Interstate Gas

Just When Alaska Needs Lessons On Economics 101, the United States Association For Energy Economics (USAEE) Will Be Holding Its 32nd Annual Conference In Anchorage in July.  Here's the Impressive Agenda, A Call for Papers, and Registration--Courtesy Of Alaska Oil and Gas Economist, Roger Marks (NGP Photo)!

Commentary: Energy and Capital's Keith Kohl says Alaska's economy is doomed to collapse--and it all has to do with TAPS throughput, as we've been reporting for years.  If national attention begins to focus on Alaska's economic decline more and more, we suspect that interest of investors from many sectors -- not just oil and gas -- will begin to factor in this different kind of risk.  It is the 'different' risk that an investment area may not be sustainable.  It is a risk that if the major taxpayers retreat, taxpayers with shallower pockets may be left holding the bag.  It is a risk that the state touted as resource rich when statehood was granted 54 years ago, may have those resources strangled and stranded by 1) an inhospitable state tax climate and 2) a hostile and overreaching federal government.  The truth hurts.  -dh

Alaska Dispatch, by Pat Forgey.   House Speaker Mike Chenault, R-Nikiski, and Rep. Mike Hawker, R-Anchorage, are making another attempt at supporting the in-state gasline legislation that they pushed through the House last year but which stalled in the Senate. 

Celebrate "Meet Alaska's" 30th Anniversary: the Alaska Support Industry Alliance!

Financial Post by Claudia Cattaneo (NGP Photo).  There is plenty of blame to go around for failing to turn Canada’s vast Arctic natural gas deposits into one of the country’s major sources of fuel.  Regulatory delays, disagreements between First Nations, opposition from green groups, the discovery of competing shale gas deposits, increasing construction costs — all played a role in the shelving last year of the Mackenzie Valley natural gas pipeline from Inuvik, N.W.T., to Alberta.  But it’s the economy of the North that is bearing the brunt of the consequences. In a cruel twist, the blow has just expanded as communities such as Inuvik (NGP Photo w/author) and Norman Wells, N.W.T., surrounded by vast hydrocarbon deposits, are forced to import large and costly quantities of fuel from southern Canada to keep homes warm and businesses running.

Fairbanks News Miner by Dermot Cole.  For the last couple of years, Alaska has enjoyed a premium on the price of oil, which has added hundreds of millions of dollars to the state treasury.  But that premium is about to vanish, according to an analysis offered by a oil industry veteran who says that rising production in North Dakota will lead to lower prices on the West Coast for Alaska oil.

Today's Consumer Energy Alliance Clips:

National Journal: Energy in the Next 4 Years 

Over the next four years, energy development will face challenges both from the Obama Administration’s regulatory agenda, as well as from Congress. Additionally anti-development forces are ramping up efforts to block energy development at the local and state level. The regulatory action, stemming mainly from EPA, that stalled during the two years leading up to the election will continue apace, at least until the midterm elections in 2014. Despite the potential for the confirmation of a more moderate Administrator, EPA can be expected to work quickly to promulgate and finalize rules in order to insure completion by 2016. I expect that the agency will push aggressively in several areas including the regulation of coal-fired utilities, regulation of hydraulic fracturing and regulation of offshore oil and gas development.

Forbes: A Broken Promised Land 

I’ve always been a big fan of Matt Damon’s movies.  Anyone who knows me well has likely heard me say that there are two actors whose films I don’t miss, because they just don’t make bad movies:  Matt Damon and Denzel Washington. After seeing Damon’s new anti-natural gas film, “Promised Land” on Saturday, I’m not sure I can continue making that statement. Granted, I’m not exactly an unbiased source given the film’s subject matter, but “Promised Land’s” disappointing box office numbers over the weekend would indicate the general public agrees.

The Florida Current: Scott maintains narrow view on water, energy issues 

Kevin Doyle, executive director of the Consumer Energy Alliance-Florida, said Florida should be concerned about federal regulations that could possibly restrict natural gas extraction by hydraulic fracturing, or "fracking."  The U.S. Environmental Protection Agency is studying the effects of fracking on drinking water. "If any one of those agencies (studying fracking) start to impose regulations that are over-excessive, that can disrupt the supply chain," Doyle said. His group supports affordable and reliable energy including increased oil production.

The Houston Chronicle: Two arrested in Keystone XL protest

Two people were arrested Monday after scores of protesters against the Keystone XL pipeline stormed the lobby of a Houston office for pipeline owner TransCanada, a spokesman for the protesters said. The activists sang and dropped black balloons symbolizing spilled oil in the lobby of the building, located immediately adjacent to the Galleria mall, with some roaming up stairwells and into offices, said Ron Seifert, a spokesman for Tar Sands Blockade, which backed the effort.

Associated Press: Colo. oil, gas panel OKs groundwater sampling rule

Colorado oil and natural gas regulators approved rules making the state the first to require energy companies to do groundwater sampling both before and after they drill. The sampling is meant to show whether supplies of drinking water have been affected by energy development. Industry and environmental interests both immediately found fault with the new sampling regulations, which the Colorado Oil and Gas Conservation Commission approved Monday as it began a three-day hearing on rule changes. Next, the commission will consider updating how far drilling must be from buildings.

Houston Chronicle: Inspectors set to look at rescued Shell drilling rig

Salvage teams anchored the Kulluk rig in Kodiak Island’s Kiliuda Bay after arriving there at 10 a.m. Alaska Standard Time, 1 p.m. Monday in Houston. But for Shell, which owns the 266-foot conical drilling unit and planned to use it to continue a $5 billion quest for Arctic oil this summer, the work is just beginning. Salvage specialists will conduct a detailed inspection of its hull, fuel tanks and equipment. There were no signs of leaking fuel from the rig during its 45-mile voyage from Sitkalidak Island, but 150,000 gallons of diesel and other petroleum liquids are on board.

Amid pressure of 'fiscal cliff,' Senate moves Alaska gas line bill  -  Petroleum News  -  The bill (S. 302) would allow for construction of a natural gas pipeline through Denali National Park and Preserve. The planned pipeline would run 737 miles ...

Personal note of welcome. to our Texas friends! With our next email alert we will welcome several hundred new subscribers, mostly owners and executives associated with the thriving Texas Oil and Gas Industry.  Last Wednesday, your author had the pleasure of addressing the annual meeting of the Texas Alliance of Energy Producers in Wichita Falls, thanks to a thoughtful invitation from TAEP President, Alex Mills (NGP Photo-L).  Today, in response to several requests, we reluctantly provide the notes we used in preparing for that presentation, here.  We say, 'reluctantly', because the speech crept into several emotional and personal spaces that we don't normally discuss publicly.  But we willingly provide the information since so many seemed so genuinely interested in helping to communicate our message.  So, welcome, Texas energy producers; may your service to the Nation be better respected as citizens begin to better understand the critical role you play in the lives of all Americans.  You are now in the friendly company of thousands of fellow readers throughout the Lower 48, Alaska, Canada, Mexico and around the world!  -dh  (Times Record Photo).  (Note: 573 attended our breakfast presentation while 1,247 were present for John Hofmeister's noon speech.  Over 2,200 attended Texas' best BBQ gathering!)

Fuel Fix, by David Holt (NGP Photo).  Last week, we learned about plans for a new set of regulations covering natural gas production from hydraulic fracturing. And this week, the Interior Department has said that those forthcoming rules are still being defined and it’s unclear when they will be released. If it sounds familiar, that’s because it is. The U.S. oil and gas industry, [...]  More »

 Large-diameter gas pipeline project to shift focus to tidewater LNG (From Elizabeth Bluemink, Alaska Department of Natural Resources for the Alaska Gas Pipeline Project Office) 

Brookings Institution, U.S. Department of Energy cite promise of Alaska gas projects 

n a letter signed Wednesday, May 2, Natural Resources Commissioner Dan Sullivan and Revenue Commissioner Bryan Butcher approved a Project Plan Amendment (PPA) for TransCanada Alaska under the Alaska Gasline Inducement Act (AGIA). The commissioners agreed to allow TransCanada Alaska, the State’s AGIA Licensee, to shift its focus to a large-diameter line that will run from Alaska’s North Slope to tidewater in Alaska for in-state use, liquefaction and export. 

On March 30, TransCanada, ExxonMobil, ConocoPhillips, and BP announced that they will work together on commercializing North Slope gas, focusing on large-scale liquefied natural gas (LNG) exports from Southcentral Alaska as an alternative to a pipeline through Alberta, Canada. The parties all agreed to do this work within an AGIA framework. 

“A key benefit of the PPA is that it enables all parties – the North Slope producers, the State and the AGIA Licensee – to come together for the first time to work on commercializing North Slope gas,” said Kurt Gibson, director of the Alaska Gas Pipeline Project Office, which oversees work by TransCanada Alaska on the Alaska Pipeline Project. 

As described in the Commissioners’ letter, the PPA lays out an orderly transition phase for TransCanada Alaska to shift its work on the Alberta project, focused on Lower 48 markets, to an LNG project focused on markets abroad. Furthermore, it describes the State’s significant, near-term expectations for TransCanada and the North Slope producers in keeping with Governor Parnell’s timetable for work on an LNG project, as laid out in his January State of the State Address. 

The PPA calls for TransCanada Alaska to complete its initial work on an LNG project by September of this year and conduct a comprehensive market solicitation by year’s end to all potential market participants, including but not limited to North Slope producers, explorers, LNG terminal developers, and entities seeking to import Alaska gas into Asian and other markets.  In early 2013, the state expects TransCanada to provide an updated, more comprehensive PPA request that will reflect the details of the LNG project and its associated timeline. This PPA will also need approval by departments of Natural Resources and Revenue.  

To accommodate the transition to an LNG project, the Commissioners have agreed to defer the filing of a certificate application for an Alberta line to the Federal Energy Regulatory Commission from October 2012 to October 2014. Approximately half of the work done by TransCanada Alaska so far on the Alberta option – including engineering and environmental studies – is applicable to an in-state LNG line. Some of the Alberta work will continue under the current PPA, either as dual use for an LNG project or to preserve work on the Alberta option for potential transfer to the State under terms of the license. This PPA will prevent unnecessary spending on the Alberta option while the LNG project is being developed.  

The Commissioners’ letter, posted at http://gasline.alaska.gov, authorizes TransCanada Alaska to perform its share of the LNG work as part of its AGIA license.  The license requires the project to be developed in a manner that maximizes in-state benefits while facilitating large-scale export.  In return for following these requirements, the license entitles TransCanada Alaska to reimbursements for its work on a gas pipeline and related midstream facilities. The license does not authorize reimbursement for work by the producers on other aspects of the LNG project, such as an export terminal or upstream mitigation work that may be necessary in advance of a major gas sale. TransCanada Alaska’s license was authorized by the Alaska State Legislature in 2008. 

In related developments that also occurred Wednesday, the Brookings Institution released findings from its year-long study on U.S. LNG exports and the Department of Energy announced a successful field trial of methane hydrate production on the North Slope. The Brookings study noted the strong competitive position of a potential, large-scale Alaska LNG project to Asia in comparison with other global LNG projects. According to Department of Energy Secretary Steven Chu, methane hydrates could “potentially yield significant new supplies of natural gas.” The Brookings Institution’s report can be read at www.brookings.edu.  The Department of Energy announcement can be read at http://energy.gov.   (See related Sean Cockerham story, ADN)

Environment issues largely missing from election campaign - Edmonton Journal - That mash-up of debates has pushed the cleanup of oilsands tailings ponds or greenhouse gas emissions off the agenda, apart from campaign promises made by NDP leader Brian Mason and Alberta Liberal leader Raj Sherman, both of whom are polling low among ...

Governor Sean Parnell Calls For Special Session Re: Gas Pipeline, Oil Taxes and Human Trafficking

See Our Friday Editorial On Business Investment Climate and a Tax Foundation Report

In  Alaska, Is A Deal A Deal?

Commentary by Dave Harbour

Today's Anchorage Daily News Editorial does not encourage Alaska's elected leaders to improve the investment climate and compete with the world's oil suppliers: rather, the Daily News advocates blackmail (i.e. "Invest As We Wish or We Will Continue to Punish You") or bribery (i.e. "If we pull back on progressivity, what exactly do we gain, and on what schedule?").  Note that this hostile, dictatorial, "pay to play" approach occurs while billions in taxpayers' assets are already committed to Alaska, long after lease sale agreements and monies have exchanged hands.  We suspect that if we asked, "Why would Alaska want to treat investors this way," tax and spend advocates would answer, "Because we can."  That attitude is anti-American, anti-free enterprise, and anti-Alaska Constitution because it causes investors to lose faith in Alaska resource development upon which the Constitution predicated Alaska's livelihood.  Mistreating investors is also anti-children, for it frightens investors from wanting to invest now in ways that could employ and sustain our kids later.   Instead, Alaska's legislative leaders should, like Governor Parnell, be seeking to make Alaska competitive, radiating good will and good faith to the world's natural resource investors.   Perhaps the legislature should adopt a natural resource slogan, "In Alaska, A Deal's A Deal".  

Anchorage Daily Planet by Tom Brennan, two stories: 

1.  Brooks Range Petroleum Corp. has the kind of problem that most independent oil companies would like to have. It made a discovery so large that the company and its partner have begun shopping for another partner with deeper pockets.  Brooks Range is headed up by Ken Thompson (NGP Photo), a former president of ARCO Alaska. When Thompson retired from ARCO, he decided to stay in Alaska and put together a venture capital firm to fund oil and gas exploration operations.

2.  Alaska has a lot of balls in the air right now. And revision of the ACES oil tax is just one of them. An important one, certainly, but there are more.  One big one, obviously, is consideration by the major North Slope leaseholders of a gas pipeline to the Southcentral Alaska Coast and an LNG plant and port facilities to prepare gas for shipment on LNG tankers.  The project would supply Pacific Rim markets where gas prices, at least for now, are quite a bit above those in the U.S., where abundant shale gas has driven prices down. Whether the differential will hold is an interesting question. One major utility in Tokyo is already looking at plans to tanker LNG from the U.S. East Coast.

Governor calling special session on 3 issues -  Coshocton Tribune Parnell issued a special session call shortly after the House and Senate adjourned their regular session early Monday. Also on the call are HB9, a bill meant to further advance an in-state natural gas pipeline project, and HB359, Parnell's bill to ... See all stories on this topic »

Oil tax battle rages as Parnell calls for special session - Alaska Dispatch Sean Parnell called for a special legislative session to start Wednesday, which will focus on oil taxes, an in-state, natural gas pipeline bill, and sex trafficking legislation. The Senate had passed a bill Saturday night that would provide substantial ... See all stories on this topic » Alaska Dispatch

House guts Senate oil tax proposal - Anchorage Daily News Sean Parnell call a special session? Parnell had said he would if the Senate passed an oil tax bill, to give the House time to vet it. But that's before an oil tax overhaul stalled in the Senate bipartisan majority caucus, and the caucus went another ... See all stories on this topic »

House guts Senate oil tax plan, OKs film credit - Fairbanks Daily News-Miner The only remaining question was: Will Gov. Sean Parnell call a special session? Parnell had said he would if the Senate passed an oil tax bill, to give the House time to vet it. But that's before an oil tax overhaul stalled in the Senate bipartisan ... See all stories on this topic »

Stalled oil tax, gasline bills to be heard in new session - Juneau Empire They ended without taking action on oil taxes, one of Parnell's top priorities, or a small natural gas pipeline, one of House Speaker Mike Chenault, R-Nikiski's top priorities. Those two issues and a popular crime bill caught in the last-minute ... See all stories on this topic »

Legislature adjourns; special session up next - Anchorage Daily News By RICHARD MAUER JUNEAU -- After working overtime into early Monday to complete their work, legislators were told by Gov. Sean Parnell that they in fact were not done. He proclaimed a special session starting Wednesday at 1 pm Parnell issued his order ... See all stories on this topic »

Alaska state House tries to kill Senate oil tax reform - Alaska Dispatch Sean Parnell, along with many members of the House, had been calling for. A top official at Armstrong Oil & Gas Inc., one of Alaska's new independent oil producers, urged the House to pass the bill. Parnell, however, didn't support the bill because it ... See all stories on this topic »

ADN/AP.  A federal judge has ordered representatives of Greenpeace USA to stay a kilometer away from Shell Oil's drilling vessels destined for Arctic Ocean waters off Alaska's northern shores.  

("Our Own Worst Enemies" commentary postphoned until next week) 

Alaska Dispatch by Alex DeMarban.  When Gov. Sean Parnell on Wednesday said the clock is ticking on the legislative session and a lot can change in 18 days, he might have been thinking of a possible huge deal in the works that could give leverage to Alaska's oil companies seeking a massive tax break.  An Associated Press story Thursday could lead one to think that the state may be on the cusp of such a deal with Exxon Mobil Corp. and other major oil companies over a massive but long-fallow gas field called Point Thomson. That’s because the Alaska Supreme Court earlier Thursday dismissed the epic lawsuit over Point Thomson at the request of the state and oil companies, according to the AP.

Juneau Empire/AP by Becky Bohrer.  The Alaska Supreme Court on Thursday granted a request by the state and energy companies to drop its review of a case involving disputed leases on the Point Thomson gas fields.   Fairbanks News Miner Editorial by Dermot Cole.  Our legislators are considering plans to back the plan to truck natural gas to Fairbanks from the North Slope, which is the best option on the table for reducing electric rates and lowering the cost of heating.  With fuel oil now priced at more than $4 a gallon, the need for more affordable energy in Interior Alaska is clear.

 ADN/AP by Becky Bohrer.  JUNEAU -- Senate President Gary Stevens (NGP Photo) on Thursday called Gov. Sean Parnell's plan to cut oil taxes a "historic gamble" with Alaskans' money that would give away billions of dollars in revenue to industry on "a wing and a prayer."

Megan Hermann of Senator Lisa Murkowski's (NGP Photo) office reports that the Senator yesterday  invited President Barack Obama to a “milkshake” summit to discuss a new approach to opening the non-wilderness portion of the Arctic National Wildlife Refuge to responsible oil and gas development. 

From Senate Energy Committee commuinications officer, Robert Dillon (NGP Photo) comes this fascinating analysis of Obama's Rose Garden attack on the oil industry yesterday:

Pinocchio Alert!

Drilling Down on the Dry Holes in the President’s Latest Energy Speech

President Obama spoke in the Rose Garden this morning about his desire to increase taxes on the largest American oil and gas producers. We believe there are bipartisan solutions to our nation’s energy challenges, but unfortunately his remarks were again filled with mistaken and misleading claims that will do nothing to reduce prices at the pump. 

Rhetoric:   “…oil companies are also getting billions a year in taxpayer subsidies – a subsidy they’ve enjoyed year after year for the last century.”

Reality:  The industry subsidizes the federal government, not the other way around.  In 2010, the five largest oil companies alone paid $55 billion in local, state, federal, and foreign taxes – not including rents, royalties, fees, and bonus payments.  So while wrong, this statement does reveal the president’s mindset – that not taking even more of a company’s earnings is somehow a “subsidy” and the same as “handing out taxpayer dollars.”  By the White House’s logic, any dollar earned, but not seized by the government is a subsidy.  Remember, too, that in Treasury’s official budget explanation the administration claimed the current tax code somehow results in the “overproduction” of domestic oil, and declared that both “detrimental to long-term energy security” and “inconsistent” with its preferred cap-and-trade program.          

Rhetoric: “We can’t just drill our way out of this problem.  We use more than 20% of the world’s oil, but we only have 2% of the world’s known oil reserves. That means we could drill every drop of American oil tomorrow – but we’d still have to buy oil from other countries to make up that difference.  We’d still have to depend on other countries to meet our energy needs.”

Reality: Yet again. The president has been awarded two Pinocchios by The Washington Post’s Fact Checker for repeatedly making this highly misleading claim.  In truth, we are an oil-rich country, with more than 220 billion barrels of recoverable resources, according to the Energy Information Administration’s latest oil and gas model.  To make it seem like the U.S. is both running out of oil and using it at an unsustainable rate, the president purposely excludes all lands that have not been drilled.  For more on this, see either Washington Post column (here and here), or the op-ed Senator Murkowski published last year.

Rhetoric: “…one analysis shows that every time gas goes up by a penny, these companies usually pocket another $200 million in quarterly profits.”

Reality:   Perhaps then, it’s time to focus on policies that would actually bring prices down. Oil prices have risen because of strengthening demand, supply disruptions in certain parts of the world, and instability in the Middle East.  But prices do not always have to go up – with the right policies in place, prices would also go down, and this talking point would become a moot point.  Instead the effort to increase taxes would reduce investment and, ultimately, supply.  In any case, it’s better to have revenue remain in the U.S., where it can be invested in research and pay down the debt, than in the hands of OPEC.  

Rhetoric: “Under my administration, we’ve opened up millions of acres of federal lands and waters to oil and gas production.” 

Reality:  The Obama administration is operating under a Five-Year OCS plan developed by the Bush administration, and has actually cancelled both onshore leases and offshore lease sales.  As a result, less acreage is available now than when President Obama took office.  He has recently touted a lease sale in the Central Gulf of Mexico that was already scheduled under the current plan.  He’s also trumpeting steps that his administration is taking that may lead to a lease sale off of the East Coast after 2018, even though he cancelled the sale that was already scheduled to take place in 2011.  That’s not “opening” anything.

Rhetoric: “We’ve added enough oil and gas pipeline to circle the Earth and then some.” 

Reality:  Most new pipelines do not require approval from the president – and only some require approval from any federal agency.  That’s probably why the president said “added” instead of “approved.”  Only a few pipelines have required presidential approval in recent years, most notably the Alberta Clipper and Keystone XL.  Rather than remind his audience that he just rejected a pipeline that would require no subsidy, create thousands of jobs, and improve our nation’s energy security, the president has resorted to this questionable statistic to try and deflect blame.    

Rhetoric: “The fact is, we’re producing more oil right now than we have in eight years, and we’re importing less of it too.  For two years in a row, America has bought less oil from other countries than we produce here at home – for the first time in over a decade.  Simply put, American oil is booming.”

Reality:  This is happening in spite of, and not because of, President Obama’s policies.  Production is up on state and private lands but fell significantly on the federal lands under the president’s control last year. Our source? The Energy Information Administration, which found that federal oil production fell 14 percent between 2010 and 2011.   

Rhetoric: “Meanwhile, these companies pay a lower tax rate than most other companies on their investments – partly because we’re giving them billions in tax giveaways every year.”

Reality: We’re not sure how the president came up with this.  According to the American Petroleum Institute, the effective tax rate paid by oil companies was 41.1 percent in 2010 – far higher than the average rate of 26.5 percent paid by other manufacturers.  According to a study cited by the Wall Street Journal, oil development projects also face far higher tax rates than other forms of energy.

Rhetoric: “Investments in wind power and solar power and biofuels; in fuel-efficient cars and trucks and homes and buildings.  That’s the future.  That’s the only way we’ll break this cycle of high gas prices that happens year after year after year.” 

Reality: The president should know that wind and solar power, as well as efficient homes and buildings, have nothing to do with “high gas prices.”  And he should also know that a bipartisan majority in Congress supported both advanced biofuels (through the 36-billion gallon Renewable Fuel Standard) and higher vehicle efficiency (through higher CAFE standards in the 2007 energy bill).  What he may not know is that GAO recently found 94 ‘green building’ programs and nearly 700 renewable energy initiatives scattered throughout the federal government. Republicans are not stridently opposed to renewable energy, but we have asked that policies be paid for and that American oil and gas production be included as part of the solution.     

CWN Energy Action Coalition
Friday, March 30 from 12-1pm
ANGDA located at 411 West 4th Avenue

Commonwealth North's Energy Action Coalition will meet this Friday, March 30 from 12-1 at ANGDA located at 411 West 4th Avenue in the Yellow Sunshine Mall on the lower level across from the Saturday Market parking lot. We will be joined by Kurt Gibson, Alaska Gas Pipeline Project Director, who will give an AGIA update specifically touching on the current status of the project and what movement the State hopes to see made this year.  If you would like to participate via teleconference the call in number will be 907-276-4900.  Commonwealth North has been leading an effort to study, highlight, and identify challenges and opportunities in Alaska's energy future in order to bring informed Alaskans to the table and come to solutions that will benefit all Alaskans and ensure these complex energy issues are understood. If you are interested in the public policy issues facing Alaska you should to be a member of Commonwealth North. Membership information is available on our website at www.commonwealthnorth.org or call Joshua Wilson at 258-9522. 

Today's news and commentary in process....

Dan Fagan's Gas Pipeline Luncheon Meeting

Dan Fagan (NGP Photo) presents a first ever luncheon featuring all the players, decision makers, and experts on Alaska gas. The free for all luncheon/town hall meeting has the sole purpose of determining what's real, true, and plausable for Alaska's vast gas resources.

Alaska Dispatch by Patti Epler.   ...a new oil and gas drilling operation has begun in Cook Inlet and is churning its way toward a potential $25 million boost from the state.

The Spartan Blake 151 jack-up drilling rig, operated by Escopeta Oil Co., arrived on site north of Nikiski on Aug. 10 after a long and controversial journey from the Gulf of Mexico to Alaska.  ... Steve Sutherlin (NGP Photo), an Alaska-based spokesman for the company, said Monday the rig is currently in position over the well and crews are driving casing into place.  Company officials have said Escopeta expects to spend about $30 million to get the rig into place, between mobilization costs and other expenses to satisfy state requirements. ... Escopeta plans to spud the well by the end of the month, coming in just under a deadline set by the Legislature for drilling to begin in order for the company to take advantage of an incentive program passed late last year. Lawmakers offered to pay for as much as 100 percent -- up to $25 million for the first well -- of the cost of the first three wells for the first company to bring a jack-up rig to the area and begin work.  A couple weeks ago, two environmental organizations -- Trustees for Alaska and Cook Inletkeeper -- asked federal regulators to prevent Escopeta from bringing the rig into Cook Inlet because of concerns over the effects on beluga whales.