4-22-14 Deadline TODAY For NPR Project Comment - Dan Fauske Briefs Sitka Chamber On Alaska Gas Project
Calgary Herald by Dan Healing. Oilsands company reports 13,400 barrels per day in Q1. Calgary Herald by Deborah Yedlin. Will there ever be an end to the largely uninformed commentary and analysis about the oilsands and the evils of the Keystone XL pipeline? ... former U.S. president Jimmy Carter, ..., sent Barack Obama a letter urging rejection of the project.
|See comment of one of our readers, submitted today!|
Today is the last day to show support for ConocoPhillips' Moose's Tooth draft, supplemental environmental impact statement regarding Unit 1 (GMT1) oil and gas development project in the National Petroleum Reserve-Alaska (NPR-A). Please take a moment to comment TODAY before COB. Thanks to the Resource Development Council for Alaska, here's how.... (Photo with apologies to the book and, in recompense, this link. -dh)
Register now, before it's too late, for the May 29, 2014 Alaska Oil & Gas Association Annual Luncheon featuring Jack Gerard, President and CEO of the American Petroleum Institute.
APRN by Robert Woolsey. ("Gas will never replace oil, from a revenue viewpoint.")
Alaska Dispatch by Suzanna Cauldwell.
The natural gas of Cook Inlet does a lot for the hundreds of thousands of Alaskans who live in Southcentral.
With an oversupply of natural gas in the country, Alaska is exploring the construction of a relatively small, low-pressure gasline within the state’s borders – while still holding out hope for a much larger project should prices improve.
Dan Fauske (NGP Photo) is the president of the Alaska Gasline Development Corporation – or AGDC. He spoke to Sitka’s Chamber of Commerce last week about when and where Alaskans may see gas. (More here, including audio....)
Our friend, Pedro van Meurs (NGP Photo-L, with author), reminds us that the course, "World Fiscal Systems for Unconventional Oil & Gas" is still accepting registrations for the June program.
"The course", van Meurs says, "will deal with International and North American fiscal systems for shale oil and shale gas, coal bed methane, oil shales and oil sands."
We understand that the software used during the course simulates the economics of the unconventional systems of Algeria, Argentina, Australia, Brazil, Bulgaria, Canada (various provinces), China, Colombia, France, Germany, India, Indonesia, Morocco, Poland, South Africa, Spain, Turkey, UK and the United States (various states). Participants will be able to keep this advanced software. (Here is the detailed agenda.)
Comment of reader, Mary Ann Pease (NGP Photo), in support of Moose's Tooth Development:
Dear Ms. Psarianos,
I am writing to you today in support of the Proposed Greater Mooses Tooth Oil and Gas Development - Alternative A in NPR-A!
This project brings long term Economic Benefits for Alaskans. Alaska and this nation needs an increase in production (Peak production from GMT1 is estimated at 30,000 BOPD), which would help offset our declining North Slope production.
As with many sustainable economic development opportunities- Development would provide benefits to local, state, and national economies through jobs creation during construction and operations, tax revenues, royalties, and new US sourced resources to help meet U.S. domestic energy demand.
I also support from environmental safety perspective (as proposed in Alternative A, GMT1), the gravel road connection to the main Alpine facilities. The road is necessary to ensure that the operator can respond to any environmental and safety issues in an adequate and timely manner.
It is also relevant to note that Environmental /Subsistence Issues are minimized with a road.
Finally, the time for action is now! This Project Was Previously Approved! We do not need any more delayed actions by the Federal Government to adversely impact economic development opportunities to Alaska.
Mary Ann Pease, Owner, MAP Consulting
The Bureau of Land Management (BLM) held public hearings in March to gather comments on the proposed Greater Mooses Tooth Unit 1 (GMT1) oil and gas development project in the National Petroleum Reserve-Alaska (NPR-A). Hearings were held in Anchorage, Fairbanks and in the NPRA villages.
The BLM released a Draft Supplemental Environmental Impact Statement (DSEIS) for the proposed project last month, launching a public comment period, which ends on Tuesday, April 22. In July 2013, ConocoPhillips, Alaska, Inc. (CPAI) submitted an application to construct a drill site, pipelines, road and other facilities to support development of petroleum resources within the Greater Mooses Tooth (GMT) Unit.
The project is approximately 14 miles west of the CPAI-operated Alpine field. The GMT1 drill site would be operated and maintained by Alpine staff and supported by existing Alpine infrastructure. The project would include construction of an 11.8-acre drill pad, an 8-mile access road, above-ground elevated pipelines, and an electric power line connecting the GMT1 drill pad to CPAI’s CD-5 drill pad currently under development. The GMT1 pad would have a capacity for up to 33 production wells, including several injection wells, and be located on a federal oil and gas lease previously issued by BLM.
The project proposes to access federal oil and gas resources, as well as resources owned by the Arctic Slope Regional Corporation and Kuukpik Corporation. The proposed development was originally analyzed in the BLM’s 2004 Alpine Satellite Development Plan (ASDP) (then referred to as CD6), and is also subject to the 2012 NPR-A Integrated Activity Plan (IAP).
The BLM has prepared a draft supplement to the ASDP to evaluate any relevant new circumstances and information which have arisen since 2004. The draft plan is available on the BLM website at http://www.blm.gov/ak/GMTU1.
RDC has submitted comments in support of Alternative A, view full letter at http://www.akrdc.org/alerts/
RDC members are encouraged to submit written comments by April 22nd. Public comments can be submitted by any of the following methods:
Fax: (907) 271- 3933
Mail: GMT1 Draft SEIS Comments, Attn.: Bridget Psarianos, 222 West 7th Avenue, Stop #13, Anchorage, Alaska 99513.
Points to consider in your comments:
- Peak production from GMT1 is estimated at 30,000 barrels of oil per day and would help offset declining North Slope production.
- Development would provide benefits to local, state, and national economies through local hire for jobs created during construction and operations, tax revenues, royalties, and new resources to help meet U.S. domestic energy demand.
- Development will also provide significant economic benefit to Alaska Natives on the North Slope as well as throughout the state through direct payment of royalties and revenue sharing among the Alaska Native Regional Corporations.
Alternative A is the Preferred Alternative
Road Needed for Emergency Spill and Safety Response
- As proposed in Alternative A, GMT1 will include a gravel road connection to the main Alpine facilities. The road is necessary to insure that the operator can respond to any environmental and safety issues in an adequate and timely manner. Alternative D, the aircraft and ice road access alternative, would not allow adequate access (on bad weather days, there would be no access) to emergency response resources and creates significant environmental and safety risk.
Environmental/Subsistence Issues are minimized with a road
- CPAI’s proposed project, Alternative A, has been modified to reduce environmental impacts and lower the overall footprint. In support of subsistence resources and access, the proposed project drill site location was moved out of the Fish Creek buffer to provide additional protection to this area. Road access will avoid the need for air traffic to the drill site, which is the number one complaint of subsistence hunters. Additionally, the project will be subject to various lease stipulations and the new Best Management Practices Adopted by BLM in 2013.
- The overall gravel footprint of Alternative A is the smallest of all the options. Alternative D has a larger gravel footprint than Alternative A because of the need to construct an airstrip and a larger gravel pad to accommodate more production equipment and a camp.
- Alternative A has the lowest estimated emissions because it requires the least amount of new infrastructure and eliminates the need for airplane support.
This Project Was Previously Approved
- The currently proposed GMT1 project (formerly CD6) is essentially the same as that approved for permitting in the 2004 ASDP Record of Decision.
- A review of new data and information shows there are no appreciable changes in the physical, biological, or social resources associated with the project study area. New data includes multi-year studies on hydrology, birds, and caribou.
Comment Deadline: Tuesday, April 22, 2014
Fairbanks News Miner by Jeff Richardson. FAIRBANKS — Rep. Don Young (This and other high resolution, NGP Photos here) took aim at a frequent target on Friday, blasting federal regulatory sprawl that he said endangered economic growth and the Alaskan way of life.
Young spoke during a luncheon with the Associated General Contractors of Alaska in Fairbanks, and directed most of his fiery comments toward the growing profile of federal agencies. He said they’ve passed 13,883 new regulations in the past four years, compared to 628 new bills that made it through Congress.
“We’re no longer a free nation,” Young said. “We’re a nation of regulatory law.”
The visit was part of a busy week for Young, including a local visit with the Alaska Miners Association and tours of the Geophysical Institute and Surgery Center of Fairbanks.
In his typically blunt style, Young said President Obama’s philosophies aim to make the U.S. a “third-rate nation,” bound by wealth distribution and rule-making by unelected bureaucrats.
Comment: We have long held that the White House Memorandum and Executive Orders establishing and implementing a new "Ocean Policy" was one of the Administration's first acts of federal overreach.
|Comment: The "Rule of Law" subject appears when we discuss "Ocean Policy", but arises as a theme wherever federal regulatory powers are exercised--including with an Alaska mining project on state land. -dh
Last week Pebble CEO Tom Collier spoke at the Alaska Miners Association conference in Fairbanks, updating attendees on the status of the Pebble project, discussing next steps, and addressing a major federal overreach by the U.S. Environmental Protection Agency. Collier expressed his confidence that although it has had setbacks, Pebble remains viable, saying “I would have stayed in Washington, D.C., if I thought this was done.”
Chairman of the board John Shively (NGP Photo) concurred: “Is it going to be difficult? Sure, but there aren’t a lot of easy projects left.”
Journal of Commerce/AP by Becky Bohrer. The U.S. Environmental Protection Agency is taking the first steps toward possibly restricting or even prohibiting development of a massive gold-and-copper prospect
First. It created a broad new policy that threatens the economy of the country without Congressional approval or oversight.
In response to this overreach, citizens and companies created an National Ocean Policy Coalition (NOPC Logo, above).
That group has generally tried to responsibly react to the White House initiative by providing input, testimony and meeting with Administration officials.
Our readers know, however, that we have shown this Administration to be unconcerned with responsible comment about its programs. It goes through the motions of holding public hearings before proceeding to do what it wished to do from the outset.
This is one of many reasons we consider the Administration to have broken faith with Americans by violating the rule of law. When the citizens no longer trust in the rule of law, confrontation between those governing and the governed becomes more likely.
Today, we received a special report from the National Ocean Policy Coalition -- which includes several Alaska public interest organizations. Its extensive reports include: I. NOPC Submits Mid-Atlantic Ocean Planning Comments, RPB Announces Meeting; II. New Request for Proposals Seeks Additional Assistance for Northeast RPB; III. New England Fishery Mgmt. Council Meeting to Include Northeast RPB Update; IV. NOAA Proposes Nearly Tripling Size of Two Marine Sanctuaries Offshore CA; V. MPA Federal Advisory Cmte Seeks Nominations, Announces Meeting.
We compliment supporters of NOPC for their hard work but urge readers to be more suspicious than ever of the motives of an overreaching federal government. After all, when fully implemented, a national ocean policy could make virtually all human activity subject to government oversight -- since it is designed to regulate activities affecting the oceans and Great Lakes and the watersheds feeding them (i.e. the whole country).
Can you imagine the new bureaucracy that will be recruited from the ranks of the 'faithful' to fully implement a program to control the rest of us?
Farmers, parking lot owners, contractors and municipalities are especially at risk, for the water flowing from these sources -- and every rooftop -- will likely carry something worthy of regulation into a body of water that is, ultimately, ocean bound.
This is why we urge NOPC and every other citizen who takes an interest in this matter to cease cooperating with the concept and begin to fight for its outright demise! White House organizers will scoff at suggestions they will overreach. But if citizens and Congress let the Administration put the bureaucracy in place, the deluge of future controls and regulations will be impossible to contain.
It is an environmental activist's dream come true--or a tyrant's. -dh
Remember this announcement, 5 years ago today? ANCHORAGE, April 8, 2008 - BP [NYSE: BP] and ConocoPhillips [NYSE: COP] today announced they have combined resources to start Denali - The Alaska Gas Pipeline. The pipeline will move approximately four billion cubic feet of natural gas per day to markets, and will be the largest private sector construction project ever built in North America. The project combines the financial strength, arctic experience and technical resources of two of the most capable and experienced companies in the world.
|Globe & Mail. The U.S. Energy Information Administration reported last week that Canadian oil exports to the United States are the highest in at least four decades.|
Today, Congressman Doc Hastings' (NGP Photo) House Natural Resources Committee held a Full Committee legislative hearing on four straightforward bills to update the Endangered Species Act (ESA) for the 21st century and improve species recovery. This effort works in the favor of Alaska's and America's economy without diminishing reasonable support for protecting truly endangered species. -dh
Does Alaska's Pension Liability Threaten Gas Pipeline Viability?
Alaska spends more than it takes in. To that extent must investors worry about when -- and not if -- the next tax proposal will creep over the horizon toward THEM.
Below is the link to an Op-Ed wherein mayors (i.e. whose own retirements are at risk with underfunded pension liabilities) urge lawmakers to support the Governor's proposal to reduce the $12 billion unfunded pension liability by $3 billion.
|Today's Juneau Empire Op-Ed. See long-time Alaskan utility and natural resource expert, Bill Corbus' (NGP Photo) related opinion. -dh|
To do that, lawmakers will have to remove $3 billion from state savings accounts at a time when their deficit spending level requires use of depleting savings.
Oil production from Prudhoe Bay is declining, upon which 90% of state spending is based. Oil revenue could continue its dramatic, annual production decline putting more reliance on savings accounts to balance an unsustainable state budget.
|See Alyeska Pipeline Service Company President Tom Barrett's (NGP photo) response to yesterday's Alaska state revenue forecast. We believe that better than projected production decline rates are due to the passage a year ago of SB 21, which reformed Alaska's oil production tax. -dh|
Paying off the entire pension liability is impossible since Alaska doesn't have $12 billion in total savings available. (4-10-14 Note: See "Understanding Alaska's Budget". Some might say we have over $20 billion in savings available; but since political reality prevents expenditure of most of these sources for "government pension fund liabilities," they should not all be considered available.)
Gas pipeline investors have to be wondering, "If I commit to a portion of a $40 - 60 billion gas pipeline/LNG export project and the state continues running out of money, how safe is my investment from predatory tax policy?"
Alaska has a track record of taxing for more than it needs to operate and, to add insult to injury, taxing the oil industry retroactively. It has built the highest cost per capita bureaucracy in the nation. Now, in the face of rising costs and diminished revenues it is urging oil companies to invest in a mega gas pipeline project so that revenue from that project a decade from now can fund the state's spending appetite.
Link to our reports and commentary on LNG competition, here.
Energy advisor, Keith Kohl, says in his communique today that, " Like us, Canada's National Energy Board has approved seven LNG export license applications — but unlike us, the first project slated to start tapping the Asian LNG markets as early as next year."
Meanwhile, dozens of pending LNG export projects in the the US and Canada are all romancing the same Asian energy consumers. Experienced observers know that profit margins will likely be thinner than they hope for. Asian utility managers are not stupid. They will want the lowest possible "ship or pay" cost for LNG energy in return for their own "take or pay", long-term financial commitments. (Some good, Lower 48 researchers are excited about Alaska's prospects, but may not be fully aware of investor concerns or competitive pressures from other export projects that we have covered in these pages. -dh)
The LNG project that offers the lowest, competitive price to an Asian utility in return for a 20-year, firm contract, cannot afford to risk company solvency on "assurances" that Alaska will not create new energy taxes out of thin air and even apply them retroactively--thus altering project metrics and risk. The risk that the contracted delivery price of LNG to an Asian market could be lower than the cost of delivering the LNG -- under a "ship or pay" arrangement, may be an unacceptable risk to a responsible investor.
So the final question that any gas pipeline investor might be asking now is, "Can Alaska assure my company that today's gas pipeline investment is safe from future tax increases when unfunded pension liabilities, run-away budgets and diminishing oil production pose a dreadful danger in spite of any politician's soothing assurances and best intentions?"
As our friend, utility manager Joe Griffith (NGP Photo), has often said, "Hope is not a strategy." We all hope for conditions that will enable sustainable budgets and projects to supply both the jobs and the financial resources of the future. But hope alone will not achieve that goal.
What then is an answer to this Gordian knot of intertwining politics and energy policy? Cut public spending to be consistent with income. Cut welfare/entitlement spending to be consistent with median welfare spending of all other states. Business taxes should not exceed median of business taxes in other states. Institute new taxes only on new investment, not on prior investment. Never tax retroactively. Cut tax and regulatory burdens to essential and responsible needs. Avoid state investment into private sector projects--which always involves politicians risking "Other Peoples' Money". Of course, there are as many suggestions as there are people with opinions.
So is some combination of these and other responsible remedies too difficult?
If workable solutions are "too difficult" they will not be undertaken and undisciplined, unsustainable economic policies will ultimately result in involuntary compliance with economic realities.
Parents warn children that this is called, "learning the hard way".
Fairbanks News Miner, by Mayors John Eberhart, Luke Hopkins and Bryce Ward.
Gov. Sean Parnell’s budget includes a $3 billion line item to reduce the Public Employees Retirement System (PERS) and Teachers Retirement System (TRS) unfunded liability, which is about $12 billion. The mayors of Alaska, through the Alaska Conference of Mayors and the Alaska Municipal League, fully support the governor’s initiative to stop the can from being kicked down the road.
The state has attempted to make inroads in regard to this huge liability, but so far hasn’t had success. Every year the deficit has increased. The governor has stepped forward to address this issue in a responsible way.
Comment: Yesterday, April 7, 2014 the Alaska Department of Revenue issued its Spring 2014 Revenue Forecast. We believe it provides a brighter outlook for a future, sustainable economy, if decision makers continue to support the sort of tax reform to which the increased production may be largely attributed. But for future years, a sustainable economy based almost entirely on the back of one industry needs serious, objective attention and problem solving.
Note that the forecast includes improved North Slope production and projects a lower decline than has been anticipated. The following is from the office of Alyeska Pipeline Service Company President Tom Barrett (NGP Photo). -dh
Barrett issued the following statement this morning:
“The Department of Revenue’s forecast is great news for TAPS. This much needed upward shift in throughput is critical, because moving less oil through TAPS creates significant challenges for the men and women who work to keep the pipeline operating safely and reliably. Every barrel in TAPS counts and the prospect of thousands of additional barrels moving down the line is welcome news.”
“We understand that Alaska depends on us to safely deliver the oil that funds so many state services. That’s why Alyeska and the TAPS Owners have aggressively pursued solutions to declining flow. But, as I have often said, ‘the best and most direct solution for TAPS is more oil.’”
“I applaud the Governor and the Legislature for fostering an environment that encourages more development. The forecast reflects that the investments being made by the producers should pay off soon for Alaska. That’s good news for TAPS and for everyone in the state.”
More information about the challenges of declining throughput is available at http://www.alyeska-pipe.com/TAPS/PipelineOperations/LowFlowOperations
About Alyeska Pipeline
For more than 36 years, Alyeska has operated the 800-mile Trans Alaska Pipeline System (TAPS), safely moving oil from Prudhoe Bay on the North Slope of Alaska south to the Port of Valdez, the northernmost ice-free port in the United States. The pipeline traverses three mountain ranges, permafrost regions and 34 major rivers and streams. Alyeska personnel work in Anchorage, Fairbanks and Valdez and at pump stations and response facilities all along the pipeline. They also operate the Ship Escort/Response Vessel System (SERVS) for Prince William Sound. Alyeska was created to construct, operate, and maintain TAPS for owner companies which today are BP Pipelines (Alaska), ConocoPhillips Transportation Alaska, ExxonMobil Pipeline Company and Unocal Pipeline Company
The report contains more than 40 pages of Commerce Department decisions from the 1970s and 1980s on expanded exports of residual fuel oil, petroleum coke, butane, specialty naphtha, and other petroleum-related products.
Fairbanks News Miner by Matt Buxton. Mayors from communities along the route of a proposed natural gas pipeline still are wary about the project’s impacts despite Gov. Sean Parnell’s creation of a project review board.
E&E News (4/1/14) reports: A federal court in Washington, D.C., today upheld a pair of sweeping 2011 settlements between the Obama administration and environmental groups over the streamlining of endangered species decisions, concluding that a homebuilders coalition lacked standing to challenge them. It marked the fourth time in a row federal courts have determined groups have no basis for challenging the legal agreement signed with WildEarth Guardians and the Center for Biological Diversity.
Juneau Empire. Roger Marks (NGP Photo), a petroleum economist in private practice, gives the House Resources Committee his evaluation of Senate Bill 138 and the associated proposed North Slope natural gas commercialization proposals at the Capitol on Thursday.
National Journal. Two facts should keep Interior Secretary Sally Jewell awake at night.
First, if Republicans win the Senate, Alaska's Sen. Lisa Murkowski (NGP Photo) will wield tremendous leverage over Jewell's department. She would lead both the Energy and Natural Resources Committee that oversees the department and the Appropriations subcommittee that controls its budget.
Second, Murkowski is utterly furious with the Interior Department these days.