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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

1-23-14 - Rule of Law Comment From "On the Road" Washington D.C.

23 January 2014 6:07am

A Pebble Tossed In The Pond...

...does it simply produce ripples--or a tsunami threatening to ruin the rule of law?

by

Dave Harbour

Ibrahim was the Lebanese cab driver who picked my son and me up at Washington's Reagan International Airport yesterday and gifted us with his view of America.

We now see that U.S.. Senator Mark Begich (NGP Photo) has decided to oppose due process and the rule of law. 

Mark Begich, US Senator, Pebble Mine, Watershed, EPA, rule of law, due process, Photo by Dave Harbour, banana republic, Steve BorellWe have not criticized Begich or anyone else for not personally supporting a particular natural resource project.

We do find it unsettling that a Member of Alaska's Congressional Delegation -- or any Member of Congress -- would become a Member of Congress, swear to uphold the Constitution, and then deny the Federal due process guarantees of the Fifth Amendment (i.e. closely related to the Fourteenth Amendment protections applying to the states).  How could any lawmaker or administrator of law try to deny protections of the law and Constitution to any citizen?

Among other ways, due process is attacked when a regulatory agency acts to prevent a lawful lease holder of state (or federal) land with the right to create a plan and apply for state and/or federal permits even before a legal record has been created to justify any regulatory action.  

Those wishing to not see a project like Pebble develop -- including a U.S. Senator -- are bound under the Constitution to became a party to a legal proceeding, argue their case and hope that the final decision based on the legal record and merits of the case falls in their favor.  And, if it doesn't, due process allows for any party to appeal to a higher tribunal.

We find it equally offensive and likely an impeachable offense that the President would support the EPA's effort to deny due process to the lawful lease holder of Alaska state lands.

Steve Borell, Alaska Miners, Pebble Mine, Watershed, EPA, rule of law, due process, Photo by Dave Harbour, banana republic, Mark Begich, US Senator, Other citizens are also concerned about this violation of a Constitutional guarantee:

Former Executive Director, Alaska Miners Association, Steve Borell (NGP Photo) points out that the EPA's attack on Pebble more resembles the act of a Banana Republic than the United States.

(See later Juneau Empire Op-Ed by Rep. Eric Feige, 2-6-14.)

As we crossed the Potomac, driving by the Lincoln, Jefferson and Washington Monuments we asked our new friend when and why he came to America.

He had been a doctor decades ago and with other educated citizens in the 1980s spoke out against heavy handed government treatment of citizens.  He was appalled at Syrian influence and violence in his country and over time his voice and that of other Lebanese patriots resulted in their expulsion or escape from the country.

"There are hundreds of thousands of us all over the world, working hard in our new lands.  Lebanese expatriates in Africa are among the wealthiest on that continent.  Many of us chose America because of its freedom," he said.

He double-parked in front of our rented townhouse on C Street NE, a few blocks from the capital.

The huge snowstorm had left the ground blanketed in sparkling whiteness and as other cars went around us, we continued to talk.

"In Lebanon," he said, "the politicians tried to divide the people--the Sunnis the Shiites and the Christians--so that they could control them.  I don't blame the politicians as much as I blame the people for being so stupid, so gullible."

I asked if he didn't sometimes feel like going back to help his people.  "No way", he said.  "Here, we may not like one another sometimes, but we still live together.  We have whites, blacks, Asians, and immigrants from every place, much more diverse than Lebanon, but we have the rule of law.  If you step over the line, the law will get you. Over there, terrorists step over the line every day and the law does not stop them.  Ordinary people have freedom here; most other countries do not."

"The one thing America has done better than other countries is protect ordinary citizens with the law," he concluded.  While we spent less time discussing rule of law in America, he also expressed displeasure with politicians who used wealth, religious, political or racial issues to divide and conquer citizen support here.  

We took Ibrahim's cell number, paid him and agreed to call him for other rides while we were in town.  

In these pages over the years -- especially over the last five years -- we have mourned over America's diminishing "rule of law" which, as Senator Tom Coburn recently put it, is increasingly becoming "rule of rulers".  (Note: In the right hand column we have a Google search engine confined to our own thousands of pages.  Search for 'due process', 'rule of law', or 'let me count the ways'.)

We have seen the rule of law debased by Administration regulators who settle with environmental litigants with an alarming trend of "wink, wink, nod, nod" settlements.  The conflict of interest is jaw dropping when one witnesses settlements between social activists who sue and former social activists hired by the Administration to regulate.  A "sue and settle process" has in many ways replaced or hijacked "due process", a foundation of our Constitution and of the rule of law.  The new process erodes Constitutional protection for all citizens while enriching and further encouraging other citizens to disrupt lawful activities with frivolous but lucrative lawsuits and other delay tactics.

One might say, "Well, Dave, if there truly is something bad going on here, why wouldn't a company just sue the government?"  Good question.  Answer, companies find it unsavory and bad business to sue their regulators, generally.  The thinking is that while one has to compromise principle, it's cheaper for the shareholders to quietly pay the settlement blood money today and satisfy the regulators and litigants than to upset them just prior to the initiation of some new project requiring their support.

That is why it is so important for citizens to become aware of what is happening to their country's eroding status as a world icon for due process, fairness and citizen protections under a rule of law.

If regulators and their allies can stop a lawful lease holder, like the Pebble Project (which has leased Alaska land) from filing permit applications, receiving a fair regulatory hearing of issues, and being able to appeal a fully adjudicated issue, we have truly lost freedom.

And if we let our hard won and dearly protected Constitutional freedoms erode into the deep space of history, will there ever again be a place for the Ibrahims of a lawless world be able to seek asylum and peace?  Indeed, as our own freedoms recede, what options to American citizens have?

Tomorrow, we'll have another cab ride with our Lebanese friend and will ask him these questions.

Maybe Ibrahim, as one who has suffered so much to obtain what we have so callously taken for granted, can shed new light on why American citizens must resist attacks on our Constitution as if our families depended on our courage, insight and action.

Maybe our humble cab driver, named after the great prophet, Abraham, can lead us to a better understanding of the future awaiting us all.

And maybe we'll all come to better appreciate the tsunami-like impact on one's homeland that could begin with a pebble's splash, a landslide, a distant earthquake or the slow collapse of a great country's rule of law.

 

 

 

Categories:

12-25-2013 "ALL I WANT FOR CHRISTMAS"

25 December 2013 5:54pm

"All I Want For Christmas!"

Or, "The Loss of Self Reliance"

On December 24, 2001 we wrote an editorial satirizing the human greed and mismanagement that was interfering with gas pipeline project advancement.

In those days, Alaskan leaders and their supporters were engaged in the beginning of a decade-long fest of spending gluttony and tax increases to support self gratification of one generation at the expense of those to follow.   -dh

12-24-09 (Christmas Eve):  Gas pipeline news this week is light as all gas pipeline stakeholder thoughts turn to home.  Before news afresh begins breaking after the holidays, perhaps it would be well to spend a quality moment or two reflecting on where we've been this year and where we wish to be in 2002.  After all, our millions of individual decisions in the coming year will produce some grand, cosmic formula revealing the future of northern gas pipelines.  -dh

"All I Want for Christmas"

Dear Santa:

I'd like an Alaska gas pipeline for Christmas. 

It should be in place, producing money by 2004, please, in time to supply 1/4 of Alaska's $1 billion+ budget deficit; and let our politicians balance the rest without increasing my taxes or reducing my services. 

I'd like the pipeline to be 'diversified', too.  It should go to a Fairbanks 'HUB' (where I'd like a new petrochemical industry established by someone for some market). 

I'd also like someone to put an inexpensive gas distribution line to every home in Fairbanks. 

To be fair, I'd like someone to take propane from the HUB and ship it to 230 Alaska villages at a reasonable cost, somehow. 

Then, I'd like someone to build a line from the HUB on down to Valdez and arrange for Tokyo Gas to sign a 20 year, "take or pay"  contract at a price high enough to pay for the pipeline as well as another petrochemical facility in Valdez. 

To take care of my friends in Southeast Alaska, I'd like propane and maybe LNG to be provided by barges or small cryogenic tankers to all our coastal citizens at a reasonable price, by someone. 

Since Southcentral Alaska may be running short of Cook Inlet gas, I'd like someone to build a branch of the pipeline from the Fairbanks HUB down to Anchorage.  See, that would displace enough gas that the Kenai Peninsula would retain adequate supplies for its residential / industrial users for another 20 years. 

Lastly, I would like for most of the gas to move from the HUB on down the Alaska Highway to make sure that the folks in the Lower 48 have plenty, but I'd want to make sure there were enough liquid gasses in the high pressure line that we could profitably supply Alberta with some of the petrochemical feedstock she needs to be supportive. 

Oh, and I almost forgot, please make the price of gas high enough so we can afford subsidies, generous rights-of-way payments to 10,000 landowners, and still have plenty of money for our state government and please build a separate Mackenzie Valley Pipeline for Canada. 

And, I'd rather not have the gas produced at all unless it's done my way. 

Sincerely,

"Wishing"

P.S.  If you have money left over, could we have some to invest as equity in the gas pipeline and would you please make sure we get at least a 12-15% return on our investment?

Dear Wishing:

All fathers, including Father Santa, instinctively want their children to have all that they wish for. 

However, one responsibility a father has is to lovingly tell his children that we don't always get everything we wish for at Christmas.  Sometimes, you get a present you think you'd rather not have and it turns out the be the best one after all.  (See P.S., below.)  I don't know if that will be the case this year, but on this Christmas Eve, I can now divulge your gifts.

1.  You will be blessed--more than most--with another year of freedom and life in the wondrous North.

2.  You will be given intelligence, courage, friends, armaments and vast resources.

3.  You will be given the freedom to break your own trail, to direct your own future path in the wonderful frontier before you.

4.  You will be blessed with the politicians that you, yourself, choose to help lead the quest.

5.  The above, basic gifts will enable you through your own wisdom, ingenuity and integrity to successfully confront your challenges.  Success, the greatest gift, will be highly savored for you will have earned it and you will pass this knowledge to your heirs.  Your failure, also shouldered by your children, will only come with misuse of the gifts.

My greatest hope for you is that you embrace the true spirit of Christmas, use well what you have been given, make good decisions, treat everyone with respect, teach your own children well, and endeavor toward 'endless progress'. 

Obtained as you have so presumptuously wished, the presents you requested would not delight you, would not eliminate the fundamental budget problems you have created, would shackle free enterprise and deliver the generations following you into debt and misery.  They represent a child's irrational thinking, depending as they do on the imprudent acts of others and requiring no effort or risk on your part.

Lovingly,

Santa

P.S.  One Christmas long, long ago, I asked for a new bicycle and a 410 shotgun.  Being a poor 11-year-old did not prevent the dreaming.  After a humble family service around our Nativity scene, wise Father gave me a snow shovel and a box of shotgun shells, my only presents.  I did not appreciate these gifts at the time, but by spring I had earned enough from snow shoveling the neighbors' driveways to buy a new bike and a used shotgun.  To this day, I love my Father as much as I respect him; and, he has never worried that I would ever confront a reasonable challenge I could not overcome.  That year I emerged into the real world, began absorbing the true Christmas message and took the first small steps toward a lifelong appreciation for free enterprise.  (Additional reference: Voice of the Times, by William J. Tobin)

Categories:

12-20-13 "Don't Forget the Mackenzie Delta!"

20 December 2013 2:12am

See Today's Petroleum News Headlines Here.

CBC: Joint review panel says Northern Gateway Pipeline project is in best interest of Canadians  -  CALGARY HERALD RELATED STORY TODAY: BY JAMES WOOD AND CHRIS VARCOE


Don't Forget the Mackenzie Delta!

Will Alaskan and Canadian Investors Merge Their Interests Into the Most Efficient Outcome for Arctic Gas?

by

Dave Harbour

Globe & Mail, TUESDAY by Jeffrey Jones.  

Before the end of the year, Imperial Oil Ltd. and its partners must inform the National Energy Board of its intentions with the Mackenzie gas project, the $16.2-billion pipeline from the Arctic which has stalled due to the flood of cheaper supplies closer to major North American markets.

The people of the Northwest Territories have waited for years for the project to get under way, but with the shale gas revolution in full swing it is doubtful that it will proceed as proposed. In October, Imperial CEO Rich Kruger told The Globe and Mail that the company is studying a revamp of Mackenzie that could see it reborn as part of a larger initiative for export of liquefied natural gas, though a plan is far from finalized.


CBC TODAY.  Imperial Oil has announced it will not go ahead with the Mackenzie Gas Project, as the market conditions are just not good right now, says a company spokesman.  ... But Pius Rolheiser, spokesman for Imperial Oil, says no construction doesn't mean the project is dead.

Will Arctic gas be monetized within our lifetimes?  If so, will we go it alone or will Canada and Alaska merge interests as they once did four decades ago?  And what about the elephant in the room: 'fiscal certainty'?

Background.  Producers, politicians and natural gas transporters and distributors began designing transportation systems in their minds' eyes even before the 1967-68 winter discovery of Prudhoe Bay's prolific oil and natural gas reserves became reality. 

Gas and oil discoveries in the Mackenzie Delta, North of Inuvik, NWT, exacerbated excitement on both sides of the border. 

The original, proven gas reserve estimates at Prudhoe Bay of 26 Trillion Cubic Feet (Tcf) have grown to about 35 Tcf, largely as a result of ExxonMobil's later discovery at Point Thomson.

The early Mackenzie Delta gas reserve estimates of less than 5 Tcf have more than doubled since the original discoveries.  Some resource (i.e. not proven) estimates suggest reserves exceeding 15 Tcf.

Currently, Alaska Native regional and village corporations, the state of Alaska and the Alaska North Slope Borough have interests in gas reserve development as do the nearby Canadian Aboriginal companies, villages and the Northwest Territories government.

Industry and political interests first debated then agreed upon west coast delivery points for Alaska oil four decades ago, with the uncodified understanding that northern gas would flow to the Midwest, through Canada.

Energy interests in both countries first worked separately at the beginning, and then together, to identify the preferred route and mode for transporting the gas.

A Canadian 'study group' merged with an Alaska 'study group' in 1971.  The new consortium carefully chose its leaders.  Arctic Gas and Competing Projects, gas pipeliineCanadian banker, William Wilder, chaired an impressive management committee including, at one time, 26 oil and gas production, transportation and distribution company CEOs.

(Map: 1970s era competing projects, courtesy of OFC.  Arctic Gas, Red; Alcan, Black; El Paso, Blue dotted)

Former TransCanada President Vern Horte became president of Canadian Arctic Gas Study Ltd. and former Alaska Lieutenant Government Bob Ward became president of Alaskan Arctic Gas Study Company--the Arctic gas consortium's two operating entities.  Famed Canadian journalist Earle Gray directed communication activity for the Canadian company from Toronto and your author handled communication and government relations functions from Alaska to Washington, D.C. under the close supervision of Ward, the consortium's American vice chairman, William Brackett, and a sub set of the management committee: the Arctic Gas Public Affairs Committee.

At the time, public lands between Prudhoe Bay and the Mackenzie Delta were available for pipeline transportation corridors.  On the American side, the Arctic National Wildlife Refuge was then the protected, but less restrictive, Arctic National Wildlife Range.

In pursuing its alternate routes and modes studies, the Arctic Gas Consortium, spent an unprecedented -- at that time -- $250 million, on engineering and environmental studies necessary to prepare applications to the National Energy Board (i.e. NEB) in Canada and the Federal Power Commission (i.e. The FPC is now the Federal Energy Regulatory Commission, FERC).

The study of alternate routes, included moving American gas by pipeline from Prudhoe Bay to the Mackenzie Delta.  From there the pipeline would carry both American and Canadian gas to Southern Canada.  Some gas could flow to Canadian markets, while the mainline would bifurcate, moving about a third of the remaining gas to the West Coast and intermountain states.  The majority of gas would supply mid west and eastern states.

All other alternative routes were found to be uneconomic or far less economically feasible, including two routes south of the wildlife range and El Paso Natural Gas' pipeline/LNG proposal.

The buried refrigerated pipeline through permafrost areas was found to be the most efficient, direct mode of transportation.  It would protect the tundra and have the lowest possible operating costs.  All alternative modes were found to be economically inferior, including conversion of gas to electricity and transport via high voltage transmission lines, conversion of the gas to LNG and moving it from the Arctic to southern markets using trucks, railroads, dirigibles, submarines, tankers, etc.

The Arctic Gas project failed to gain NEB approval in Canada; the FPC disapproved El Paso's LNG concept; and, the 'approved' Alaska Highway project failed to overcome economic challenges as the true estimates of its cost became known just as natural gas prices became depressed in the early 1980s.  When gas prices improved twenty years later, governments and industry again became interested in creating and Arctic gas transportation project.

Discussion.  Since Arctic Gas days, American and Canadian governments have made access over the public lands between Prudhoe Bay and Inuvik more restrictive.

One also notes that when the original Arctic Gas project was first studied, the low cost of taxation helped overcome the high cost of Arctic construction, procurement and labor.  But as the 1970s progressed, producers became more and more alarmed that in Alaska "a deal was not a deal".  That is, the Governor and Legislature demonstrated no desire to restrain spending or taxation just because companies calculated their original lease sale bids and later investments on the circumstances then prevailing.  Oil companies in the 1970s experienced almost annual tax increases.

Jay Hammond, Alaska Governor, Tax Reform, Oil Taxes, Chapter 21, Photo by Dave HarbourIn 1981, Governor Jay Hammond (NGP Photo), joined by legislative leaders in both parties, agreed upon a 'fair share' tax methodology, which provided fiscal certainty until after the turn of the century.

In 2006 Governor Frank Murkowski (NGP Photo) proposed an increase in the severance, or production tax in return for a guarantee of fiscal certainty that would protect future producer investments--including a gas pipeline investment.  The producers and Frank Murkowski, Governor, Production Tax, producer agreement, Photo by Dave HarbourGovernor shook hands, in good faith.  Then, the legislature acted to increase the production tax but denied the recommendation for fiscal certainty.  

Adding insult to injury -- from an investor perspective -- incoming Governor Sarah Palin, ACES, AGIA, oil tax increase, liberal, Photo by Dave HarbourSarah Palin (NGP Photo) then proposed a larger production tax increase which the Legislature increased to an even higher level and then decided to apply retroactively -- with Palin's support.  

Last Spring, the Legislature adopted Senate Bill 21, reforming Palin's production tax.  With over 90% of the Alaska state operating budget dependent on steeply declining oil production, elected leaders are intent on improving the climate for investing in continuing exploration and development -- and in a gas pipeline.

While an improvement in tax policy is now and will likely continue to produce more investment, it cannot overcome the cloud of distrust created by previous government decisions—and a current effort by some legislators, unions and environmental activists to repeal SB 21.  Only some sort of fiscal guarantee against inappropriate government expropriation of private revenues will serve to support an additional $40 - $60 billion gas pipeline investment -- in our opinion.

Even if the Governor and lawmakers were to favor such a guarantee, it would surely be accompanied by vigorous debate and opposition since Alaska's constitution jealously guards the State's right to modify tax policy.  

Yes, we agree there are certain valid roles for government subsidy.  Roads, bridges and docks come to mind.  

As to energy projects, the Alaska Bradley Lake Hydroelectric project is a wonderful example of a proper role for government.  

On a larger scale, the Susitna-Watana Hydroelectric project -- as Norway has found -- could use today's oil dollars to provide 50 or 100 years of inexpensive energy to citizens.  And, yes, until this long-lead-time project comes on line, Alaskans will need other energy sources.

Furthermore, tax and regulatory incentives have their place and have worked in the Cook Inlet oil and gas basin.

Our concern is that too many unprioritized projects levered into existence by public subsidy and designed to energize the same markets could waste money, deflect private investment and result in both abandoned efforts and a diminished treasury

Adding to that confusion are well intended special interest groups and politicians supporting a bewildering array of energy projects, many of which are not proven to be economically feasible.  Most persevere on the strength of past or present public subsidy, political support and a “strategy of hope”.  These include:

The Palin Administration, in our opinion, grievously erred by proposing a financial incentive for the large diameter, Alaska gas pipeline project.  Palin erred because some of her objectives (i.e. "must haves", in return for the subsidy) were already covered under terms of the Alaska Natural Gas Pipeline Act of 2004 and because her action thwarted competition, to a large degree, and limited state prerogatives in other ways.  

In any case, the large diameter pipeline is the project most likely to survive, monetize Alaska gas and provide for most foreign and domestic consumer needs in the long term.  This is because it is almost completely under private control of investors who -- under proper conditions -- will provide the funding and markets and accept most of the risk for project completion.  The other projects, surviving as they must on the tide of diminishing tax revenues and the brilliance of bureaucratic agencies are at best in competition with one another and at worst, are short term remedies accompanied by long term salvage headaches.

Conclusion.  

Had we more time and had the gentle reader more patience we surely could have put finer clothing and adjectives on the shoulders of many of today’s well-intended government energy projects.  But in fairness, had we done so, we’d have had to extend this essay further to objectively discuss the logical infirmities of each--which must be reserved for a future commentary.

For now, we offer this conclusion:

The state should establish priorities for all pending, state supported energy projects.  

For example: if Cook Inlet oil and gas incentives produce significant new gas supplies, perhaps subsidies for other gas projects should be automatically suspended.

One also muses that high diesel fuel is the major driver for subsidized gas and electric projects for Fairbanks--but we hear virtually no discussion about the potential for Alaska to provide subsidized royalty oil to Fairbanks for local refined products.  This solution could both heat homes and generate power--a stopgap measure that protects life and property until a large diameter gas pipeline and/or Susitna-Watana hydro project can provide sufficient, reasonably priced energy.

We first offer a perspective that -- aside from the grand, Susitna-Watana Hydro dam, the energy project most likely to survive and succeed, will be the project that remains closest to the free markets.  Fast moving events can more easily confuse slow reacting bureaucratic decision makers than more agile entrepreneurs intent on making and not losing money for their shareholders by providing valuable services and products to the marketplace. 

Secondly, we observe -- without the liability of special interest influence --  that it would be eminently logical were American and Canadian companies to once again merge efforts.  By combining large volumes of Canadian and Alaskan gas, economies of scale could produce an incrementally better feasibility profile for the project.

A more efficient project would provide more royalties and tax revenue to governments.

A joint project would benefit the related Inupiat/Inuit of the Arctic Slope Regional Corporation lands and Canada’s Inuvialuit and Gwich’in aboriginal corporations through contracting opportunities, local property taxes and because some production in both areas flows from indigenous lands.  Other Alaska Natives could benefit from a more efficient project though the 7(i) revenue sharing provision of the Alaska Native Claims Settlement Act (ANSCA).  The most efficient possible project would provide the highest returns to producers, Native shareholders and the state tax/royalty income stream in a highly competitive world energy environment.

Today, the proliferation of shale gas discoveries throughout North America makes that market less attractive for Arctic gas, if not infeasible, when compared with certain Asian markets.

Since foreign markets will likely become the destination for Arctic Gas, LNG transport becomes the mode of transportation.

That leaves routing.  The Globe & Mail and CBC pieces above suggest that Imperial is considering new options for Canadian Arctic gas.  Imperial’s US brother, ExxonMobil, is an influential participant on the US side.  Other Alaska producers have interest in Mackenzie Delta gas and TransCanada has been a major supporter of the Mackenzie Valley Pipeline's Aboriginal Pipeline Group and all were once involved in the Arctic Gas Project.  One expects that the subject of a joint, American-Canadian project has at least been discussed, if not studied.

The route, on first glance would involve an approximate 750 mile straight shot from Prudhoe Bay down to the Nikiski area of Cook Inlet.  Gas could flow by pipeline from the Mackenzie Delta to Prudhoe Bay.  Logically, the two governments should allow that pipeline route to safely bury a pipeline in the permafrost on shore over currently restricted areas, like ANWR.  Less logically, a refrigerated line could be buried in the tidal lands offshore ANWR though it would be more environmentally challenging, more expensive, and subject to ice scour and certain corrosive challenges.

Those who opposed earlier "over the top" routes for moving Alaska gas to the Mackenzie Delta and then down to the midwest, could find this reversed concept for movement of Arctic gas/LNG to Asia more palpable

So will Arctic gas be monetized in our lifetimes?  Depends on how long we live.  Some of us have longer than others.  But all of us have lived long enough to know that whether the Alaskan and Canadian Arctic gas reserves are economically combined and transported together, or not, there will be permitting, financing, labor and engineering challenges galore…complicated by environmental extremist opposition, political intrigue and constituent greed. 

On top of that will be the final question: will Alaska be able to provide the financial and tax certainty necessary to assure investors that their investment will be treated, in good faith, with respect.  If Canada is involved, could that government provide fiscal certainty on its side of the border?

A bad news ending.  If government is incapable of creating a fiscal certainty guarantee, no private sector investor in his right mind will spend any more time, energy or treasure considering the feasibility of a gargantuan Arctic LNG/Pipeline project involving any route or mode of transportation. 

A good news ending.  If solid, fiscal assurance is created, a whole new world of opportunity, prosperity and promise for investors, citizens and the children of the next several generations could reward all concerned.

-End-

​Reference: Our November 2002 Commentary

(Note: We repeat for new readers that our goal is to provide accurate, useful information to readers.  Accuracy is paramount.  In support of our goal, we invite our thousands of readers to send us additions or corrections that contribute toward the accuracy of our communications.   When a valid addition or correction arrives, we try to make appropriate changes immediately.     –dh)

​Reference November 2002 Commentary


 

From the EIA: State Energy Profiles enhanced and renewables sections added

As with national trends, the energy sectors in each state continue to experience rapid changes, including increased oil and natural gas production, new renewable electricity generation, and changing motor gasoline prices. With these and other energy trends in mind, the U.S. Energy Information Administration updated its State Energy Profiles, which are available through EIA's State Energy Portal. There are new analytical narratives on the energy sectors of each of the 50 states, the District of Columbia, and five U.S. territories.

Portal users can also tap into the multilayer mapping function to show user-selected views of fossil and renewable energy resources, oil refineries, pipelines, power plants, transmission lines, and other energy infrastructure.

Policy makers, energy analysts, and the general public can access revised state-level analysis on the petroleum, natural gas, coal, and electricity sectors. In addition, the narratives feature a new section on renewable energy that details each state's renewable resources, including biomass, geothermal, hydroelectricity, solar, and wind, and how those resources are being developed.

State Energy Profiles give users detailed portraits of energy production, consumption, and energy prices at the state level. They feature almost 90 key data series, state Quick Facts, and charts for each state. Users can learn state facts such as:

  • Texas is the nation's top crude-oil producer and accounts for more than one-fourth of the nation's petroleum-refining capacity.
  • Pennsylvania natural gas production more than quadrupled since 2009 because of increased development of the Marcellus Shale, placing the state among the top producers nationally.
  • Washington ranks first in the nation in hydroelectric generation and has the lowest electricity prices.
  • Coal produced in Kentucky is distributed to about one-half the U.S. states.
  • The world's largest photovoltaic solar electricity generation facility is currently under construction in Arizona.
  • Nevada is second in the nation, after California, in the amount of geothermal power produced.

The portal also features state rankings for 10 key energy statistics, a find function to search for state data across EIA, a compare screen that allows users to look at states side by side for a variety of energy indicators, and links to additional resources.​

Categories:

12-12-13 "Foxes in the Arctic Hen House"

12 December 2013 7:31am

Upon inquiry, ConocoPhillips provides us with the latest status on its Kenai Peninsula LNG export facility, below.  We regard this as very good news because it helps assure Cook Inlet explorers that they might have both domestic and foreign markets for their gas discoveries.  Absent foreign markets, the domestic market alone could be insufficient to provide adequate, long term gas exploration incentives.  -dh 

With support from many local stakeholders, and in consideration of a request from the State of Alaska, ConocoPhillips Alaska (COPA) has submitted an application to the U.S. Department of Energy to resume exports of LNG from the Kenai Facility.  The application was submitted Wednesday, December 11, 2013, and will be available on the Department of Energy website: http://energy.gov/fe/services/natural-gas-regulation

ConocoPhillips Alaska remains committed to meeting its local gas supply contracts and putting local gas needs first.  COPA affirms its commitment to divert its equity and third party gas from the Kenai LNG Facility to local buyers during times of peak need.


Foxes in the Arctic Hen House

by

Dave Harbour

​We ask readers today if they have ever considered that sly foxes forage in our Arctic hen house, in our home, our breeding area, our safe haven.

Doc Hastings, ESA, Settement, Photo by Dave HarbourToday, the House Natural Resources Committee held an oversight hearing entitled “ESA Decisions by Closed-Door Settlement: Short-Changing Science, Transparency, Private Property, and State & Local Economies.”  This hearing examined the impacts of the Endangered Species Act’s (ESA) closed-door mega-settlements on listing and critical habitat decisions and the need to reform this law to ensure that its focus is on recovering species while protecting jobs and local economies.

This oversight hearing is the fifth in a series this Committee has held on the Endangered Species Act this year.  House Natural Resources Committee Chairman Doc Hastings (NPG Photo) announced at the hearing today that the Committee intends to advance common sense legislation to improve the ESA for the benefit of both species and people.

Anyone who has observed rookery refuges of any kind, from chickens to penguins to seals, knows several things.  Danger surrounds individuals day and night; most are vigilant and ready to flee or fight at a moment's notice.  Peaceful surroundings are required to procreate then feed and nurture the young.  They require God-given or man-given natural resources to sustain life.

Americans and Canadians have created a free enterprise rookery throughout North America that is surely envied, yes coveted, by many.

So far, we have defended our shores from foreign enemies and assisted friends and former enemies alike in recovering from war, famine, flood and other misery without seeking financial or territorial retribution.

We have believed that "Right Makes Might" not the reverse.

We have sustained life from the bounty of God's resources and the talents with which He has blessed us.

Today, we have evidence that foreign and domestic special interests -- that mean us harm -- are alive and well.  We define "harm" as internal strategies to seize political and economic control and external strategies to seize control over us.

And we fear that complacency pervades our historically safe abode.

The purpose of this essay is to alert citizens and their leaders of a few contemporary threats to domestic tranquility and urge immediate action.

Threat one.  On November 1, we alerted readers to the effort by Russia and America's federal government to, potentially, further restrict human activity within Alaska's lands and waters.  We provided a copy of a draft "Beringia" agreement which the two governments withheld from public view until recently.  We provided readers with an analysis of the agreement (i.e. called a Memorandum of Understanding, or MOU, we believe, to avoid the criticism that the Administration is unilaterally creating a treaty with the Russian Federation without the Constitutionally required consent of the United States Senate).  To date, we have seen no dramatic, highly publicized effort to demand approval of the MOU by major stakeholders: the State of Alaska and the United States Senate.  The Governor, Alaska Legislature and Alaska Congressional Delegation should immediately create a New Year's Resolution requiring advance stakeholder approval before the agreement is consummated.  They should activate bully national pulpits and take legal action, if necessary, to assure that the rule of law is respected and that the Senate ratification process is employed.

Threat two.  Yesterday, we provided an Associated Press report on one of Russia's "top priority" commitments to harden and strengthen military outposts and capabilities in the Arctic.  We noted from a Canadian Press story that Canada is rising to the challenge of defending its interest in the Arctic and we have followed the Prime Minister's annual, Arctic inspection tours of military assets.  Over a year ago, we laced these issues together, warning that while American leaders, were attempting to establish new controls over American commerce and human behavior, the Canadian leadership was at the same moment in the Arctic defending its jurisdiction there.  America's naive and inexperienced leaders are not keeping their eyes on the ball.  They are consumed day and night with shutting down free enterprise and resource development as their Russian and Canadian counterparts are carefully moving their Arctic chessboard pieces into place.  

Threat three.  America's government is populated with environmental extremists and socialist activists determined to "change America".  We have seen the changes being implemented via counter-Congressional Executive Orders, Senate rule changes to destroy opposition, government takeovers of key sectors of America's free enterprise economy.  In yesterday's post, we highlighted John Podesta's return to the White House.  We provided readers an analysis of Podesta's significant and successful efforts to merge contributions from George Soros, et. al. into a rainbow of social and environmental activist 'non-profit' organizations intent on eliminating, blocking, controlling or delaying free enterprise activity of all kinds, and natural resource exploration and development in particular.  Podesta's return to the White House means much more than simply the addition of another executive opposed to the Keystone XL pipeline.

Threat four.  We lack time and space today to more fully analyze this threat, but give readers a hint: "Consider the networked environmental/socialist organizations and efforts to further socialize Canada and diminish her great natural resource and energy transportation industries."  (Were we less focused on the Arctic, we would also analyze other coordinated challenges from Middle Eastern, North Korean and Chinese belligerents designed to cause a demonstrably weak US government to blink in response--with catastrophic outcome.)

Today, as we connect the dots of these few current events, we see that both internal and external forces pursue missions that threaten the continuing prosperity of the United States and Canada.

America is vulnerable to a loss of Arctic sovereignty due to its naive understanding of Russian actions and capabilities.  Many of its own regulators, with some heroic exceptions, are consciously and irresponsibly undermining the natural resource engines of wealth that have both prospered and protected its people.  

Canada is more responsibly viewing Arctic challenges but shares the liability of the internal cancer of environmental/socialist extremism.

*     *     *

We believe it is time for voters, mayors, premiers, governors, legislatures, legislative assemblies, parliament, congress, campaign contributors and other North American influence leaders to rationally note the elevated threat level and take responsible, legal and decisive action to deal with the foxes around and among us. 

Absent action against the clear and present dangers and threats noted here, Arctic prosperity, our North American safe house, our peaceful way of life, our economic future and even our freedom are at risk.

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11-15-13 - New Battle For ANWR Begins!

15 November 2013 9:43am

Commentary:  Yesterday, BP's Dawn Patience provided a report demonstrating that the company spends $1.5 billion and supports more than 350 vendors, 2,300 BP employees and 22,500 total jobs in Alaska.  Here's the .pdf.  

The company's significant, Alaska projects include, "13 oilfields on the North Slope (including Prudhoe Bay, Endicott, Northstar and Milne Point), which account for about two-thirds of Alaska oil production."  The report goes on to note that the company spent over $25 billion with 15,000 vendors throughout the country in 2012, creating a national economic impact of $147 billion.  

The Alaska impact is great, but we believe it to be a fraction of what it could be were state and federal energy policies more reasonable.  BP spent about 6% of its total US expenditure in the country's largest  state.  We see that number as a reflection of two things: 1) the difficult cost challenge of producing new oil on Alaska lands and, 2) national regulatory restrictions on access to oil rich federal lands and 3) very competitive domestic energy investment alternatives.

We provide these Alaska and national numbers to emphasize the choices investors have.  Being truly aware of the competition for capital should convince policy makers that in order to retain investment, their areas need to be competitive.  

In Alaska's case, having some of the highest taxes, labor and operating costs in the free world does not translate to, "competitive" over the long haul...especially when most of our competitors don't need an 800 mile pipeline to bring oil and gas to a market hub and when most are located in more temperate zones that are less remote to the markets.  

To add insult to injury, Alaska's tarnished reputation is to increase taxes retroactively -- after investment has been made -- and when a moderate tax reform is enacted, lawmakers make its effective date prospective, not retroactive.  

Furthermore, a pending citizens initiative to repeal oil production tax reform, in effect, cannot but help delay if not derail certain investor decisions--which is probably what the environmentally oriented initiative sponsors hope for.

Investors are also mindful that Alaska's unsustainable spending/income trend makes any of today's investors potential targets for massive tax increases in the not too distant future. 

To ignore these realities is to ignore the responsibility of leadership and reflect a misunderstanding of economics.     -dh 

NEW ANWR BATTLE ERUPTS

Juneau Empire (TODAY).  U.S. Senators Maria Cantwell (D-WA) and Mark Kirk (R-IL) introduced legislation Wednesday that would designate 1.56 million acres of land in the Alaska National Wildlife Refuge as wilderness. ...

Sen. Lisa Murkowski (NGP Photo) called the bill “anti-Alaska legislation” and said it would ban oil and natural gas development in the non-wilderness portion of ANWR.

“I cannot understand how, given Alaska’s decades of responsible energy development, this is still viewed as a good idea or a necessary action,” Murkowski said. “At a time when our nation clearly needs more jobs, more revenues, and more domestic energy, this bill defiantly ignores all three.”

Alaska State Rep. Charisse Millett (NGP Photo), R-Anchorage, issued a statement Thursday saying that it was unfortunate that “some members of Congress are more interested in waging a policy fight based on outdated beliefs that fly in the face of reality.”

“It’s disappointing, though not surprising, that senators from states claiming to be good faith neighbors with Alaska are once again attempting to dictate its economic future,” Millett said in the statement. “Alaska has a track record of responsible oil and gas development that spans decades.”


Petroleum News.  After a recent speech in which Interior Secretary Sally Jewell laid out the Obama administration’s vision for conservation, Alaska’s Democratic senator, Mark Begich (NGP Photo), fired her a letter promising a fight.  (See our Commentary)

 

 

 

 

Today's News Links From Consumer Energy Alliance:

Huffington Post: On Fracking, It's Time to Discuss Facts 

In the past few years, the use of the technology of hydraulic fracturing to produce oil and natural gas has dominated national energy policy discussions. Much of the discourse has been fraught with fear, misunderstanding and, in some cases, misinformation. However, in some cases, dispute is slowly being replaced by reasoned debate, acceptance and increasingly responsible regulation and use of this technology.

Breaking Energy: 10 Tips to Save Energy Consumers Money this Winter 

The EIA’s latest Short-Term Energy and Winter Fuels Outlook finds US households heated with natural gas, propane and electricity face higher heating bills this winter. Higher heating costs can hit families on fixed budgets hard, so the Consumer Energy Alliance compiled a list of winter energy-saving tips that can soften the increased heating cost burden anticipated this season.

1200 WOAIUSA Now Number One Oil and Gas Producer in the World 

Boosted by massive oil and gas production from the Eagle Ford shale oil play southeast of San Antonio, the U.S. Energy Information Administration reports that the U.S. is overtaking Russia and Saudi Arabia and will become the world's largest producer of oil and natural gas in 2013, 1200 WOAI news reports. The average production in the U.S. is the equivalent of about 22 million barrels of oil natural gas and related fuels.  That compares to Russia's daily production of about 21.8 million barrels per day.

Capital Soup: Consumer Energy Alliance-Florida Executive Director to Speak at the National Hispanic Caucus of State Legislators 2013 Summit

As if consumers don't have enough problems with a sputtering economy, heath care bills and a wheezing jobs market, winter and its bigger heating bills are around the corner. According to the U.S. Energy Information Administration, more than 90% of American households will see higher energy bills this winter. The EIA says the total cost for natural gas heat this year will climb 13%, to $679. Homes with electric heat (38% of the total housing stock) will fare better, as prices will climb by only 2%.Either way, homeowners and renters who handle their own utility bills should take steps to keep heating costs down -- even before the weather really turns cold.    

Huffington Post: Where Is Obama on Climate Treaty?

n Warsaw, 189 countries are represented in the negotiations that started Monday. Many people are rightly wondering about the country responsible for the most climate pollution in the atmosphere. There are reasons for hope about the U.S. reducing its emissions, but Obama still shows no indication he's serious enough to give international climate policy the force of law. According to the Energy Information Agency, U.S. carbon dioxide (CO2) emissions have decreased to 1992 levels, achieving about a 13 percent cut since 2005 levels (other climate pollutants are uncertain). Much of this CO2 decrease is due to dropping coal for electricity.

 

Bloomberg: Tennessee Valley Authority Defies McConnell With Coal Cut

The Tennessee Valley Authority said it will cut its use of coal-fired electrical generation by about half of current levels, shuttering some units and converting others to burn natural gas to meet tighter emission-control regulations. The board of the Knoxville, Tennessee-based public utility voted today to close eight coal-burning generators. Among them are two that will be shut and converted to burn natural gas at Paradise Fossil Plant in western Kentucky, which U.S. Senate Republican leader Mitch McConnell, who represents the state, had urged be kept as coal units.

750KTRH AM: The U.S. is Headed for Energy Independence

Energy independence is coming for the United States much sooner than most oil industry watchers had expected. New advances in technology push developments like the Eagle Ford shale formation as a source of crude, meaning the U.S. could be the top oil producing nation in the world by 2016.  And, it goes further than that.

Kitsap Sun: California's Low-Carbon Fuel Rule Is Working, Study Says, but Threats Loom

California is replacing oil with cleaner-burning fuels in cars and trucks, thanks to a landmark low-carbon fuel rule, according to a recent report. But the rule's fate is uncertain amid legal chaos and a shortfall in the production of clean biofuels. The report, conducted by researchers at the Institute of Transportation Studies at the University of California, Davis, said California drivers saved more than two billion gallons of gasoline in the two years since the launch of the rule—about as much gas as the state uses in two months. The carbon emissions reduction is equal to taking half a million vehicles off the road.

The Wall Street Journal: West Virginia Preps for Shale-Gas Play

A Brazilian conglomerate unveiled a proposal Thursday to build a multibillion-dollar natural-gas refining complex in West Virginia—the biggest such development in the state as it tries to profit from the region's drilling boom. The proposed project by Odebrecht Group, a privately held São Paolo-based engineering, construction and petrochemical company, would include a plant known as an ethane cracker, where natural gas is turned into ethylene, a chemical-industry feedstock. It would also include three plants to produce polyethylene, which is used to make numerous products, from plastic bags to pipes.

Reuters: COLUMN-Shale 2.0, going global: Kemp

How quickly the shale revolution spreads from North America to the rest of the world is the single most important factor affecting the outlook for oil and gas markets over the next two decades. For pessimists, the conditions that made the shale revolution possible in the United States will be difficult to replicate, slowing the spread of shale oil and gas production. In its 2013 World Energy Outlook, the International Energy Agency projects shale oil production will reach almost 6 million barrels per day (bpd) by 2030, about 6 percent of global supplies.

Citizens’ Voice: Gas companies: 'We're hiring'

Although there won't be any wells in the Wilkes-Barre/Scranton area, there will still be lots of natural gas-related career opportunities, people in the industry say. From truck drivers to laborers, engineers to scientists, the jobs are out there. "We're hiring, and the pay is good," John Augustine of the Marcellus Shale Coalition said of the industry after a seminar at the East Mountain Inn on Thursday. Although the Marcellus Shale underlies Luzerne and Lackawanna counties, its natural gas was "cooked out" by the high temperatures that hardened the coal.

Breaking Energy: Energy Quote of the Day: Keystone XL’s Role in a Low Oil Price Scenario

Language on the proposed Keystone XL pipeline buried on page 491 of the International Energy Agency’s most recent World Energy Outlook may provide more fuel for opponents of the project, but it could offer a leg up to project proponents, as well. The WEO 2013 forecasts that oil sands production will average 4.3 million barrels per day in 2035, up from 1.8MM bbl/d last year, “contingent on the construction of major new pipelines to enable the crude to be exported to Asia and the United States.” The pipelines in question are Keystone XL, which would link Alberta oil sands to Gulf Coast refineries, and two pipelines from Alberta to Canada’s western coast to allow for Asia-Pacific exports.

Houston Business Journal: Rail vs. pipeline debate lacks facts and fairness

The production of oil in the Bakken Formation and revitalized Spraberry oil field is playing central roles in powering our country’s march toward energy independence and in reshaping our national energy debate. Unfortunately, one aspect of that debate has been tainted by bad research and dubious claims. None have been as egregious as one advanced by some increasingly desperate Keystone XL backers who have asserted in various forums that the use of rail to move crude oil from fields to refineries puts the public in jeopardy.

Juneau Empire: Legislation introduced would prevent drilling in ANWR

U.S. Senators Maria Cantwell (D-WA) and Mark Kirk (R-IL) introduced legislation Wednesday that would designate 1.56 million acres of land in the Alaska National Wildlife Refuge as wilderness. “The Arctic National Wildlife Refuge is a national treasure that must be preserved for future generations to experience and enjoy,” Cantwell said in a statement. “I’m proud to join Senator Kirk on this bipartisan bill to protect one of the last pristine public lands in America. We need to advance forward-looking solutions for America’s energy future, while preserving this treasured public land and the unique ecosystem that depends on it.”

Denver Business Journal: Broomfield vote flips, city says frack ban approved, will recount

Voters in Broomfield approved a ban on hydraulic fracturing, better known as fracking, within the town’s borders, by a razor-thin margin of 17 votes out of 20,683 cast, according to the latest tallies by city officials posted Thursday night. The margin is so narrow that a recount is mandatory, according to the city. That's a switch from the unofficial results posted after the elections ended Nov. 5, which showed the measure losing by about 13 votes. The ballot question called for a five-year moratorium on fracking.

The Wall Street Journal: The Right Way to Frack

What is one thing you wished the public understood about fracking? BILL RITTER: The public should understand that hydraulic fracturing can be done in a way that is both environmentally sound and socially responsible. Oil and gas producers have been developing and using hydraulic fracturing techniques for decades. It has only been in the last decade, however, that hydraulic fracturing has been combined with directional drilling, allowing producers to tap tight shale oil and gas reserves that previously were considered non-retrievable.

The Wall Street Journal: ‘Fracking’ Is a Loaded—and Misunderstood—Term

Pro or con, “fracking” has become a politically charged word. In the 1984 textbook “Fundamentals of the Petroleum Industry,” hydraulic fracturing or “fracking” is defined as follows: Modern fracturing uses pressured water, gels of various types, and other fluids that are compatible with the formation and hydrocarbons… to inject tons of fluid thousands of feet into the earth at nearly unimaginable pressures…great enough to lift and break up the producing formation…When the fracturing pressure is removed, overburden pressure reasserts itself and sometimes reseals the formation as tightly as before. The contractor, therefore, pumps a propping agent (e.g. usually sand) down the hole with the fluid. It props (tiny) fractures open against formation pressure when the fracturing pressure is gone.

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11-13-13

13 November 2013 10:14am

Feds Seek To Tighten Noose on Development By Expanding Clean Water Act Regulatory Control

From our friends at the Pacific Legal Foundation comes word of this effort, "to stretch federal power so broadly that it could potentially cover every pond, puddle and pothole in the country."  Since Alaska has more ponds, puddles, lakes, rivers and streams than any other state and 3/4 of America's coastline, the 49th state's citizens should be alert to this new EPA rulemaking effort, detailed below.  This new regulation would provide new ammunition to White House efforts, using zoning techniques, to restrict human activity in the nation's oceans and in areas affecting rivers and streams feeding the oceans and Great Lakes.  We believe this could also be an effort to employ vast new cadres of federal enforcers who will seek control over oil, gas and mining (including fracking) activity on public and private lands while charging a new schedule of fees to finance government agency growth.   It is another way of redistributing wealth, jobs and power from the private sector to government, as we discussed in Monday's commentary.    -dh

PLF.  Federal officials are pushing a new rule to vastly expand their power over water and land under the Clean Water Act. The U.S. Environmental Protection Agency and the Army Corps of Engineers, relying on EPA's new report on "connectivity" that is still in draft form and under review, aim to regulate isolated water bodies that have no significant effects on navigable waters.

This plan is an apparent conflict with PLF's 2006 victory at the U.S. Supreme Court in Rapanos v. United States. In an October 31 PLF news release, PLF Principal Attorney M. Reed Hopper warned federal regulators of pursuing this expansion of power.

"We seem to be witnessing a push to stretch federal power so broadly that it could potentially cover every pond, puddle, and pothole in the country," Hopper said. "Federal regulators should be warned that if their new water rule veers away from statutory and constitutional principles, they risk sailing into a lawsuit." 

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