Federal Obstruction

We Are Proud of Two Legislators and Lamenting Our Loss Of Faith In American 'Rule of Law"

Commentary By

Dave Harbour

Over the last four 'Obama Years' no Alaska legislators have been more diligent than Senator Cathy Giessel (NGP Photo-R) and Representative Charisse Millett (NGP Photo) in joining with Governor Sean Parnell to oppose the continuing flood of federal attacks against Alaska natural resource development.

Most recently, the two have written federal offices "urging" the granting of permits required under the Clean Water Act before another winter work season is lost. (i.e. Giessel letter, and Millett letter)

First applied for three years ago, the permits would allow development of the Point Thomson oil field on the Alaska North Slope (ANS) which contains about a third of the 35Tcf of ANS natural gas proven reserves including a prodigious supply of petroleum liquids.  If transported to Prudhoe Bay via a small diameter pipeline, the petroleum liquids existing under high pressure in the field could be used to enhance recovery of Prudhoe Bay oil reserves and slightly work against the declining throughput of the Trans Alaska Pipeline System (TAPS).  

TAPS is 2/3 empty now and this American Energy Lifeline (which once transported 20% of domestic oil reserves) is within sight of closure.  Without new reserves from various adjacent ANS areas, it could close within the decade, leaving high and dry Alaska's state operating budget that is 90% dependent on ANS oil.  A vanished TAPS could also create a hit on Alaska's economy, almost 1/2 dependent on the direct and indirect economic activity produced by sale of ANS crude oil.  Alaska would again become a ward of the federal government after depleting its various savings accounts in relatively short order.

Waiting in the wings is an area within ANWR (i.e. 1002 area), designated by Congress for oil production.  The Obama Administration's Interior Department via its Fish and Wildlife Department is developing recommendations to convert that area into untouchable wilderness.  

Congress has also designated a "National Petroleum Reserve-Alaska" for oil and gas exploration and development but the Obama Administration's Interior Department via its Bureau of Land Management has developed recommendations to convert the most important transportation corridors and exploration areas into untouchable wilderness.   This follows several frustrating years wherein the Administration's EPA and Corps of Engineers for specious, indefensible reasons delayed granting of bridge access to ConocoPhillips.  This is in an area for which the company had purchased federal government leases it reasonably expected to develop.

Also adjacent to the Alaska North Slope are the Chukchi and Beaufort Seas whose shallow waters (about 150' in the exploration area) contain some of the most exciting prospects for oil and gas exploration and development.  Perhaps two dozen billion barrels of oil there, or more, could support over 50 thousand jobs per year throughout America, decrease our dependence on foreign oil, reduce the balance of payments deficit and add billions in federal revenue (i.e. and a good deal to local treasuries assuming Congress passes a revenue sharing bill for Alaska like that which benefits Gulf of Mexico states).  Shell Oil and other companies have purchased from the Interior Department over $2 billion in leases with the reasonable expectation of being able to explore and develop them.  The companies have spent another $2 billion preparing for work during the brief, summer exploration seasons.   However, the Obama Administration's Interior Department, EPA and Corps of Engineers have year after year delayed granting of several of the several dozen key permits required.   Shell is within days of having to pull the plug on yet another summer exploration season following this 2012 summer silly season of Federal keystone cops bureaucratic bungling.

This litany of anti-Alaska resource development federal attacks doesn't even include efforts to designate nearly 200,000 square miles of coastal area as 'critical habitat' (under the Endangered Species Act) for Polar Bears, even as their populations increase.  The litany does not include federal efforts to designate valuable fishing grounds as 'critical habitat' for Steller Sea Lions, even as their populations increase.  This litany does not include federal efforts to designate Alaska's most populace area around Anchorage as 'critical habitat' for Beluga Whales, even though their populations are increasing.  We also have not mentioned EPA efforts to derail legally permitted projects on state lands after leases have been tendered but before permits have been applied for--a gross violation of due process.  Finally, we have not listed here the litany of horrible economic effects and losses of freedom that will surely follow Obama's pending execution of his non-Congressinally approved or funded project to "zone the oceans".  Ocean zoning will prevent thousands of human activities now legally permissable from ocean areas up thousands of miles of rivers and streams throughout interior America--including the Great Lakes.  The project has been initiatied by Executive Order and money legally appropriated for other purposes has been illegally used like a slush fund at White House direction to support planning for ocean zoning.

Accordingly, as we praise Senator Giessel and Representative Millett, we now have experience and evidence suggesting that one way or another federal gatekeepers will take further action to stop or stall Point Thomson activity and Arctic OCS activity this year.   If the agencies do permit these projects in the next few days, it will be a case of very little, very late...maybe too late.  The sad thing is that even if some permits are belatedly approved, it will be with our suspicion that the approvals are motivated more by an upcoming election than by the desire to 'do the right thing' for America.

For those who think we are too hard on Obama and his federal-environmental cabal, please note that we began this four year term with reserved judgment and a high degree of respect for the new Administration, the rule of law and those entrusted with the power to reasonably regulate federal policies in Alaska.  Experience has taught us that this Administration determines outcomes and virtually ignores common sense, public hearing input and due process.  Accordingly, we have much reason, now, for criticizing this Administration whose greatest failing may well be the destruction of our faith in America's rule of law.  Instead of being objective and reasonable, exercise of the federal rule of law in Alaska and perhaps elsewhere around the country is now fully demonstrated to be arbitrary, capricious and subject to undue influence by environmental extremist groups.

Many of us have lost faith in the trustworthiness of our federal government that will take a determined effort and a new generation of leaders to restore.

Last Friday Governor Sean Parnell (NGP Photo) wrote the Chairmen of the Senate and House committees responsible for energy and natural resource policy.  He said:

"At a press conference recently, Interior Secretary Ken Salazar blamed Shell Oil for the delays in drilling exploration wells in the Beaufort and Chukchi Seas.  This premise is  patently false. The attachment clearly displays a pattern of federal obstruction designed to prevent development of Alaska's abundant resource base.  Decisions by the federal administration have negatively impacted Alaska's economy and, in fact, the entire nation. Repeated federal actions have led to countless delays, as  every lease sale proposed in the Arctic Outer Continental Shelf (OCS) has been canceled by the Obama Administration, with the exception of one, which was delayed.   At this critical juncture, Alaska is prepared to supply our nation with employment as well as  a secure source of domestic energy, only to be thwarted repeatedly by federal actions designed to impede our progress.   Evidence shows the

INVESTORS HUB.  Prime Minister Stephen Harper said Wednesday his government may contribute to the funding of a proposed pipeline to carry natural gas from the arctic through the Mackenzie Valley in Canada's north. "Because of the underdeveloped nature of the infrastructure, the government has provided some fiscal support to proponents to compensate for that, and that package of support is on the table," Mr. Harper told reporters in the Northwest Territories. Mr. Harper added that the pipeline would have to have a commercial basis. "The proponents themselves have to make decisions as to whether the projects are commercially viable," he said.

blame lies not with industry, but with the Obama Administration's agenda to prevent oil and gas production on federal lands." (Here is the .pdf).   (Commentary:  We note that the Governor could have listed many contemporary examples of precisely how actions by Department of Interior Secretary Ken Salazar, the EPA, BLM, the USFWS and U.S. Coast Guard have more directly delayed Arctic exploration and development in the Chukchi and Beaufort Seas, America's National Petroleum Reserve-Alaska, and the Congressionally-designated oil and gas exploration area of the Arctic National Wildlife Refuge.  The Governor is not exaggerating to say that the Obama Administration has created a, "pattern of federal obstruction designed to prevent development of Alaska's abundant resource base."  -dh)

Alaska Dispatch by Alex DeMarban.  With Arctic riches beckoning as the ice cap crumbles, world and local leaders eyeing the risks and rewards of development in the fragile high north gathered under one roof this weekend for a conversation on possibilities that seem as vast as the region's frigid ocean itself. 

LA Times: Shell seeks more time to drill exploratory well in Chukchi Sea.  With its bid to launch offshore drilling in the Arctic Ocean running up against a deadline to protect against sea ice, Shell Alaska has requested an extension in its window for drilling in the Chukchi Sea. Peter E. Slaiby (NGP Photo) , vice president of the Alaska venture, said Sunday that the company has proposed extending the time allowed for drilling in the Chukchi by slightly less than two weeks beyond the Sept. 24 deadline set by the U.S. Department of Interior to allow time for cleanup of any oil spill before the onset of winter sea ice. Meeting with reporters at an Arctic Imperative Summit here, Slaiby said the company’s latest models for  forecasting the onset of winter sea ice now show the first freeze-up occurring somewhat later than originally envisioned when federal officials imposed their initial deadline for ending operations in the Chukchi

Sea.Houston Chronicle: Isaac shutting down production, refineries likely next.  Energy companies intensified their efforts to evacuate workers from the Gulf of Mexico, as companies continued shutting down production. The trend is likely to continue Monday with refinery operations also being suspended. BP said Sunday it had suspended production at all of its operated production platforms in the Gulf of Mexico, as it and other energy companies scramble to get ready for Tropical Storm Isaac to blast into the Gulf. The storm was moving across the Florida Keys and toward the Gulf Sunday afternoon, and several of the leading storm-tracking models show a westward shift, with a growing consensus that it will strengthen into a hurricane over the next few days.

Fresno Bee: America makes choices for wrong reasons.  As gas prices climb back toward $4 a gallon, the Obama administration -- facing a tough re-election campaign and rising Middle East tensions -- is once again considering tapping the Strategic Petroleum Reserve. For years, administrations have bought and stored oil for emergencies, in fear of a cutoff of imported oil, as happened during the Arab embargo of 1973-74. But since 2009, the U.S. government has declared most federal lands off-limits to new oil and gas exploration -- despite vast recent finds of energy and radically new means to tap it. President Obama also canceled the most vital sections of the Keystone pipeline, a proposed conduit from the Canadian oil fields into the heart of the oil-consuming U.S., while preventing production on existing oil and gas reserves in northern Alaska and offshore. In the midst of a crop-killing drought, we are diverting about 40% of our shrinking corn crop to produce high-cost ethanol fuels.

Oil Price: Dipping into US Strategic Oil Reserves: A Speculator's Bonanza. The White House is keeping the rumor-mill afloat with hints that it may draw from US strategic oil and petroleum reserves, watching the market respond on the speculation with a slight fall in oil prices, but this is just a testing of the waters.  America has a 696-million barrel Strategic Petroleum Reserve stored away in underground salt caverns in two US states, Texas and Louisiana, in the event of an energy supply emergency. It may sound like a lot, but when you consider that the US imports over 300 million barrels of oil and petroleum products monthly, the buried reserves are meager. So when mainstream media starts reporting about “anonymous White House sources” hinting that President Obama is considering releasing oil from the reserve, you have to wonder why. Most likely, they are just testing the potential public response to this.

Houston Chronicle: Steffy: Romney plan based on fable of energy independence.  Republican presidential candidate Mitt Romney rolled out an energy plan that bears one disturbing similarity to the Obama administration's. It's rooted in fantasy in the one area that matters the most: domestic oil and gas production. Not surprisingly, Romney's plan is heavily focused on fossil fuels, with only token mentions of alternative energy. It calls for more drilling both onshore and off. While President Barack Obama has struggled to create demand for alternative fuels - a strategy of "pulling" the country toward something it might not otherwise embrace - Romney is trying to "push" what we already have.

Washington Post: Alaska pursuing unconventional shale oil development to fill its pipeline.  Canada may have its Albertan oil sands, and North Dakota has its Bakken oil formation. But don’t count Alaska out when it comes to producing unconventional oil. Alaska, which has fallen behind North Dakota in oil output and whose Prudhoe Bay oil fields are waning, is exploring the possibility of extracting oil from the source rock on the state’s North Slope. The state has leased more than half a million acres of its land to exploration companies, and even some environmentalists believe that the shale oil development could be the best way to increase output with relatively modest damage to the environment.

A Shameful Management of the Country's Resources  

The Obama Administration is again considering use/misuse of the nation's Strategic Petroleum Reserve, designed to be used in a national emergency.  The average price per barrel paid for the SPR oil is less than $30.  Today's price hovers around $100.  (Could the real motivation be arbitrage?)

At the same time, this month the Obama Administration announced the BLM plans to essentially lock up the National Petroleum Reserve-Alaska (NPR-A) at the same time the USFWS hopes to recommend wilderness designations for the approved oil and gas area of ANWR, at the same time the US Coast Guard and EPA are slowing or blocking Shell's Arctic exploration efforts.  See the comment of petroleum engineer Richard Garrard in our report below.  To add insult to irony, as this hypocrytical administration talks piously about environmental values in NPR-A (which would be materially unaffected by a responsible oil and gas leasing program), it refuses to properly and timely clean up and plug scores of its own, abandoned legacy wells in NPR-A.  As a result of this incompetent management, America will deplete its SPR during a presidential campaign when there is no national emergency, leaving itself truly vulnerable to future emergency situations while refusing to produce domestic energy in Alaska.

 It is worse than incompetent management.  It is a shameful management of the country's resources.  -dh

Houston Chronicle by Sean Parnell, Governor of Alaska (NGP Photo).   The United States begins a new energy era, one that will play out for decades and has already put thousands to work, even before a single oil well has been drilled.   A 22-ship fleet is en route to Arctic waters to begin exploratory drilling in the Chukchi and Beaufort seas, an important step toward securing our nation’s energy security.  Energy security doesn’t just put our oil in a pipeline; it puts Americans to work, and it does so years before oil hits the market.  It could be 10 more years before Shell Oil will produce oil from the Chukchi and Beaufort. Even so, Americans are already working across the nation and will be kept busy through the interim.  Shell’s preparations created high-paying jobs from New England to the Gulf Coast and the Pacific Northwest, in addition to Alaska’s urban centers and remote Arctic communities.  With our nation’s unemployment higher than it was in January 2009, this development cannot be overlooked.  (Read More)

 Representative Bill Stoltze (L), Senator Charlie Huggins and members of the Mat-Su Legislative Delegation sent a letter today to Governor Sean Parnell asking him to direct Attorney General Michael Geraghty to file an injunction blocking the efforts of the federal government to unilaterally restrict responsible economic growth by converting large portions of the National Petroleum Reserve Alaska (NPR-A) into a wildlife sanctuary.

The August 2012 issue of RDC's Resource Review newsletter is now available online.  Topics in this edition include:

Ballot Measure 2

Alaska Business Report Card

Emission Control Area

Bristol Bay watershed assessment

EPA Overreach in Bristol Bay

Oil Company Profit and Taxes

Alaska Investment Climate

Take action, get in the game

RDC board tour to Ketchikan

PDF and web versions are available at:

PDF Version:  http://www.akrdc.org/newsletters/2012/august.pdf

Web version:  http://www.akrdc.org/newsletters/

Associated Press: Alaska delegation critical of proposed NPR-A restrictions - Special protections proposed for wildlife habitat in the 36,000-square-mile National Petroleum Reserve-Alaska would block oil development on half the area but Alaska officials' immediate concern is how it would affect offshore drilling. Alaska's congressional delegation said U.S. Interior Department restrictions on the Indiana-size reserve likely will add expense for a pipeline that could carry oil from offshore wells in the Chukchi Sea to the trans-Alaska pipeline. At worst, it could block access.

Calgary Herald by James Wood.  Premier Alison Redford's brief visit to Vancouver Tuesday had no time for diplomacy as Alberta and British Columbia remain at odds over the Northern Gate-way pipeline proposal.

Alaska's Economic Focus: TAPS and Spend

by

Dave Harbour

We have pointed out that the single economic focus of Alaskans and all Americans interested in energy security should be the improved throughput of the Trans Alaska Pipeline System (TAPS).  

America's energy lifeline once transported over 2 million barrels of crude oil/day to the Lower 48, 20% of America's domestic supply.  Alaska was the largest oil producing state.  Thirty years later TAPS is 2/3 empty and depleting at a 6% annual rate.  Alaska first lost its production record to Texas and this year North Dakota began producing more oil than the 49th State.  Alaska's economy is over a third dependent on TAPS activity and the state operating budget counts on it for 90% of its revenue.  Elected leaders have done virtually nothing to curb a voracious and addictive spending habit that requires more and more natural resource revenue.   Indeed, Alaska is in a precarious economic situation, just a step away from financial disaster.

New life for TAPS requires massive, new throughput from state lands and/or from federal lands.  As we have seen this week, the Obama-enviro-cabal is doing everything possible to block new troughput from federal lands.  State lawmakers have diminished appetite of oil company investors for state leases by cranking up the tax burden, making Alaska uncompetitive in the international energy marketplace, discouraging more throughput from state lands.  

Now comes a voters initiative which would transfer much of Alaska's natural resource policy power from the Executive and Legislative Branches of government to unelected bureaucrats.  And yes, as always, there is something that can be done.  Alaska residents can vote on this destructive, anti-constitutional initiative.  Here is how. 

So Alaska's primary focus today must be on encouraging more state and federal land exploration and development throughput for TAPS.  But the statesmen among us, if there are any, must know that sustaining prosperity requires more mature tax and spend discipline than human nature likes. 

Sacrificing for future prosperity ultimately benefits the next generation at the expense of this one, and is sometimes called, "enlightened self interest".   However, that ethic requires one to believe that, "It is better to give than to receive," rather than the intuitive, selfish reverse.

See reader comments here:

8-15-12.  Right on target, as usual, Dave.  Thanks for the article and I have mailed to others…..But when your audience is continually sent up to date information that we are fighting the Administration, the environmentalists, the anti-development groups, foundations giving money to anti-Alaska groups (non-profits) and the largest newspaper working together to make Alaska a federally controlled State regulated and controlled so investors will go elsewhere, I wonder where the “fire in the belly” pro-development Alaskans are and are we going in fighting back…..I would start by asking all to stop advertising in the ADN and stop buying the paper….go to email news or small conservative papers or the Wall Street Journal or USA Today even though they are liberal to a degree….but push back financially on the ADN.   
 
It seems we all attend all the right meetings and listen to the proper speeches, as well and give money to fight propositions that will further kill our Oil and Gas and Mining industry but none wish to be in the front lines to turn this state around like they have  done in North Dakota…  We need new faces in DC and Pro-Development in Juneau supporting our Governor……The Union Leaders, Oil and Gas Leaders and Mining should Hold a “pro-Development large scale Demonstration on the Park Strip and one in Fairbanks, saying we are tired of the anti people and non-profits and the News Stories and get our State back to work……..If we do not do something dramatic and vote in the right people who knows if TAPS will be operating in 5 years or less…….??   Thanks for all you do Dave…..you’re a true Alaskan!      -pr

 Politico’s “Morning Energy”: CEA to host Pittsburgh Summit **Article mentions CEA.  The Consumer Energy Alliance will announce today that it will host the 2012 Pennsylvania Energy and Manufacturing Summit on Sept. 10 in Pittsburgh — where ME is willing to bet natural gas may get a mention or two. Besides the usual contingent of lawmakers and industry officials, representatives from the Obama and Romney campaigns will attend as well. 

ADN by Becky Bohrer.  Battle Lines Drawn Over Coastal Management

Bloomberg News:  Alaska Governor Sean Parnell (NGP Photo) asked U.S. Interior Secretary Ken Salazar (NGP Photo) to help expedite an Army Corps of Engineers decision on permits to develop the state’s Point Thomson oil and gas field after it was delayed.

Some of us in Alaska have been as attuned to Shell’s offshore drilling plans as we are to the summer Olympics.  For years, we have watched Shell jump over hurdle after hurdle, much like a gold-medal Olympian, only to be delayed by baseless litigation by opposition groups and regulatory strangulation by the federal government. Now, with Shell in the final stages of approval by the feds, a final – hopefully surmountable – hurdle remains.

Houston Chronicle by Jennifer Dlougy.  The Obama administration ignored the wishes of coastal leaders when assembling a plan for offshore drilling near their shores, a group of Republican governors from Texas, Louisiana and other states says.  In a letter to President Barack Obama Wednesday and obtained exclusively by Hearst Newspapers, the pro-drilling governors say they are "concerned about the lack of communication from the federal government on critical matters that affect our coastal development."  (Note:  The letter, among others, was signed by Alaska Governor Sean Parnell and Texas Governor Rick Perry - NGP Photos.  HERE IS THE LETTER.  -DH)