Interstate Gas

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.

Breaking news.  A few minutes ago, the Alaska Gas Pipeline Federal Coordinator, Larry Persily (NGP File Photo), said he thinks the (AGIA/TransCanada) project is "very viable…," but to get someone to sign shipping commitments, "you're going to have to have a fiscal deal between the state and producers."  Check for more complete report tomorrow morning.  -dh

More links to yesterday's hearings: KTVA, Channel 11.

Beginning Comment.  Question regarding legislative hearings: Are Alaska's legislative leaders keeping their collective eye on the ball: filling the oil pipeline to sustain Alaska's economy?  If so, should we be hearing more support for federal approval of Shell's 2012 Alaska OCS program, more support for federal approval of ConocoPhillips' CD-5 project, more opposition to the Fish and Wildlife Service plans to lock up ANWR's designated 1002, oil and gas production area, more support for production tax reform?   After all, if TAPS shuts down, we won't get a gas pipeline and due to a 90% drop in state revenue and resulting outmigration, we won't need much natural gas to satisfy a teenie in-state demand.  -dh

Gas Pipeline Comment.  At today's legislative hearing the Alaska Gas Pipeline  Federal Inspector will provide lawmakers with his view of the status of an Alaska Gas Pipeline Project (Watch streaming video, 9 a.m. AST).  Yesterday, we gave an immediate link to Yereth Rosen's breaking news article revealing TransCanada Pipeline's lack of shipper commitments.  Today, the Anchorage Daily News' Richard Mauer quotes Alaska Oil and Gas Conservation Commissioner, Cathy Foerster (NGP File Photo), as saying that, "...with oil a far more valuable commodity than gas, it makes sense to use gas to produce oil rather than sell the gas and leave oil in the ground.  That factor begins to change in the future as oil reserves dwindle, she said. The oil fields wouldn't be hurt by the 500 million cubic feet a day that would be drawn by the 24-inch instate line, she said, but the 4.5 billion cubic feet taken daily by the larger line is another matter.  But that's not a reason to shelve the project. The North Slope likely has huge natural gas fields that no one has bothered to explore because there's no market. Put in a pipeline and that would change -- and those "dry" fields wouldn't limit oil production, she said."  We believe Foerster's logic, unassailable as it is, will be used by intrastate gas pipeline advocates to justify state ownership of a local use pipeline.  -dh

Oil Tax Comment.  

Let's Don't Use Alaska's Constitution To Justify Selfishness

by

Dave Harbour

An Anchorage Daily News Editorial writer this morning meant well and wisely said, "The state's job is to get the most value it can from its resource for the benefit of all Alaskans.  That's not a matter of discretion. That's in the state constitution."  Well, yes it is but....   But after we define who "Alaskans" are, we might reach a different conclusion than if we just assume the constitution grants this generation the right and obligation to unleash a slash and burn policy only benefitting current Alaskans.  

If we want to extract every drop of blood out of a dying turnip for tonight's family dinner, we're not looking for ways of sustaining that turnip for the kids' families.  If we do want to sustain turnip output for future generations, we'll eat a little less tonight and plant a little more in the morning.  

Put another way, we agree with the editorial writer if our job is to extract from the Alaska North Slope (ANS) every single dollar possible for this generation to spend.  But...if, as I have come to believe, our constitution demands we produce maximum natural resource benefit for this AND future Alaska generations, then we must undertake policies that weigh more heavily in favor of sustaining development for them, than for satisfying this generation's demands for cash now to spend now on me, now.

Put a final way, don't you agree that we should not let Alaska's constitution help us rationalize tax and regulatory policies that have the effect of taking sustained revenue from our kids to satisfy our greed today?  Some might still argue in favor of extracting the maximum benefit of natural resource revenue for this generation at the expense of the next.  To them, I would gently offer that such a philosophy would also justify spending the kid's college money and every future PFD check on things that I want for me to satisfy my immediate wants right now.

Come to think of it, I fear the growth of that "maximum benefit for me, now" mentality.  It is very self centered.  It ignores and disrespects the idea that one generation, through sacrifice, assures a better life for the next.  Ultimately, it is an argument for selfishness, for not giving, for not saving, for not loving, for not defending a country with one's life.  

Oh Canada - significant developments in Canadian energy

 

TransCanada has no firm commitments to ship gas on its proposed $40 billion gas pipeline project according to executive, Tony Palmer (NGP Photo).   See Reuters Story breaking now.  (Story by Yereth Rosen, Jeffrey Jones and Rob Wilson)  Watch the hearings:  http://www.alaskalegislature.tv/ 

 

TODAY, the Senate Resource Committee Examines Status of TransCanada's AGIA Gasline Project (See above report) and Of Cook Inlet Natural Gas Reserves, Exploration and Development Projects.  Go Here For Information.  Below Is Yesterday's Report On the Alaska Intrastate Gas Pipeline Project--And Our Own Editorial Comments.  (Mike Prax comments in the News Miner: We would be foolish to even consider abandoning two years of effort and risk losing hundreds of millions of dollars on a project that is proceeding according to the agreed-upon plan, only to start over on the same project that we had to admit was uneconomical.)

Alaska Dispatch by Patti Epler.  The state and Exxon Mobil have reached an agreement in the years-old lawsuit over the Point Thomson oil and gas field on the North Slope, a major hurdle that needed to be crossed before a major gas pipeline could be economically viable.

ADN by Richard Mauer.    ...  Dan Fauske (NGP Photo-R), the head of the state-owned corporation, tried with his staff to answer the questions ....  "I appreciate the enthusiasm and the need to answer the questions, but you're not going to answer every question in one year," he said.  ...  In a business flush with four-letter acronyms, the state corporation headed by Fauske was chartered by the Legislature to examine the Alaska Stand-Alone Gas Pipeline, or ASAP, once called the bullet line.  ... Lest anyone think that the 24-inch line is a small-scale project, Fauske's lieutenant, project manager Dave Haugen (NGP Photo), sought to correct the record.  "This project is spoken flippantly, occasionally, as being the 'little-inch guys,' or a minor project," Haugen told the committee. "This is a huge project...."

ADN by Sean Cockerham.  Gov. Sean Parnell (NGP Photo-l) is getting ready to renew his push to roll back Alaska's oil tax while supporters of the tax are pointing to news of increased exploration and jobs on the North Slope.   The latest report getting attention from lawmakers came from Petroleum News. It reported in an Aug. 14 article that "operators on the North Slope and nearshore Beaufort Sea are preparing for what promises to be one of the busiest exploration seasons since 1969... Fairbanks Democratic Sen. Joe Paskvan (NGP Photo) sent a statement to the press soon after the Petroleum News article first appeared. Paskvan is among the skeptics in the state Senate who blocked Parnell's tax cut.  "It appears that Alaska's tax credits under its production tax system are working to promote capital expenditures, including new exploration wells. Good news for the industry and the state, which relies upon the industry for revenues to its treasury. Exploration should mean increased oil production and increased throughput down the pipeline," he said.   *    News Miner by Rod Boyce.  Parnell, in an email from his spokeswoman, responded Saturday to Paskvan’s comments and to the Petroleum News story.  ...  Sen. Joe Paskvan, D-Fairbanks, put out a news release last week praising a recent story in Petroleum News that said 2012 could be one of the busiest in years for drilling activity on the North Slope.    

Alaska State Senate Resouces Meeting Today: Alaska Stand Alone Gas Pipeline

Fairbanks News Miner Editorial re: Feds Want To Lock Up ANWR's 1002 Area.  Our Comment:  We believe the Alaska National Interest Lands Conservation Act (ANILCA) which created the 1002 area as an oil and gas province violated the Alaska Constititution and Statehood Act.  The wild and distructive actions of the U.S. Fish and Wildlife Service and its Salazar/Obama masters will contribute to the dismantlement of the US economy and put one more nail into the coffin of Alaska's economy--and a 50-year statehood experiment.  ANWR, NPR-A and OCS are three of the four possibilities for sustaining Alaska's economic lifeline, the Trans Alaska Pipeline System (TAPS)...and the Obama-Salazar-EnviroExtremist cabal has blocked energy development in all of those areas.  Alaska's economic survival is truly at stake and, ironically, the feds will not protect any wildlife values by expanding ANWR wilderness designations, since exploration would occur in the winter months when migrating species are absent.  Alaskans should prepare for upcoming hearings and here's how.   (See our 5-11-10 ANWR Hearing Report)  -dh

Note from reader: Big THANK YOU for ---as ever---keeping Alaskans up to date on ANWR and the new public comment opportunities.  Keep up the good work!  -AVR

NWT's Bob Mcleod (NGP Photo) urges federal support for Mackenzie Valley Natural Gas Pipeline Project.

Alaska Gas Pipeline Report and Commentary

(See Patti Eppler's thorough gas pipeline status report in today's Alaska Dispatch)

by

Dave Harbour

Friday, the Federal Coordinator of the Alaska Gas Pipeline project to be, told members of Commonwealth North that the Alaska Gasline Inducement Act (AGIA), designed to provide a $500 million incentive, was never designed to produce a pipeline.  The Coordinator, Larry Persily (NGP photo) said citizens misunderstood or were misled if they believed incentive legislation could force a pipeline into existence, "AGIA won't get you a pipeline," he said, "AGIA gets you permits...."

Your author raised the issue of fiscal certainty for those who might desire to invest in the $40 billion project.  Persily agreed that the investors could not move forward without fiscal certainty.  Your author asked how FERC could issue a certificate if project proponents lacked a financing plan which would require fiscal certainty.  He responded that the 2004 Act does not require FERC to evaluate a financing plan but to meet an expedited time deadline.  The Act presumes the project to be in the public interest.  A review of the state's analysis of the 2004 act, produces an understanding that the FERC is under heavy obligation to produce project approvals within 20 months of the filing of a "complete" application, assuming lack of a financing plan does not make the application "incomplete" (See Persily's PowerPoint slides here).  (See Bill McAllister's Channel 11 Television report here.  KTVA Photo-Left).  Persily added that the Federal Coordinator has the authority to null conditions imposed by any permitting agency which may seem to the Coordinator excessive.

Persily pointed out that the FERC is moving ahead to determine the perameters of an anticipated project Environmental Impact Statement (EIS).  His website, www.arcticgas.gov, describes a scoping process that was triggered by an August 5 FERC notice in the Federal Register.

Your author made reference in the meeting to the 6% annual decline in production and the Trans Alaska Pipeline System (TAPS) CEO's concern about the potential for an unanticipated winter pipeline shutdown.  "Were that to happen and the pipeline to permanently cease operations would the producers, in your opinion, operate the North Slope production area just to produce gas for a gas pipeline?"  Persily noted that while an operating gas line will "do as much as anything to get more oil into TAPS...you need the oil to carry the fixed cost of operating the North Slope fields."  He observed that it is expensive to operate Arctic oil fields and that, "gas will not do it alone."

Finally, Persily addressed citizen expectations.   He said it is unreasonable for, "Alaskans to expect to get filthy, stinking rich off of a natural gas pipeline.  But, with reasonable expectations," he said, "jobs, revenue, and an instate gas spur line can be expected."

Event Photos:

Bill Walker

Brian Davies

Jim Posey

Arden Page

CHECK OUT ENERGY DAY, OCTOBER 15, 2011 -- CELEBRATE AMERICAN ENERGY: A GOOD IDEA FOR ALL OF NORTH AMERICA!

We have preordered the new book by respected Alaska Dispatch Co-Founders, Tony Hopfinger and Amanda Coyne: Crude Awakening: Money, Mavericks, and Mayhem in Alaska

Federal Gas Pipeline Coordinator, Larry Persily (NGP Photo-r) will address Commonwealth North today: noon, ANGDA Conference Room, 411 West 4th Avenue, Yellow Sunshine Mall, Anchorage.  (More from ADN where Persily formerly served with distinction as a journalist and editor.  -dh)

Alaska State Legislature:

(Comment.  We hear from a reliable source that at a recent conference in San Antonio of the National Council of State Legislators a Member of our own Alaska State House of Representatives spoke against passage of a resolution supporting development of ANWR.  We herewith offer any legislator an opportunity to comment and correct the record.  -dh)

1. Dan Fauske (NGP Photo-above) briefing, Anchorage LIO, Monday, August 15, Alaska Stand Alone Gas Pipeline Project Plan.
2. Tony Palmer (NGP Photo-r) briefing, Anchorage LIO, Tuesday, August 16, AGIA gasline project, along with briefings on Cook Inlet Natural Gas Reserves.
3. Larry Persily briefing, Anchorage LIO, Wednesday, August 17, status of Alaska gas pipeline project federal coordination.
4. Our Commentary: To keep the 2/3 empty Trans Alaska Pipeline System (TAPS) operating, new oil reserves are needed.  New oil can come from federal sources like ANWR, OCS, NPR-A -- which the Obama Administration currently opposes.  New oil reserves could also come from state lands --  were the Legislature to act to improve the investment climate.  If certain legislators oppose ANWR and investment climate improvement, TAPS cannot be sustained.  If TAPS is not sustained, the state operating budget (almost 90% dependent on oil) and the entire state economy (over 1/3 dependent on oil) will fail.  If TAPS is dismantled, removed and the right of way restored (DR&R, as required by Alaska law) and Alaska returns to a pre-pipeline population, no intrastate gas pipeline from Prudhoe Bay will be required.  No big hydroelectric project will be needed.  Most state services will be dramatically curtailed.  The Permanent Fund will be dissipated.  The legislature will be managing a fiscal crisis never experienced by our citizens.  Is this logic not indisputable?   If it is, why don't legislators act of one mind to improve the state investment climate and demand federal support for robust oil and gas development on federal lands?  -dh

Fairbanks News Miner by Matt Buxton.  The Alaska Gasline Port Authority board of directors voted unanimously this week to pass a resolution calling for the removal of a ballot proposition directing the agency to pursue trucking natural gas into the Fairbanks area.  The decision, made Wednesday, comes in advance of a special meeting of the Fairbanks North Star Borough Assembly next week, where members will introduce and discuss an ordinance to remove Proposition 1 from the Oct. 4 ballot. ... During discussion, board member Merrick Peirce, along with many other members, applauded the private partnership.  “What’s formed is a deal that’s better than we’ve could have ever envisioned,” he said. “This opens the door for the North Pole distribution area and that’d be great.”   As the port authority abandons a plan to truck natural gas, something it has explored for about two years, it will resume its pursuit of a natural gas pipeline to connect Prudhoe Bay, Fairbanks and Valdez.   The renewed focus is strengthened by a late-July analysis, from consultant Wood MacKenzie, showing a line to Valdez would be profitable and could bring the state of Alaska $65 billion over 30 years.

On December 24, 2001 we wrote an editorial satirizing the human greed and mismanagement that was interfering with gas pipeline project advancement.