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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.

 

Interstate Gas

4-10-14 Hostility Toward Alaska's Major Investors

10 April 2014 2:40am

COMMENTARY: "Alaska Should Never Become Like Hostile Argentina!

In this video of yesterday's Senate Resources Committee meeting a minority senator (i.e. Hollis French {NGP Hollis French, Senator, Alaska, Photo by Dave HarbourPhoto} of Anchorage) proposes that witnesses be required to testify under oath.  This unprecedented (or at least rare) action is sure to further convince investors that Alaska is a risky place to do business.  Some might say, "Well, we have the statutory right to interview witnesses under oath."  Our concern with that clever response is, "Fine, then why not interview all witnesses under oath?  Why just interview major investors under oath; why not interview major beneficiaries of state spending to testify under oath?"  In short, treating the oil industry witnesses differently than education, union, health care, municipal and non profit witnesses contributes to an atmosphere of hostility and discriminatory treatment.  Hostility toward investors cannot encourage investment.  The only question is how much damage such hostility will reap on investment decisions.  The answer to that question, unfortunately, is that we will never know how it would have been the other way.  We do know that after Cathy Giessel, Senate Resources Committee, Alaska, oil, Photo by Dave Harbourone Alaskan investor's experience in Argentina, investors will be all the more wary now about hostile rhetoric that always precedes increases in tax and regulatory burdens -- and even expropriation of property.  We compliment Committee Chair Cathy Giessel (NGP Photo) on her smooth handling of a difficult situation.  -dh


Globe & Mail by Jeffrey Jones.  CALGARY'S STRONG ENERGY SECTOR!

Washington Times / AP by Becky Bohrer.  The House Rules Committee on Tuesday advanced legislation that would allow out-of-state residents to serve on the board of directors of the Alaska Gasline Development Corp.


Office of the Alaska Gas Pipeline Federal Coordinator, by Bill White.  (Comment: An analysis issued yesterday that could bode well for an Alaska gas pipeline/LNG project -- if the state of Alaska can convince investors of its new-found reliability as a stable fiscal regime.  -dh)

Anxiety is rising in the liquefied natural gas business over the slow rollout of North American LNG export projects. Anxiety about supply. Anxiety about pricing.

The worry was simmering at the big Gastech Conference & Exhibition held March 24-27 in Goyang, South Korea, as LNG buyers and sellers fretted that the world's constrained supply could last beyond the next few years.

"Despite all the rhetoric and hubris that our industry generated, LNG will be shorter for longer than most people are imagining," said Martin Houston, a recently retired chief operating officer of the U.K.'s BG Group, a global LNG supplier.

More....

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4-8-14 What Do Underfunded Pensions Have To Do With An Alaska Gas Pipeline?

08 April 2014 9:07am

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, CongressmanDoc Hastings, ESA, Photo by Dave Harbour 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?

(See SitNews Ketchikan Reprint)

by

Dave Harbour

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.

Bill Corbus, Juneau, State Spending, Mine, Electric Utility, Photo by Dave HarbourToday'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, Alyeska Pipeline, oil, taxes, production, TAPS, Photo by Dave HarbourTom 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 Joe Griffith, In-state gas, gas pipeline, electric utility, MEA, CEA, Photo by Dave Harbour, ANGDA, CWNany 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 Tom Barrett, Alyeska Pipeline, TAPS, state revenue forecast, alaska, throughput, tax policy, Photo by Dave Harbourlargely 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

For more information, visit http://www.alyeska-pipe.com or follow Alyeska on Facebook or on Twitter at http://www.twitter.com/AlyeskaPipeline

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4-7-14

07 April 2014 10:21am

WILD CANADA: This spectacular four-part series on the wildlife and the wild lands of Canada reveals a Canada that few have seen before. 


This morning, U.S. Senator Lisa Murkowski (NGP Photo) ...Lisa Murkowski, Pebble, rule of law, Rio Tinto, Northern Dynasty, Photo by Dave Harbour

Rebecca Logan, SB 21, Senate Resources, Alaska oil taxes, Photo by Dave Harbour, Alaska Support Industry AllianceThis afternoon at 7:30 p.m. Eastern Standard Time, readers may watch a legislative hearing (i.e. live streaming) in Juneau before the Senate Resources Committee.  One of the Doug Smith, Little Red Services, SB 21, oil taxes, Alaska investment climate, Photo by Dave Harbouritems heard will be "Updates From The Field", including testimony concerning Alaska's tax and investment climate by Alaska Support Industry Alliance representatives, Rebecca Logan and Doug Smith (See photos). 

 ... commented on Rio Tinto's divestment of its interest in the Pebble Partnership.  

Her position is consistent with the view we have expressed over that last two years that EPA's potential, preemptive action is a gross violation of the rule of law and creates a dangerous precedent for any oil and gas, mining, commercial fishing, agricultural, construction or other public works project.

*   *   *

Here is Governor Sean Parnell's statement, released Sean Parnell, Rio Tinto, Northern Dynasty, Pebble, Rule of Law, preemptive, EPA, Photo by Dave Harbourearly this afternoon:  Governor Sean Parnell (NGP Photo) today released the following statement after learning of Rio Tinto’s decision to divest its 19 percent ownership stake in Northern Dynasty Minerals and the Pebble copper and gold project.  “It’s disheartening to see a company like Rio Tinto take its business elsewhere as a result of the current federal regulatory environment,” Governor Parnell said. “Even more troubling is the EPA’s efforts to preemptively veto a project before any proposal has been submitted and before a public permitting process has even commenced. Mining provides thousands of jobs for Alaskans and is a critical sector of our state’s economy. Looking ahead, for Alaska to compete globally for investment dollars, it will require a fairer and more stable regulatory process than what the federal government currently pursues.”

*     *     *    

The EPA's unrelenting ardor is aptly demonstrated by Administrator McCarthy's speech tonight to the US Water Alliance in Washington, National Geographic Headquarters Grosvenor Auditorium, 6 p.m.  She will discuss EPA’s continued efforts to "safeguard our waterways" (if not our economy -dh), including the Agency’s recent landmark proposal to clarify protections for the nation’s streams and wetlands under the Clean Water Act.  -dh


Peninsula Clarion/AP by Becky Bohrer.   The House Resources Committee version of a bill to advance a major liquefied natural gas project was starting to take shape Saturday, as members dug into a thick stack of proposed changes.  The committee, with a reputation for finely parsing language, was making slow but steady progress in an amendment process that began Friday. The panel planned to resume work Sunday, after making a slight dent in the stack after hours of meeting Saturday.


From Robert Dillon, Senate Energy Committee Staff.  The U.S. Energy Information Administration today released the first part of its Annual Energy Outlook for 2014. Under the EIA’s high-resource case for U.S. oil production – that is, a scenario where oil production sees sustained production increases over the next 25 years – net imports drop to zero:

“In the High Oil and Gas Resource case, growth in tight oil production continues for a longer period of time than projected in the Reference case. Domestic crude oil production increases to nearly 13 MMbbl/d before 2035 in the High Oil and Gas Resource case, and net U.S. oil imports decline through 2036 and remain at or near zero from 2037 through 2040.” – EIA.gov/forecasts.


U.S. Sen. Lisa Murkowski (R-Alaska) today released the following statement on Rio Tinto’s decision to divest its 19-percent shareholder interest in Northern Dynasty Minerals and the Pebble gold, copper, and molybdenum prospect in Southwest Alaska:

“I appreciate the way Rio Tinto is handling this decision. Instead of simply divesting, it has committed to investing in the education of Bristol Bay’s next generation. This will help ensure that local residents have the skills to get or create the kind of jobs that will allow them to provide for their families.

“I understand that many mining companies are reevaluating their project portfolios right now, but I’m concerned by what else may have prompted this decision. If we want to attract investment to our state and our economy, we need a regulatory system at the federal level that is predictable enough to allow responsible development to go forward – at least to the permitting stage, and without the threat of a preemptive veto from the EPA hanging over it."  

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4-2-14

02 April 2014 6:33am

U.S. Sen. Lisa Murkowski (R-Alaska) today released a report demonstrating that the Department of Commerce retains the power to modernize its regulations and allow condensate exports.  

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.

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3-28-14

28 March 2014 10:30am

Roger Marks, alaska gas pipeline, Photo by Dave HarbourJuneau 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.


Lisa Murkowski, Senate power, energy natural resources, interior department, Photo by Dave Harbour, Sally JewellNational 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.

 

 

 

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3-24-14

24 March 2014 10:33am

Washington Post Editorial.  DEBATE HAS raged over whether the United States can fight Vladimir Putin on the Russian president’s most favorable ground: energy politics. It can, and it should, particularly because there’s an obvious path forward that coincides with the United States’ — indeed, the world’s — economic interests. That path is lifting irrational restrictions on exports and making it easier to build natural gas export terminals.


Comment:  This comment and our archives will supplement the adjacent story.  

Late last year we began documenting with more and more detail the relationship of socialist and environmental extremism to the current administration in Washington.  

Here is a recent link that, in turn, links back to John PodestaGeorge Soros, the Center for American Progress and other groups that contribute to the corruption of the Rule of Law in the United States.  

-dh

Powerline Blog (3/22/14) ...  a still deeper level of corruption is on display here. Juliet Eilperin is a reporter for the Washington Post who covers, among other things, environmental politics. As I wrote in my prior post, she is married to Andrew Light. Light writes on climate policy for the Center for American Progress, a far-left organization that has carried on a years-long vendetta against Charles and David Koch on its web site, Think Progress. Light is also a member of the Obama administration, as Senior Adviser to the Special Envoy on Climate Change in the Department of State. The Center for American Progress is headed by John Podesta, who chaired Barack Obama’s transition team and is now listed as a ‘special advisor’ to the Obama administration. Note that Ms. Eilperin quoted Podesta, her husband’s boss, in her puff piece on Tom Steyer. Oh, yes–one more thing. Guess who sits on the board of the Center for American Progress? Yup. Tom Steyer.”

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