KTUU Opinion by Senator John Coghill (NGP Photo).
Respectfully, Gov. Bill Walker, with the best of intentions, has proposed “up-sizing” the Alaska Stand Alone Pipeline project, ASAP, as leverage for prospective negotiations with producers in the Alaska liquefied natural gas project, AKLNG.
On its face that “sounds good.” Unfortunately, up-sizing ASAP may result in significant negative consequences.
As we listened to testimony this session, a few themes developed: 1. the State, if Governor Walker continues on his path, may itself become a “risk factor” for alignment with AKLNG, and 2. if the State pursues two projects at once, it may likely undermine both projects. More....
Sen. Murkowski: Iran Oil Could Hurt U.S. Production if Prohibition on Exporting Domestic Crude Oil isn’t Lifted
Restrictions on U.S. Oil Trade Amount to “Domestic Sanctions”
Washington, D.C. – U.S. Sen. Lisa Murkowski, R-Alaska, today drew attention to the potential impact that ending sanctions against Iran could have on U.S. production if the outdated prohibition on exporting domestic crude oil is not also lifted.
“If sanctions on Iran are lifted, Tehran will be able to make money by selling their oil to our friends and may use that money to destabilize our allies,” Murkowski said. “If we lift the current sanctions on Iran while keeping in place our own domestic sanctions on crude oil exports, America’s ability to increase its domestic energy security and that of our allies will suffer.”
Adam Sieminski, administrator of the Energy Information Administration (EIA), testified before the Senate Energy and Natural Resources Committee on Thursday that sanction relief could result in as much as 1 million barrels a day of Iranian oil flooding the global market. Meanwhile, most U.S. oil production is blocked from competing on the world market by regulations leftover from the 1970s.
Murkowski, chairman of the energy committee, stressed the strategic benefits to the United States of rising domestic oil production, including providing flexibility in dealing with trouble spots such as Iran. “It doesn’t make sense that American producers are blocked by U.S. law from selling to the same markets that Iran could reach once the sanctions are lifted,” Murkowski said.
“It is important for us to recognize that if these sanctions on Iran are lifted and we in fact keep our own domestic sanctions in place it effectively ends up being a liability for us,” Murkowski said. “U.S. producers should be allowed to compete directly with Iran in the global market.”
EIA Administrator Sieminski said rising U.S. oil production – currently at 9.2 million barrels a day, its highest level since 1972 – has helped stabilize world markets and keep prices in check.
“The impact of U.S. production goes beyond just the Iranian sanctions issue,” Sieminski said. “Back in 2012 and 2013, there were some really serious interruptions in oil production in countries like Libya, Sudan, Yemen, Syria, and others. They add up to a huge amount of oil – over 2 million barrels a day, at one point approaching 3 million barrels a day. If it hadn’t been for the growth in shale production in the U.S. and production in a few other countries, including Canada, the price of oil would have been a lot higher. Obviously that would have been a benefit to producers but the overall impact on the economy could have been pretty devastating. The growth in production in the U.S. played an important role in stabilizing the global oil markets.”
Murkowski has long called for modernizing U.S. energy and trade policy to end the ban on crude oil exports. In March, she held a hearing looking at the economic and strategic benefits of ending the outdated export prohibition. Murkowski released a report last year on the need to liberalize America’s energy trade policies.
The end of week Consumer Energy Alliance energy links:
The Wall Street Journal: Obama Administration Proposes New Offshore Drilling Rules
FOR IMMEDIATE RELEASE
Governor Walker Secures Promise from Legislative Leadership on Confirmation Votes
April 17, 2015 JUNEAU—Governor Bill Walker today revoked his proclamation to convene the House and Senate into a joint session today at 10 a.m. to vote on his appointments.
“I just wrapped up a meeting with House Speaker Mike Chenault and Senate President Kevin Meyer,” Governor Walker said. “They gave me their word that each of the 89 appointments would be given an up or down vote on Sunday. I trust them.”
Governor Walker said revoking the proclamation is an important step toward a positive relationship with legislative leadership.
FOR IMMEDIATE RELEASE
Governor Walker Vetoes Bill That Ties Alaska’s Hands During Pipeline Negotiations
April 17, 2015 JUNEAU – Governor Bill Walker today vetoed HB 132, making good on a March 2 promise when the bill was introduced.
“This veto in no way means the end of discussions with legislative leadership,” Governor Walker said. “We continue to have multiple meetings to ensure AKLNG is successful and remains the priority while maintaining access to a backup option.”
HB 132 limits the Alaska Gasline Development Corporation (AGDC) from actively working on any gas line project other than the Alaska Liquefied Natural Gas (AKLNG) line. The State of Alaska is a partner in AKLNG along with TransCanada, ExxonMobil, ConocoPhillips and BP.
“We cannot have legislation that ties Alaska’s hands while we are trying to negotiate the best possible gas line deal for Alaskans,” Governor Walker said. “This bill prevents the state from having an adequate backup plan should the AKLNG efforts not proceed.”
Governor Walker also continues to meet with AKLNG partners to advance this project. Governor Walker has said multiple times AKLNG remains his administration’s priority and having a backup option with the ASAP line will not interfere with the AKLNG project.
(Attached: Veto letters to House Speaker & Senate President; Governor’s veto signature)
LEGISLATIVE NEWS RELEASE: New Bills Seek Savings for Electricity Along Railbelt
SB105 and HB187 would create the Railbelt Electric Transmission Authority
JUNEAU-Two bills have been introduced this week to help reduce electricity costs for a majority of Alaskans by creating the Railbelt Electrical Transmission Authority (RETA) to manage electrical transmission along the Railbelt. The Railbelt is Alaska’s largest interconnected electric transmission area and home to the largest population centers: from Fairbanks in the north through the Mat-Su Borough, Anchorage, Seward and Homer in the south.
The House Special Committee on Energy, co-chaired by Representatives Liz Vazquez, R-Anchorage, and Jim Colver, R-Palmer introduced House Bill 187 on Friday, while Senator Lesil McGuire, R-Anchorage, introduced its companion bill, Senate Bill 105, in the Senate on Saturday.
“Historically, we have had three generation and transmission (G&T) utilities along the Railbelt which had regional responsibility and voluntary compliance,” said Senator McGuire. “Now we have five G&T utilities, each with their own regional challenges that cannot be resolved with the current structure. We need to find a way to establish predictable, reliable and affordable economic dispatch across the Railbelt with open access policies for independent power producers. There are tremendous savings possible for the consumer with a unified transmission system.”
“Delivering affordable energy efficiently is absolutely crucial for Alaskan families and for our state’s economic development – and our Railbelt grid needs to be up to the task,” said Representative Liz Vazquez, R-Anchorage. “As a former utility board member, I’ve seen this problem first-hand, and we’ve been working very hard this session to start developing a long-term solution. These bills are the first step in solving the problem and bringing affordable energy efficiently to the Railbelt.”
The legislation proposes the Railbelt Transmission Authority would be a division of the Regulatory Commission of Alaska (RCA) which is currently the agency that oversees and regulates Alaska’s utilities. Several similar concepts have been proposed by various utilities in recent years including the Alaska Railbelt Cooperative Transmission and Electric Company (ARCTEC) and Transco (a Railbelt transmission company). Though ownership structures differ in all three proposals each have similar goals: economic dispatch of electricity across the Railbelt, open and non-discriminatory access, regional planning of future transmission infrastructure and reduced end-user costs.
“It is important to state that this bill is a starting point,” said Representative Colver. “We are starting a conversation that I hope results in a more efficient use of our power generation and transmission systems on the Railbelt. Our goal is to lower the costs of energy to consumers. I look forward to working with the RCA and engaging with all stakeholders.”
The sponsors of the legislation do not plan on advancing the bill during the current legislative session, but plan to hold meetings over the interim to further develop the plan in preparation for next January.
For more information, please contact Josh Walton in Representative Liz Vazquez’s office at 907-465-3892, David Scott in Representative Colver’s office at 907-465-4859, or Jesse Logan in Senator McGuire’s office at 907-465-2995.
Calgary Herald by Stephen Ewart. Record oil production, increasingly complex energy transportation issues and unprecedented public engagement aren’t enough to prevent a nearly 25 per cent cut to the budget and large reduction in staff at the National Energy Board over the next two years.
News of the “operational realities” confronting the NEB — which will mean 73 fewer employees — emerged late last week with release of its 2015-16 Report on Plans and Priorities.
The reason for the drop-off in funding is easily explained.(More)
KTOO. The Senate Finance Committee plans confirmation hearings for Gov. Bill Walker’s appointees to the Alaska Gasline Development Corp. board.
The hearings for Rick Halford, Joe Paskvan and Hugh Short are scheduled for Tuesday (Today).
They would replace three members removed by Walker earlier this year, including former pipeline and oil company executives.
Some lawmakers have raised questions .... (More)
Today's RELEVANT Consumer Energy Alliance energy links:
Bill Martinez Live: Bill Martinez Show April 7, 2015 Michael Whatley (NGP Photo) Interview
Associated Press: Greenpeace activists board drill rig retained by Shell for Arctic offshore drilling
Six Greenpeace activists protesting Arctic offshore drilling on Monday boarded a drill rig as it was transported across the Pacific Ocean toward Seattle, where it will be staged for drilling on Shell leases in Alaska waters. The 400-foot Polar Pioneer, owned by Transocean Ltd., was on board a heavy-lift vessel about 750 miles northwest of Hawaii when the activists approached in inflatable boats and used climbing gear to get on board, Greenpeace spokesman Travis Nichols said.
Real Clear Energy: Keystone XL Traded For Arctic Drilling Rights?
Few debates in energy have been more contentious than Keystone XL (KXL). Environmental groups opposed the pipeline and turned out a grass roots movement that astonished even battle weary Enviros. It also caused serious problems for the industry as their assets became stranded and they were forced to ship crude by rail and barge. It is estimated that this amounted to approximately $17B over the past few years in lost revenue due to public accountability campaigns. But it looks as though the Obama Administration and Big Oil merely traded KXL for Arctic drilling rights.
National Journal: Life After Keystone: The Future of the Climate Movement When the Pipeline Battle Ends
President Obama could reject or approve the controversial Keystone XL pipeline any day, week or month now. And as a decision looms, environmentalists face a daunting question: Can they recreate the kind of mass appeal that Keystone inspires when the pipeline battle ends?
The New York Times: Laurence Tribe Fights Climate Case Against Star Pupil From Harvard, President Obama
Laurence H. Tribe, the highly regarded liberal scholar of constitutional law, still speaks of President Obama as a proud teacher would of a star student. “He was one of the most amazing research assistants I’ve ever had,” Mr. Tribe said in a recent interview. Mr. Obama worked for him at Harvard Law School, where Mr. Tribe has taught for four decades.
CBS News: Is oil and gas to blame for Okla. earthquakes?
Kim Hatfield, with the Oklahoma Independent Petroleum Association, says the science to prove a definitive link simply isn't there. "Coincidence is not correlation," said Hatfield. "This area has been seismically active over eons and the fact that this is unprecedented in our experience doesn't necessarily mean it hasn't happened before."
The Independent: A disaster waiting to happen in Oklahoma?
Until very recently earthquakes were a rare occurrence in Oklahoma. Not any more. In 2008, the U.S. Geological Survey recorded just two earthquakes above 3.0 on the Richter Scale in Oklahoma. In 2014 it recorded 585, including 15 that measured over 4.0. The state is on target to break through 800 in 2015, taking California’s crown as the most active seismic state in the country.
Wall Street Journal: Fewer oil trains ply America’s rails
The growth in oil-train shipments fueled by the U.S. energy boom has stalled in recent months, dampened by safety problems and low crude prices.
Associated Press: Oil train cars need urgent upgrades
A spokesman for the American Petroleum Institute said the organization supports a "science-based" approach to safety that includes track maintenance and repairs in addition to any tank car upgrades.
Bloomberg: Safety Board Urges Aggressive Timetable to Replace Oil Tank Cars
U.S. railroad cars used to haul oil should be upgraded or replaced within five years with sturdier models better able to prevent explosions after derailments, federal safety investigators said in a proposal made public Monday.
Houston Chronicle: Oil's jolt means jingle for summer travelers
The global crude collapse that has jolted the oil industry will usher in the least expensive driving season in years, with pump prices expected to hover near $2 per gallon at some stations. Peak-season gasoline hasn’t been that low since 2009 during the economic downturn.
Statesman Journal: Oregon debates HF moratorium
A legislative committee will hear testimony Tuesday on a bill that would put a 10-year moratorium on hydraulic fracturing for oil and gas exploration and production in the state. Proponents tout the economic benefits brought to communities with wells and the energy independence they afford.
The Motley Fool: The Biggest Threat Facing Offshore Drillers Keeps Getting Worse
Few industries have been so negatively affected by the oil crash as offshore drillers. In the past I've attempted to find drillers whose contract backlogs were relatively insulated from the downturn. To this effect I recommended SeaDrill Partners, because just 20% of its rigs had contracts expiring through 2016. Now however, news of contract cancellations from BP mean that the risk of contract cancellations -- which I believe to be the biggest risk to the industry -- is rising and in a most alarming way. Find out why and what it might mean for your portfolio.
The Hill: Hope for bipartisan action on energy
Hold onto your hats, there just may be bipartisan legislation on the horizon. And who would have guessed that after the hyper-partisan Keystone XL showdown, the topic to come together on would be of all things, energy? First, in the wee hours of March 27, after the contentious budget resolution was passed at 3 a.m., Sens. Rob Portman (R-Ohio) and Jeanne Shaheen (D-N.H.) appeared on a nearly empty Senate floor and quietly passed a stripped down version of their energy efficiency bill with a unanimous vote of two.
Fuel Fix: U.S. refiners can bulk up to consume more domestic oil
The United States can boost its consumption of the light oil increasingly flowing out of domestic wells today, a new government report finds, even as it warns that potential changes to the nation’s longstanding ban on raw crude exports risk undermining those investments.
Fuel Fix: Tensions ignite on East Coast as White House weighs Atlantic drilling
The prospect of a new generation of Atlantic drilling is stirring a heated debate up and down the East Coast, as fierce opponents warn that offshore oil development could jeopardize marine life and tourism-based economies. Oil industry leaders, meanwhile, are touting the potential jobs and economic gains that could flow along with crude from wells drilled at least 50 miles off the shores of Virginia, Georgia and the Carolinas. They envision a new frontier of Atlantic production that could emerge as a profitable replacement to shale oil extraction or continued pumping from the heavily tapped Gulf of Mexico.
Huffington Post: Illinois poll shows strong opposition to HF
Nearly half of Illinois voters oppose fracking, according to a new poll by the Simon Institute. The statewide poll reveals 48.6 percent oppose fracking while only 31.8 percent believe it should be encouraged, even if there are economic benefits. Opponents outnumber supporters in all regions of the state, including downstate where fracking is promoted as a jobs plan.
Philadelphia Inquirer: Gas tax can’t ignore prices
It's Wolf's misfortune to be attempting to address this failure in the midst of a gas glut. Given that the regional natural-gas price has plummeted by more than half over the past year, legislators and others have rightly questioned whether the governor's projected $1 billion a year in revenue from the levy is realistic.
Lancaster Online: Restoring aging county-owned bridges tied to impact fee
The Lancaster County commissioners are addressing the problem by turning to impact fee revenue from natural gas drillers. As of February, the county had $2.2 million available, said county engineer Scott Russell of Rettew Associates. The commissioners are counting on continuing impact fee revenue to help fund the replacement or repair of nearly all 44 county-owned concrete or steel bridges over the next five years.
Power Source: EPA analysis details water usage in HF
The EPA’s report shows that many drillers in Pennsylvania and Ohio are reusing water more often than their counterparts in the West. More than 70 percent of disclosures that identified water sources in Ohio and Pennsylvania identified some amount of reused and associated types of water in base fluids.
The Post and Courier: Seismic testing permits go to public hearing
Nine companies so far want to use seismic guns to search for oil and natural gas off the South Carolina coast. The federal permits for them are up for public hearingWednesday. The hearing comes amid a swell of opposition that has been mounting since federal regulators last year gave a preliminary nod to the permits, opening an evaluation period by federal and state agencies.
Baltimore Sun: HF moratorium passes senate
By a 45-2 vote, senators sent the measure to the House, which has passed a version of the bill that environmental advocates believe is stronger. The House bill calls for a three-year moratorium and further study of the health and economic development impact of the practice. The Senate bill does not require a study.
Associated Press: ‘Fight Club’ actor speaks out against HF
In films, he’s played poker with Matt Damon and fought with Brad Pitt. Now actor Edward Norton is lending his voice to the anti-fracking campaign in Maryland.
San Antonio Business Journal: Series of earthquakes shakes Permian Basin in recent weeks
A series of three earthquakes hit the Permian Basin along the oil and natural gas-rich lands along the Pecos and Reeves county lines over the past two weeks, according to data from the U.S. Geological Survey.
Santa Fe New Mexican: NM oil production holds steady
Newly released numbers indicate that the pace of oil production in New Mexico did not slow in January. According to figures from the New Mexico Energy, Minerals and Natural Resources Department, oil-and-gas companies doing business in the state in January reported a production level of almost 13.6 million barrels of oil.
CBC News: HF criticism spreads, even in Alberta and Texas
The Alberta Energy Regulator, which is responsible for enforcing industry policies, rejects claims that fracking affects human or animal health. The AER says hydraulic fracturing, in use in Alberta since the 1950s, is one of several well-established methods of recovering oil and gas.
AJOC by Tim Bradner With about two weeks left on the clock, the 2015 session of the Legislature seems set to end with a big bang. A collision is shaping up between legislators and Gov. Bill Walker (NGP Photo) over the governor’s vision of a large state-led gas pipeline.
Notes from the road: We have little time to write while traveling (Today in L.A. on the way to Anchorage). We do note that as the Alaska legislative session comes to an end our greatest concerns are:
- Administration interference with Ak-LNG project by even talking about government involvement in a competing project; and
- Administration support for a poorly thought out, government sponsored Interior Energy Project; and
- Administration not using bully pulpit to support adequate spending cuts (i.e. the State Chamber calls them 'cosmetic') to create a sustainable government going forward...along with legislative proclivity to not cut spending due to last day 'trading' of special interest projects; and
- Legislative initiative to create requirements for Regulatory Commission of Alaska to approve expensive, non-economically feasible alternative energy projects, subsidized by utility ratepayers (HB 78); and
- In wake of low oil prices, lack of will to cut government spending, hostility of governor toward industry/legislature/Ak-LNG project, we anticipate the Governor working with certain constituencies to increase oil taxes within the next year or two. Hoping this to be incorrect but fearing it isn't, we could foresee an "economic death spiral" wherein lack of spending discipline begets higher oil taxes, which begets lower oil industry capital spending, begetting lower production, which begets even lower state revenue, resulting in higher oil taxes, and so forth.
- Faced with such challenges, we believe Alaska's bright future can only unfold with leaders possessing wisdom, a spiritual connection with our creator and a commitment to become honest, effective communicators.
We want to work with our new Governor to progress this great State forward, especially knowing
The two legislators above created the Alaska Gasline Development Corporation (AGDC) concept as an insurance policy for transporting Alaska North Slope (ANS) gas to citizens and to an export facility.
The current governor - who opposed the AGDC/ASAP gasline concept before he supported it .... more coming....
...en route from South America to a stop in Mexico City, then two days in LA, then home to Anchorage.
We apologize if the posts are a little more infrequent than usual.
the difficult times before us. We respect that he is our Governor, duly elected by Alaskans, and we appreciate the respectful acknowledgement that we, too, are representatives duly elected by Alaskans. We all have Alaskans’ best interests at heart, and want a future of prosperity and opportunity in our State.
While we believe we share many of the same goals and values as the Governor, we differ as to the approach to natural gas development that will deliver the greatest benefits to Alaskans.
Let us be very clear about what we want: We want to commercialize natural gas for the highest value possible, for the Permanent Fund and for the Treasury, so that every Alaskan may share in the wealth of our resources. We want affordable natural gas to flow to our communities that still suffer under the fluctuating prices of fuel oil. And we want a project that includes the necessary elements — including participation of the North Slope producers and the State — for real success, as soon as responsible project engineering and -permitting allows.
The Legislature found that project with the Alaska LNG Project, in which the state is a 25 percent owner.
But we also preserved our ability to pursue a different project, if the Alaska LNG Project does not progress into the next development stage. We have that in the 36-inch line that the Alaska Gasline Development Corporation has developed. It is in prime position to alter if necessary — and if the Alaska LNG Project does not prove viable, we’ll know what adaptations we must make in order to offer a viable project. To increase its size now, to an arbitrary, unsupported volume, is not a prudent use of funds. That does not provide us a viable alternative should Alaska LNG not progress.
The Governor has indicated he sees success in a different framework. Unfortunately, to date, neither he nor his administration have shared those details with us and with the Alaska public. He submitted a letter to the Senate Resources Committee on Friday with some explanations for his alternative approach, and we appreciate that. But Alaskans need to know details. What about the LNG component — who owns that? And the pipeline — is the state to shoulder 100 percent of the risk and cost? Who will ship gas, if one or more of the producers remain engaged in Alaska LNG? If all 3 producers are not partners, how will the state determine its gas share — and is it enough to support our level of equity ownership? We want to better understand the terms and structure of his proposal in order to conduct the rigorous vetting and analysis that will allow us to make an informed, responsible decision on a forward course.
The government process is about thorough, open review of ideas, in the form of legislation, that leads to policies. We hold hearings; explore details; call for experts to analyze and model impacts; vet each and every aspect; hear from the public; undertake legal review; and, finally, debate on whether a policy should be adopted.
It is how Alaskans came to be owners of the Alaska LNG Project; through a deliberate, well-investigated decision.
Certainly, we would have preferred not to have introduced legislation — House Bill 132 — to temporarily restrict an alternative, conflicting approach and to keep Alaska LNG on track. However, we were compelled to, out of grave concern that the Administration’s approach would threaten the viability of the tremendous opportunity before Alaska in the Alaska LNG Project. A project that is on time, on budget, and on track to success. And unfortunately, the few details offered by the Governor’s letter reaffirm that it is more imperative than ever to pass HB 132, as his approach clearly creates a competing alternative that threatens the state’s investment in and the success of Alaska LNG.
The details of any project are crucial. At stake are the value of our royalty gas, which feeds the Permanent Fund; our state share in production, property and income taxes that support the treasury; the availability and cost of gas for Alaskans; and future North Slope resource development. Variations on the SB 138 framework can have significant consequences. These details were not part of the Governor’s letter — and we must have these details in order to make a deliberative decision on natural gas policy, and the responsible fiscal choices our constituents demand.
We want to work together on a path forward that is responsible, allows for public understanding and input, and does not recklessly waste state money pursuing options that lack a proven, commercial foundation. Competing with ourselves, while confusing our partners and the markets, is not in our best interests.
Speaker of the House Mike Chenault represents Niksiki and Rep. Mike Hawker represents Anchorage in the Alaska House of Representatives.