conference for late this month to review a proposal to provide natural gas to customers in Hanover and Lebanon via a pipeline. If approved, the franchise petition before the Public Utilities Commission would grant Valley Green Natural Gas authority to provide regulated natural gas service in the two municipalities.


7-20-15 BC LNG Moves Forward

20 July 2015 5:21am

Vancouver Sun by Dirk Meissner.  


Could the Alaska gas pipeline/LNG project's need for fiscal certainty be modeled after BC's attempt to provide a 25 year window of certainty for investors?

Alaska Governor Bill Walker, gas pipeline, LNG, ak-lng, oil gas taxes, aces, Photo by Dave HarbourAlaska Governor Bill Walker (NGP Photo) has pledged to seek a fiscal certainty for Alaska's gas.  But we have observed that since the major producers own both oil and gas facilities in the state, providing certainty for only the gas still leaves investors vulnerable to predatory taxation.

Unfortunately Alaska has a long history of increasing or enacting oil taxes over the years.  It has even demonstrated an unjustifiable greed in enacting RETROACTIVE oil tax increases.

Therefore, we believe that the only effective fiscal certainty that will provide a proper investment environment for a $45-65 billion Ak-LNG project will be creation of tax certainty for both the investors' oil and gas holdings -- and property.  -dh

A liquefied natural gas industry: the British Columbia government fought an election on it, launched an extraordinary summer legislative session and made financial concessions, but it still isn't enough for the companies that want even lower taxes and have expressed concerns over the availability of workers.

The Liberal government's LNG dream is expected to move towards reality this week when a bill is adopted for a 25-year agreement on what could be B.C.'s first LNG plant.

B.C.'s politicians were recalled this month to debate and pass a single piece of legislation that aims to provide certainty to LNG investors and revenues to the province.

"I think there's more work to do in terms of making sure we are in fact globally competitive," said B.C. LNG Alliance president David Keane. "I think the government has more to do."

Pacific NorthWest LNG, a joint venture backed by Malaysian state-owned energy giant Petronas, plans to build a US$36-billion LNG plant at: http://www.vancouversun.com/business/pass+year+industry+wants+more/11226540/story.html#ixzz3gRB8smIT


7-12-15 Our Iranian Nuclear Negotiations: Hopelessly Incompetent, Naive, Pro-American Or Pro-Enemy?

12 July 2015 12:40pm

Our Iranian Nuclear Negotiations: Hopelessly Incompetent, Naive, Pro-American or Pro-Enemy?  You Be The Judge.


Dave Harbour

Image result for cartoon iran

Today and perhaps tomorrow comes another deadline extension in, and maybe an ending of, the Iranian nuclear negotiation.  It is one of the most important -- and dangerous -- energy and world security issues in history.


The current process is alienating the United States from all of our 'former' Middle Eastern allies who, together, have helped provide significant security to the region.  Israel, Jordan, Saudi Arabia, Egypt and other countries in the area recognize Iran for the supporter of terrorism and threat to their own sovereignty that it is.  

They also know that regardless of the American-led negotiation's outcome, the Iranians will continue with their nuclear weapon program.  This will cause neighbors to engage in an "arms race" to become similarly armed.  

Why do our readers care?

The end game could result in continuing sanctions on Iranian oil sales, supporting higher oil prices.  The end game could also find Iran free of sanctions, causing the legal and unrestrained trade of Iranian oil -- pressuring oil prices to go lower.  Both results will impact Alaskan and Canadian local governments, companies and their national economies.

Russian and Chinese mischief also surrounds the Greek financial crisis -- which may be coming to a head any moment.  See this Calgary Herald article by Deborah Yedlin.

North American and European security could be affected by the outcome of the Iranian nuclear talks.  A lifting of sanctions could refill Iran's coffers with billions, sure to be shared with terrorist organizations. 

Relations with Russia and China will be affected, for whereas they might have supported Iranian sanctions earlier, today they would most assuredly not do so in the likely event that Iran would soon begin violating the terms of any 'deal'.   Moreover, today they are, respectively, challenging the resolve of the United States with: provocative and imperialistic movements against Europe; bomber probes of North American air space; and threats to countries and international sea traffic in the South China Sea.

Forgive us for our own naiveté, but we do not understand why any but the most incompetent, inexperienced or unpatriotic administration would even consider negotiating with a fascist, Islamic regime that is a master of breaking agreements, holds American hostages, and also publicly wishes "death to America" and to America's best Middle Eastern ally, Israel.   This is occurring at the same time the administration is downgrading the U.S. military and upgrading onerous natural resource regulations throughout America and calling, "global warming a top national security priority".  On second thought, we are not naive; we have put the puzzle together logically and the picture is one of either the American leadership's incompetence or deceit.

Sitting next to Secretary of State John Kerry, a Vietnam Veteran who publicly threw his military medals away, is Energy Secretary Dr. Ernest Moniz.  He has enjoyed a distinguished career in previous lives, a physicist who served in academic leadership at the Massachusetts Institute of Technology, as Under Secretary of the US Department of Energy and as Associate Director of the White House Office of Science and Technology Policy.  

Neither, however, is known for negotiating high stakes positions in the international big league.

We believe Kerry is executing orders bound to endanger the national security of the United States.  We believe that while Dr. Moniz is a nuclear expert, neither he nor Kerry know when America should not negotiate, nor how to negotiate.

So when we awaken tomorrow, we hope that as Monday unfolds we'll not see any agreement.   We hope that we will see sanctions continue and be made even more robust until -- and not before -- Iran:

  • pleads for peace,
  • agrees to destruction of weapon related nuclear equipment and material,
  • agrees to unannounced and unfettered inspections of both military and nuclear facilities,
  • demonstrably ceases all funding and other tangible and intangible support for Islamic terrorism,
  • releases all American hostages, and
  • recants its threat to destroy Israel.

Without such common sense conditions being agreed to and successfully implement for at least 12 months, no lifting of sanctions should even be considered, much less discussed or negotiated.

The fact that the United States is bowing so low to such low life savages and transmitting such weakness during such perilous times is an affront to the entire foundation and history of the United States of America and poses a clear and present danger to all free people at home and abroad.  Our leaders are giving comfort to our enemies and alienating our allies.

Today, Senate Majority Leader Mitch McConnell weakly stated that the Senate would not approve a "bad deal".  We ask: Why in the name of millions of fallen patriots should he not have said, "The President is on a fool's errand.  The United States should not negotiate with an enemy, a proven liar, a terrorist state.  Sanctions will continue and increase until the road to a nuclear Iran is permanently destroyed.  From our viewpoint any nuclear "deal" brought to this body is DEAD ON ARRIVAL if it does not represent a complete capitulation of Iran's imperialistic, untrustworthy ways to our COMPLETE SATISFACTION."

The administration SHOULD BE ashamed of its performance and our Congressional representatives SHOULD NOT BE ashamed to remind the country of this misrepresentation loudly and daily lest their lack of powerful objection be interpreted as weak acquiescence.


Dave Harbour, publisher of Northern Gas Pipelines, is a former Chairman of the Regulatory Commission of Alaska and a Commissioner Emeritus of the National Association of Regulatory Utility Commissioners (NARUC).  He served as NARUC's official representative to the Interstate Oil & Gas Compact Commission (IOGCC).  Harbour is past Chairman of the Alaska Council on Economic Education, former Chairman of the Anchorage Chamber of Commerce, and past President of the American Bald Eagle Foundation and the Alaska Press Club.  He is Chairman Emeritus of the Alaska Oil & Gas Congress.

Opinions or viewpoints expressed in this webpage or in our email alerts are solely those of the publisher and in no way reflect the opinion(s) of any affiliated company, person, employer or other organization.



7-1-15 Alaska Governor Reneges On Oil Tax Credit

01 July 2015 12:30pm

Our Commentary

Bill Walker, Alaska, Governor, Alaska Oil Taxes, Tax Credits, Investment Climate, ACES, Photo by Dave HarbourADN by Pat Forgey.   Alaska Gov. Bill Walker (NGP Photo) announced Tuesday that he had signed state operating and capital budgets, approving $9.8 billion in spending sought by the Legislature but vetoing a possible $200 million worth of controversial oil tax credits.      ...

 Alaska Kevin Meyer, Senate President, ConocoPhillips, Oil Taxes, Tax Credits, Investment Climate, ACES, Photo by Dave Harbour"It is apparent the current oil and gas production tax credit system is unsustainable," Walker said in a letter Monday to Senate President Kevin Meyer, (NGP Photo), telling him of the veto. He signed the budgets Monday, but didn't publish the final documents or announce his actions until Tuesday afternoon.     ...

"I'm glad the governor took appropriate action" on the tax credits, said Rep. David Guttenberg, (NGP Photo), a member of the budget-writing House Finance Committee.

By limiting payment of credits, he said, oil companies will share the pain that Alaskans are facing due to budget cuts.   (As if the oil companies weren't already paying the lion's share of state taxes.   -dh)

 AlaskRepresentative David Guttenberg, Alaska State Legislature, House of Representatives, Farbanks, Oil Taxes, Tax Credits, Investment Climate, ACES, Photo by Dave Harbour

"It makes everybody involved in this budget crunch that we're dealing with," he said.   ....     

Our comment:

The Governor and his democrat allies would rather raise taxes and stop/delay agreed-upon credits than make meaningful spending cuts.  We have also seen signs that odd coalitions involving "moderate republicans" could support that effort.  

Alaskan producers (and explorers and refiners) have tried over the past year to maintain a positive, optimistic attitude.  However, they are mindful of Alaska's history with ACES; with retroactive taxation; with anti-oil voters' initiatives; with the governor's vow to not include oil in gas pipeline fiscal certainty policy; with "revenue enhancement" signals for increased oil taxes; and, with this week's credit veto action as they finalize corporate, CY 2016 investment decisions in a low oil price environment.  
It's looking more likely that legislative positions could become solidified much farther in advance of the next legislative session than in previous years.  Government spending supporters will be putting more and more constituent and financial pressure on lawmakers in the coming months. 
Rep. Guttenberg has already sounded the rallying cry (See ADN quote above).

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

25 June 2015 8:18am

It's An Uphill Road For An Alaska LNG Project

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


Dave Harbour

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

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

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

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

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

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

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

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

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


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

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

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

So, oil prices remained high, for a time.

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

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

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

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

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


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

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

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

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

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

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


Dave Harbour, publisher of Northern Gas Pipelines, is a former Chairman of the Regulatory Commission of Alaska and a Commissioner Emeritus of the National Association of Regulatory Utility Commissioners (NARUC).  He served as NARUC's official representative to the Interstate Oil & Gas Compact Commission (IOGCC).  Harbour is past Chairman of the Alaska Council on Economic Education, former Chairman of the Anchorage Chamber of Commerce, and past President of the American Bald Eagle Foundation and the Alaska Press Club.  He is Chairman Emeritus of the Alaska Oil & Gas Congress.

Opinions or viewpoints expressed in this webpage or in our email alerts are solely those of the publisher and in no way reflect the opinion(s) of any affiliated company, person, employer or other organization.



6-18-15 Why Shale Critics Have It Wrong

18 June 2015 4:21am

Oil Tax Commentary


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

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

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

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

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


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