Is Alaska Flirting With The Last Gas Pipe Straw?
Our friend, John Hofmeister (NGP Photo), former Shell President, offered this "quotable quote" on the energy situation during his interview with the Oxford Club's Energy and Infrastructure Strategist Dave Fessler:
Please Consider Testifying Today, Friday, March 14 on HB 77: Improve Alaska's Permitting Efficiency (We at NGP believe this is one rather small but important way citizens can improve Alaska's investment climate--rather than our usual challenge to fight off additional investment climate attacks! -dh)
Our friends at the Fairbanks Chamber of Commerce are encouraging citizens to testify in support of House Bill 77 during the Senate Resources Committee meeting tomorrow. The Chamber's Board of Directors has adopted, as one of the Chamber's 2014 legislative priorities, to increase responsible resource development through the permitting process. (Read More Here)
"...if we keep the current level of government, where we have the executive branch with 13 agencies governing energy, plus the White House, 26 Congressional committees and subcommittees in Congress, both the Senate and the House, 800 federal judges, 50 states, 50 state governors, 50 state legislatures, 50 state court systems. Then you get to the municipalities and the counties of the country. You have thousands and thousands of governmental units that are fragmenting what it is that the energy industry is trying to do to bring molecules and electrons to the American people for their use. And that governance is so fragmented it can't work."
Is Alaska Flirting With The Last Gas Pipe Straw?
Earlier this week, the folks at Alaska Public Media reminded us that the republican-led Legislature is dealing with another dimension of gas pipeline competition, an added cost: legislated labor rates.
Our friends at the Fairbanks Chamber of Commerce are encouraging citizens to testify in support of House Bill 77 during the Senate Resources Committee meeting tomorrow. The Chamber's Board of Directors has adopted, as one of the Chamber's 2014 legislative priorities, to increase responsible resource development through the permitting process.
Friday, March 14
Senate Resources - 3:30pm
CSHB 77 - Land Use/Disp/Exchanges; Water Rights
The CS includes changes that limit DNR's authority to issue a general permit, define the process for issuing a general permit to include public comment, allows individuals, tribes and others to be able to apply for water reservations, but clarifies that the certificate will be issued to an appropriate state agency rather than a person. In times of declining budgets, general permits are an appropriate tool to efficiently authorize routine activities such as mooring buoys.
The bill allows "persons" to apply for instream flow reservations, but if granted the in stream flow certificates are held by a State agency. CSHB 77 solves the problems with the current system, which focuses on who gets paperwork in first. For large projects that are multiple years in the planning, the decision on how to withdraw water, protect the fish, and promote economic development should be made with all the data, and with an understanding of all the environmental and social effects. It should not be based on who gets their paperwork in first. But, recent court decisions and environmental groups' legal claims are making it a paperwork race.
DNR has received over 300 applications for an instream flow reservation. The vast majority are from public agencies. In contrast to the almost 300 agency applications, the state has received 34 applications from other groups. Of the 34 applications, over 85% were from groups opposed to a development project. Their purpose is at least partially to use the application to change or stop the agency permitting process.
Decisions about these projects should be made by Alaskans through their government - not by environmental groups, nor even by individual Alaskans. CSHB 77 solves the problem with the current instream flow permitting system with minimal changes, and does not affect public notice or any other part of the process.
Talking Points to Consider in your Testimony:
- This bill will help cut the red tape and put Alaskans back to work.
- The bill improves efficiencies in the issuance of General Permits, diminishes the chronic backlog in permitting, results in cost savings to the state, while protecting the environment.
- CSHB77 diminishes the ability of ENGOs to abuse the system and stop projects.
- This bill will help cut the red tape and put Alaskans back to work.
- CSHB77 implements changes that will provide certainty and timely response to Alaskans that obtain permits, while maintaining efficiently run state agencies. In these times of trimming the state budget, ensuring that state agencies are able to efficiently issue and manage permits, thus keeping down the cost and time expended, is crucial
- CSHB77 provides for the issuance of general permits, so that minor projects can be permitted practically. Section 1 of HB77 makes it clear there is a requirement for public notice and provides opportunity for public input on any general permit. General permits would cover activities that are already authorized for permit under existing statute. General permits are not unprecedented; in fact, they are widely used by federal agencies.
- CSHB77 requires that appeals to sales, leases, and land disposals can be done only by those who are directly and negatively impacted by the decision. This brings accountability to the appeals process, ensuring that appeals must be brought only when a directly involved stakeholder is adversely affected by a decision, rather than a special interest attempting to block permits
- Thanks to special appropriations by the legislature, DNR is making positive progress on a tremendous permit application backlog. Extra funding helps address the backlog symptom, but efficiency measures in CSHB77 help address the cause of the backlog.
- CSHB77 ensures that Alaska's water resources are managed by those who are best equipped to do so - agency staff with science-based expertise.
Additional Information & Talking Points:
Alaska Public Media by Alexandra Gutierrez. The latest version of a bill advancing a natural gas megaproject restores language concerning collective bargaining. The Senate Finance Co-Chair Pete Kelly announced on Tuesday evening that the committee will scrap the less specific language they had planned to use when dealing with labor terms.
Commentary: The following post by the Pebble Project precisely reflects the editorial position we have taken for several years.
We would add that the White House has no business lecturing Russia and other nations on the importance of respecting "rule of law" when it has taken large steps in the last five years to diminish the American "rule of law" set forth by our founders.
Other examples of Obama Administration of "rule of law" violations include "Fast and Furious", "Uninforced immigration laws", "Unpunished IRS illegal targeting", "Uninforced voter intimidation", "Unpunished Violation of 1st Amendment (i.e. Fox News and AP)", "Illegal changes by fiat in Affordable Care Act to delay deadlines and exempt special interests from enforcement", etc.
Even if we did not 'support' the Pebble Project, we should be both offended and fearful that EPA's violation of the First Amendment to the Constitution and to the permitting process in this case allows EPA and its environmental activist allies to stop any project anywhere at any time without regard to due process.
Is this the America we were brought up to love, respect and defend with our lives, fortunes and sacred honor? -dh
On February 28, EPA Administrator Gina McCarthy short-circuited the established National Environmental Permitting Act (NEPA) process rather than allowing the Pebble Partnership to design and submit an actual mine development proposal and have it fairly and objectively evaluated. EPA is potentially preparing to preclude Pebble development without ever seeing a proposed mine plan.
The NEPA process has been sufficient to evaluate and advance major Alaska resource development initiatives since its inception in 1970. Alaskans are familiar with NEPA and are confident that it works. The possibility of EPA preemptively vetoing projects before they’re even presented has many Alaskans thinking and talking about it:
David Wight, past president of the Alyeska Pipeline Service Co, is frank in his ADN editorial: “EPA choose wrong process to vet Pebble.”
Lorene Anelon, president of Iliamna Natives Limited, argues in favor of a return to NEPA in theBristol Bay Times, stating that “EPA action on Pebble fails to consider people of region.”
And the editorial staff of the Fairbanks Daily News-Miner calls it a clear case of the agency overreaching, declaring “EPA goes too far on Pebble mine.”
There’s still time
EPA hasn’t issued any regulatory decision about the Pebble Project yet. The process announced by EPA Administrator McCarthy late last month began a series of steps that is still being sorted out. Alaskans who favor a predictable, reliable permitting process—one that allows responsible resource development to continue serving as a major driver of Alaska’s economy—should read these and other editorial perspectives, and stay tuned for ways to make their voices heard.
3-11-14 Competition Is Not Only About Markets...A Sovereign Ignores A Competitive Investment Climate At Its Peril
The Human Temptation To Ignore The Value Of A Competitive Investment Climate
The North American platter is heavy with energy sustenance, now manifested by the boom in oil and gas shale productivity.
Last week, the office of the Federal Coordinator for the Alaska gas pipeline project summarized current and developing trends in Liquefied Natural Gas (LNG) competition for markets.
Earlier, we commented on the same subject.
Over the Weekend, we hear from British Columbia that a new taxing regime on LNG exports will produce billions of dollars of new revenue for the coastal province, and that concerns investors.
We shall refer to these pieces in today's commentary. -dh
Suddenly, the fundamentals have changed as the US works toward becoming as big a producer of energy as it is a user, and Canada seeks to expand energy wealth from Alberta to British Columbia.
But, this challenge of plenty, as Alaska and Alberta have found over the last several decades, is almost and maybe more difficult than challenges of shortage...as during the late 1980s when oil prices and oil patch economies bottomed.
You would think that as jobs increase and city/state treasuries grow with additional income, property and sales taxes, the people and politicians alike would be celebrating prosperity.
History in Alberta and Alaska has taught that a growing private sector doesn't buy too much political capital. No, taking more of the income stream -- even at the cost of private jobs and prosperity -- buys politicians votes in his/her voting districts. Supporting status quo prosperity is oh, so boring.
Alberta learned during the last decade that it must moderate its royalty take to bring back jobs and economic growth--and it worked.
Alaska took longer to learn the lesson; it was loathe to give up its death grip on the flow of confiscatory production taxes, even if keeping a tight grip meant a loss of private jobs, dangerously low and diminishing throughput of the Trans Alaska Pipeline System (TAPS) and economic suicide (i.e. since over a third of Alaska's economy and 90% of its government operating budget is based on that diminishing tax base, put into place during the Palin Administration).
But slow as it was to understand the economic reality that its repulsive investor tax policies had pushed Texas, North Dakota and, now, even California ahead of the so-called "Pioneering State" in annual oil production.
Yet act, Alaska finally did. In the latter days of last Spring's legislative session, a majority of the House and Senate joined the Governor to reform the Palin production tax increase.
But lest those hoping for a more competitive investment climate in Alaska would find breathing easier, some minority leaders in the Legislature joined with anti-business environmental and social activists to advocate a voters referendum immediately after the session ended. That referendum would, if passed, repeal the tax reform bill passed not even a year ago.
You can imagine how someone poised to make new investments in Alaska last spring must feel now; "let's give it a good go and if tax reform is withdrawn by a vote of the people, we'll have to reevaluate our project plans."
In the box above, the Federal Coordinator Office analysis of market competition reveals that there are too many LNG projects chasing too little demand.
This means that LNG project investors will be carefully choosing the investment venues more likely to produce a reliable return on and of their capital.
The pending Alaska vote this coming August, at best, does not improve Alaska's reliability or attractiveness as an investment climate. In 2014, with Alaska's governor, legislature and large producers pretty much find themselves under aligned stars; it would seem that this could be a watershed moment in history for an Alaska LNG project.
Similarly, with British Columbia announcing new taxes that they proudly proclaim could bring billions of dollars in tax revenues, one can only wonder how that changes the metrics of current LNG investor plans--especially if it takes a final 'net profits' format. Net profit approaches, like the reformed Alaska production tax, cause immediate tension between tax authority and taxpayer. One will always be refusing expense deductions and the other will always be defending them -- at great cost of time and relationships.
Meanwhile, virtually every oil producing state in America is increasing production--except Alaska. The giant Alaska oil producer lies strapped Gulliver-like to the ground by a thousand strands of Alaska political strife, federal opposition to every kind of Alaska development and a growing competition from other producing areas.
Alaska seems to not realize that its resources can be properly developed and reasonably taxed in a way that brings not just maximum benefits to one greedy generation, but maximum benefits to many generations of thankful, employed Alaskans.
BC seems to be less interested -- from the perch of a foreign observer, in facilitating LNG projects that can provide generations of good jobs and economic development than in separating gas transporters from their hard earned money as soon as possible regardless of how that treatment may affect long term jobs and prosperity.
With more LNG projects underway than there are markets to satisfy, some will not be built.
We think it logical that jurisdictions treating the new LNG export opportunity as a money tree will find themselves losing competition to those who place greater value on long term industry relationships that foster long term jobs, community support and economic prosperity.
BP today announced its intention to establish a separate business to manage its onshore oil and gas assets in the US Lower 48.
Comment: Yesterday we noted that two legislators are planning for a new oil revenue stream should voters adopt an August Primary Ballot proposition to repeal oil tax reform.
That revenue stream will be based on a new policy emphasis on state investment and equity into oil and gas exploration and development projects. These are the same minority legislators who are leading an effort to repeal the SB21 oil tax reform bill passed by a majority of the House and Senate, and signed by the Governor, less than a year ago.
We can now see a strategy rising from the mist: repeal of tax reform will have to be replaced by something that produces revenue. Since repeal of reform will deflect investment, an unhappy but obvious policy replacement would be to socialize/nationalize natural resource industries...starting with the small step of massive equity investment of public funds and employment of state employees to oversee the profitability of the investments.
What could possibly go wrong?
Today, we hear in a Fairbanks News Miner editorial, that certain Mayors who reap large and mostly passive benefits from the oil and gas statewide property tax, are mounting an effort to investigate impact on their revenues from an agreement between the state and gas pipeline parties regarding the fiscal regime enabling a gas pipeline project to proceed.
Certain gubernatorial candidates oppose both oil tax reform and the fiscal terms surrounding a gas pipeline project.
The current governor supports both tax reform and the proposed gas pipeline fiscal regime.
While there seems to be alignment among major gas pipeline and oil tax stakeholders, lack of political alignment from other, vocal influence leaders could well cause oil tax reform to disappear after August, soon to be replaced by new statewide leadership and a new world of natural resource control by bureaucrats and government ownership of the 'means of production'.
Should this be the outcome, we can envision great impact, as well, on Alaska's entire investment climate, not merely limited to natural resource investors. -dh
Comment: Fox News interviewed former Alaska Governor Sarah Palin (NGP Photo) today.
During the interview, we learned that Candidate Obama opposed Candidate Romney's conviction that Russia posed a global threat to peace.
The program also produced a video of Candidate Sarah Palin, earlier warning that just as Russia invaded Georgia it could as easily invade Ukraine.
Throughout the interview, Palin emphasized the importance of approving the Keystone XL pipeline and developing domestic energy resources with Administration support--rather than Administration opposition.
Our faithful readers know that we have been hard on Palin for her Alaska oil tax and gas pipeline policies nearly a decade ago...but in this interview we found ourselves appreciating her message, which we paraphrase: "Develop America's resources aggressively and responsibly now, Mr. Obama, or watch our standing in the world and support for our allies diminish along with our national security and economic recovery."
We also note from the current issue of Petroleum News, that "Commissioner John Norman (NGP Photo) retired from the Alaska Oil and Gas Conservation Commission at the end of January. Norman, an attorney, had been the public member of the commission for 10 years. He was named to the commission by former Gov. Frank Murkowski in 2004, replacing Sarah Palin as the public mem...." (We are reminded once again of what a small world it is as we congratulate Governor Palin on her stand for domestic energy production and her replacement, Commissioner Norman, for a lifetime of service to the state and nation. -dh
Wall Street Journal by James Freeman
WARREN BUFFETT, CLIMATE-CHANGE DENIER
The billionaire chairman of Berkshire Hathaway (Photo, Buffett with NGP Publisher) is on some kind of roll. Yesterday we told you about his warning on public pension funds in his annual letter to shareholders. Now, he's puncturing deeply-held liberal myths about global warming. Mr. Buffett tells CNBC that extreme weather events are not becoming more common, and that climate change is not altering his company's calculations when insuring against catastrophic weather events. "The public has the impression that because there's been so much talk about climate that events of the last 10 years from an insured standpoint and climate have been unusual," he said. "The answer is they haven't." (We commented on the subject of climate change two days ago, invoking Aristotle's Golden Mean ideal; and we challenged both sides of the debate). -dh
Comment and link: We earlier commented on LNG competition.
Here, Peter Tertzakian of the Globe and Mail gives further insight on the softening LNG market for British Columbia exports. Are not some of Canada's LNG export concerns ones that we Alaskans share. In both Alaska's land Canada's cases, LNG market demand and competition are exacerbated by local political interests striving to obtain for themselves and their constituencies all possible benefits -- even if the end result is achieving 100% success in gaining benefits for projects that became embroiled and then doomed in a sea of local and national political struggles.
To quote our reference at the Globe and Mail: Japanese benchmark prices for LNG in Asia have been exceptionally high since the Fukushima nuclear disaster, almost exactly three years ago. Concurrently, domestic Canadian natural gas prices have been anomalously low. The resulting “differential” between the two was $15.70 (U.S.) for one million British thermal units (MMBtu) at its widest in July, 2012. It’s been that massive price gap, or arbitrage, that triggered the buy-low-sell-high opportunity to build LNG export facilities in North America, including 14 projects off the west coast of B.C.
Dear Readers: We have documented excesses in policy and deficiencies in decision making owing to the 'global warming' faith crowd.
Still, we must prize facts and science over politics in our search for 'Endless Progress'. In this spirit, we ask our more knowledgeable friends to help us with a response or rebuttal to this reaction to Ferrara's commentary. -dh
(Our Comment: The Obama Administration departments -- including DOD -- base many changing policies on a bureaucratic faith in the siren calls of global warming.
Upon the "environmental protection/global warming" assumptions are based programs causing vast damage to American employment, economic health and national security--while building big government bureaucracies and political dependencies on the Executive branch.
This explains why the Administration and its allies will fight to the death to impugn the reputation of global warming critics. After all, if the climate is actually growing cooler or simply cycling through another historic period of 'cooling/warming', how can government justify its damaging policies?
Ferrara's Forbes column may represent an inconvenient truth to disciples of global warming--but integrity demands that we hear a response to the challenge laid out in the box above. After all, even if it can be shown that warming is a long term trend, we would still demand -- in the name of science -- proof that mankind (and not the oceans, etc.) were the major contributor of greenhouse gasses.
Then, if man is proved to be the principle cause, is America wisely adopting policies that are reasonable and do not threaten to bankrupt the country while major carbon producers in the developing world are making little to no effort to contain carbon output?
Lastly, even if the United States (i.e. with over $17 trillion dollars in short term debt and over $90 trillion in unfunded liabilities) bankrupts itself in search of the holy climate grail, will the end result of global domination by powerful green house gas emitters produce a more sustainable world?
We do not advocate one political position over another or one extreme view over another (i.e. except that as our dear readers know, we do not deny that we are dedicated to the intent and protections of the Constitution of the Unites States and its precedent, Declaration of Independence). And we do not seek compromise for the sake of 'getting along'. Instead, we search for reason, a place between excess of bureaucracy and deficiency of precaution -- which which Aristotle might still today characterize as the "Golden Mean". -dh)
Ferrara's words, continued: "...future generations of scientists will look back and say this is the moment when we took the political out of the political science of "climate change," and this is how we did it. Real scientists know that these 50 co-authors are real scientists. That is transparent from the tenor of the report itself.
"The publication is "double peer reviewed," in that it discusses thousands of peer reviewed articles published in scientific journals, and is itself peer reviewed. That is in sharp contrast to President Obama's own EPA, which issued its "endangerment finding" legally authorizing regulation of carbon dioxide (CO2) emissions, without submitting the finding to its own peer review board, as required by federal law. What were they so afraid of if 97% of scientists supposedly agree with them?
"The conclusion of the report is that the U.N.'s IPCC has exaggerated the amount of global warming likely to occur due to mankind's emissions of CO2, and the warming that human civilization will cause as a result "is likely to be modest and cause no net harm to the global environment or to human well-being." The primary, dominant cause of global climate change is natural causes, not human effects, the report concludes."
Clearly, Russia has leverage over Ukraine. Depriving Ukraine of energy supplies or reasonably priced energy could deal a devastating economic blow to the struggling country.
The map also illustrates the importance of the United States and Canada reasonably developing their own energy resources. Energy is the building block of an economy and all economic activity in modern societies is totally dependent on both the supply and the reasonable pricing of energy supplies--as we learned with the Arab Oil Embargo in the 1970s.
With continuing delay of the Keystone XL pipeline and continuous stalling of other energy and mining projects, America's leaders are preventing their citizens not only from having massive new employment, but from enjoying the energy independence and national security which they deserve and could so easily enjoy but for an obstinate Administration.
The map was created from data provided from National Gas Union of Ukraine by RIA Novosti. We display the map with appreciation, subject to permission requested from the owner. This and other similar maps are available to public viewing on Google. -dh