|Related Photo Cutline, Journal of Commerce, by Tim Bradner. Alaska Gasline Development Corp. President Dan Fauske (NGP Photo) said the change in the Alaska Stand Alone Pipeline project to increase the capacity to a 36-inch diameter and use high-strength steel could allow up to 2.6 billion cubic feet per day to be shipped. That improves the economics of the project compared to previous restrictions that limited it to no more than 500 million cubic feet per day. (Bradner's is one of the most informative, thorough, readable gas pipeline updates we have seen. Kudos! -dh)|
Journal of Commerce by Tim Bradner. A year ago there was a lot of complaining about state money being wasted on the Alaska Stand Alone Pipeline project, the little brother to the big North Slope gas pipeline project. ... But a funny thing has happened. The project has morphed. Little Brother pipeline isn’t little anymore. It has grown up.
Video: Today, U.S. Senator John Barrasso discussed the LNG Permitting Certainty and Transparency Act (S. 33), that will speed up the approval process for exports of liquefied natural gas (LNG) to countries which do not have free trade agreements with the United States. Additionally, the U.S. Chamber of Commerce and the American Petroleum Institute issued letters of support for S. 33 in advance of today’s hearing.
|Calgary Herald by Dan Healing. A consortium including Calgary-based midstream and energy firm Altagas Ltd. has taken possession of the proposed Douglas Channel LNG project through a plan of arrangement that ends a Companies’ Creditors Arrangement Act process. (Alaskans will note the consortium includes investors from Asian and European market areas. -dh)|
Shell Gears Up For 2015 Chukchi Exploration Season!
World Energy News by Joseph Keefe. Oil major Shell wants to revive its Arctic oil drilling programme this year after a near two-year suspension, angering environmentalists who say the risk of an oil spill is too high.
Robert Dillon (NGP Photo) of the Senate Energy and Natural Resources Committee reports this afternoon that, "Shell CEO Ben van Beurden today told a conference in London that Shell would drill in Alaska’s Chukchi Sea this summer.
"Shell has invested nearly $6 billion in leases and exploration in the Chukchi and Beaufort seas off Alaska’s northern coast," Dillon said. "The Arctic holds 13 percent of the world’s undiscovered oil reserves, and 30 percent of undiscovered natural gas deposits, so the potential for Alaska is immense. Arctic waters off Alaska’s northern coast contain an estimated 30 billion barrels of oil and 221 trillion cubic feet of natural gas, according to the federal government."
Dillon said the resources are "critically important to the nation, state and continued operations of the Trans Alaska Pipeline System (TAPS)" in terms of domestic oil supply and jobs.
Shell aims to restart Arctic drilling this year – CEO (Reuters)
LONDON Thu Jan 29, 2015 5:25am EST
Jan 29 (Reuters) - Royal Dutch Shell is planning to restart oil drilling in the Arctic this year, Chief Executive Ben van Beurden said on Thursday.
The oil company suspended its Alaskan drilling programme in 2014 to rein in costs and in the face of fierce environmental opposition.
Van Beurden said he aimed to restart the campaign this year, pending approval of the necessary permits and the conclusion of various legal challenges.
"Yes, we are minded to drill in the Chukchi Sea," he told reporters at a conference in London.
|This afternoon, Alaska's newest US Senator spoke out on yesterday's Presidential Executive Order.|
On Thursday — just three weeks into the new year — the U.S. Senate chamber is set to surpass last year’s total of 15 amendment votes, thanks to a flurry of voting centered almost entirely on the Keystone XL pipeline. Read more....
|What happened to Alaska? Saudi....|
CBC. Irving Oil Ltd. is facing more questions about its use of a pipeline that was built on the property designated for the Canaport LNG facility. Saint John struck a 25-year property tax deal in 2005 that was intended to encourage the development of the Canaport LNG facility. The deal slashed the property tax bill for the LNG terminal ... Read more.
Yesterday, we were interviewed on the Dan Fagan - Glen Biegel (NGP Photo) Radio Program. On your right is the podcast if you want to watch the action. (Glen yawns from time to time, gets up to stretch, etc.) He introduces me and begins his monolog on energy at 2:21:50 (That's two hours, twenty-one minutes and fifty seconds into the program.) Then the interview actually starts at 2:29:35, with a break at 2:59:10 and the conclusion at 2:41:40. Biegel is a gifted air personality. He does his homework, has a prodigious memory and can think and speak circles around a fellow like me. But I do hope our readers get a little entertainment if not information out of that experience. And, ya gotta hear the whacky music/sound effects played during the breaks; sounds like little brass instruments singing, "Have to be happy!" And, you will be, just as I was. (Link)
In our opinion this is another end run around Congress but our Senior Senator, while somewhat critical, seems unaware of true ramifications, the ultimate strategy of an overreaching White House. This is especially dangerous in view of her powerful position as Chair of a key, Senate jurisdictional committee. WE URGE YOU TO REVIEW OUR CONCERNS HERE. -dh
KTUU by Austin Baird. The White House on Wednesday issued an executive order described as an attempt to coordinate federal Arctic-related activities, and to promote collaboration between other groups including local and state governments, academia and the private sector.
“The Arctic region provides critical ecological, cultural, and economic services to our nation,” Tamara Dickinson and Patricia Falcone wrote for the White House’s Office of Science and Technology Policy. “But we know based on decades of rigorous scientific research that climate change is causing the Alaskan Arctic to warm twice as rapidly as the rest of the United States – and that climate change will continue to transform the Arctic.”
Sen. Lisa Murkowski, R-Alaska, who chairs the Energy and Natural Resources Committee, called the announcement “a good step forward” but criticized the president’s overall approach to Arctic policy.
“Once again, the president remains focused on climate change,” she wrote in a release. ” I agree that climate change is an issue facing our nation and my state, but for President Obama and many of his ideological allies, the plan for the Arctic boils down to two words: Hands Off.”
Alaska's Senior U.S. Senator, Lisa Murkowski (NGP Photo) has long advocated for relaxation of the ban on exporting domestically produced oil--created during the so called Arab Oil Embargo of the 1970s. Reader Eric Dompling kindly refers us to an important analysis of the benefits to U.S. consumers of exporting our resources in an article written by Tessa Sandstrom, "America’s Once-in-a-Generation Opportunity Starts With Exports". An era of low oil prices is the perfect time to lift the ban, for having access to world markets can assists U.S. producers in being able to compete for sales in a bigger marketplace--and keep supporting jobs, federal taxes, state taxes, local taxes and an abundance of oil and gas for our own citizens. -dh
Business Insider by Rob Wile.
You may have noticed we haven't heard much talk about opening the Alaska National Wildlife Refuge recently.
For decades, America debated whether to open up federally protected land that is said to contain lots and lots of oil (though exact estimates are plagued by uncertainty).
What happened? "Saudi" America.
ADN by Alex DeMarban. ...in Washington, D.C., an aide to Sen. Lisa Murkowski said that as the new chair of the Senate Energy and Natural Resources Committee, Murkowski is strategizing on the best way to convince Congress to open the 1.5-million-acre coastal stretch of the refuge, set aside by Congress in 1980 for hydrocarbon evaluation.
Fuel Fix by Ryan Holeywell. Halliburton officials say they’re bracing for a tough year as falling oil prices are prompting their customers to slash their budgets.
As oil prices have fallen more than 50 percent from their summer peaks, Halliburton’s customers have cut their budgets by an average of 25 percent to 30 percent, putting pressure on the oil field services company to reduce its rates, company officials said Tuesday.
“The long-term fundamentals of our business are still strong,” Halliburton president Jeff Miller said on.... Read more.
* * *
Our concerns about yesterday's Executive Order On the Arctic are here, for the record, and we hope Members of Congress and Alaska's Administration are paying attention as the temperature in the pot containing the complacent frog, increases.
We can closely associate our own thinking with a statement released this afternoon by Alaska's new U.S. Senator, Dan Sullivan (NGP photo):
“While I am encouraged to see that the federal government is taking steps to coordinate itself in the Arctic arena – I see this as merely a piece of paper,” said Sullivan. “With regard to the Arctic, the State of Alaska is not just another stakeholder as this executive order indicates, we are the other sovereign. Indeed, the sovereign that makes the U.S. an Arctic nation.”
“What is troubling about this executive order is the White House's continual focus on large, abstract concepts such as climate change. But what is most troubling is that this executive order fails to acknowledge the need to develop our Arctic resources in a responsible manner – which is such a critical issue for Alaska’s future.”
The White House
Office of the Press Secretary
- - - - - - -
ENHANCING COORDINATION OF NATIONAL EFFORTS IN THE ARCTIC
By the authority vested in me as President by the Constitution and the laws of the United States of America, and to prepare the Nation for a changing Arctic and enhance coordination of national efforts in the Arctic, it is hereby ordered as follows:
Section 1. Policy. The Arctic has critical long-term strategic, ecological, cultural, and economic value, and it is imperative that we continue to protect our national interests in the region, which include: national defense; sovereign rights and responsibilities; maritime safety; energy and economic benefits; environmental stewardship; promotion of science and research; and preservation of the rights, freedoms, and uses of the sea as reflected in international law.
Over the past 60 years, climate change has caused the Alaskan Arctic to warm twice as rapidly as the rest of the United States, and will continue to transform the Arctic as its consequences grow more severe. Over the past several decades, higher atmospheric temperatures have led to a steady and dramatic reduction in Arctic sea ice, widespread glacier retreat, increasing coastal erosion, more acidic oceans, earlier spring snowmelt, thawing permafrost, drier landscapes, and more extensive insect outbreaks and wildfires, thus changing the accessibility and natural features of this remote region. As a global leader, the United States has the responsibility to strengthen international cooperation to mitigate the greenhouse gas emissions driving climate change, understand more fully and manage more effectively the adverse effects of climate change, protect life and property, develop and manage resources responsibly, enhance the quality of life of Arctic inhabitants, and serve as stewards for valuable and vulnerable ecosystems. In doing so, we must rely on science-based decisionmaking and respect the value and utility of the traditional knowledge of Alaska Native peoples. As the United States assumes the Chairmanship of the Arctic Council, it is more important than ever that we have a coordinated national effort that takes advantage of our combined expertise and efforts in the Arctic region to promote our shared values and priorities.
As the Arctic has changed, the number of Federal working groups created to address the growing strategic importance and accessibility of this critical region has increased. Although these groups have made significant progress and achieved important milestones, managing the broad range of interagency activity in the Arctic requires coordinated planning by the Federal Government, with input by partners and stakeholders, to facilitate Federal, State, local, and Alaska Native tribal government and similar Alaska Native organization, as well as private and nonprofit sector, efforts in the Arctic.
Sec. 2. Arctic Executive Steering Committee. (a) Establishment. There is established an Arctic Executive Steering Committee (Steering Committee), which shall provide guidance to executive departments and agencies (agencies) and enhance coordination of Federal Arctic policies across agencies and offices, and, where applicable, with State, local, and Alaska Native tribal governments and similar Alaska Native organizations, academic and research institutions, and the private and nonprofit sectors.
(b) Membership. The Steering Committee shall consist of:
(i) the heads, or their designees, of the Office of Science and Technology Policy, the Council on Environmental Quality, the Domestic Policy Council, and the National Security Council;
(ii) the Executive Officer of the Steering Committee, who shall be designated by the Chair of the Steering Committee (Chair); and
(iii) the Deputy Secretary or equivalent officer from the Departments of State, Defense, Justice, the Interior, Agriculture, Commerce, Labor, Health and Human Services, Transportation, Energy, and Homeland Security; the Office of the Director of National Intelligence; the Environmental Protection Agency; the National Aeronautics and Space Administration; the National Science Foundation; the Arctic Research Commission; and the Office of Management and Budget; the Assistant to the President for Public Engagement and Intergovernmental Affairs, or his or her designee; and other agencies or offices as determined appropriate by the Chair.
(i) The Director of the Office of Science and Technology Policy, or his or her designee, shall be the Chair of the Executive Steering Committee. The Assistant to the President for National Security Affairs, or his or her designee, shall be the Vice Chair. Under the leadership of the Chair, the Steering Committee will meet quarterly, or as appropriate, to shape priorities, establish strategic direction, oversee implementation, and ensure coordination of Federal activities in the Arctic.
(ii) The Steering Committee shall coordinate with existing working groups established by Executive Order or statute.
(iii) As appropriate, the Chair of the Steering Committee may establish subcommittees and working groups, consisting of representatives from relevant agencies, to focus on specific key issues and assist in carrying out its responsibilities.
(iv) Agencies shall provide administrative support and additional resources, as appropriate, to support their participation in the Steering Committee to the extent permitted by law and within existing appropriations. Each agency shall bear its own expenses for supporting its participation in the Steering Committee and associated working groups.
(v) Each member of the Steering Committee shall provide the Executive Officer with a single point of contact for coordinating efforts with interagency partners, collaborating with State, local, and Alaska Native tribal governments and similar Alaska Native organizations, and assisting in carrying out the functions and duties assigned by the Steering Committee.
Sec. 3. Responsibilities of the Arctic Executive Steering Committee. The Steering Committee, in coordination with the heads of relevant agencies and under the direction of the Chair, shall:
(a) provide guidance and coordinate efforts to implement the priorities, objectives, activities, and responsibilities identified in National Security Presidential Directive 66/Homeland Security Presidential Directive 25, Arctic Region Policy, the National Strategy for the Arctic Region and its Implementation Plan, and related agency plans;
(b) provide guidance on prioritizing Federal activities, consistent with agency authorities, while the United States is Chair of the Arctic Council, including, where appropriate, recommendations for resources to use in carrying out those activities; and
(c) establish a working group to provide a report to the Steering Committee by May 1, 2015, that:
(i) identifies potential areas of overlap between and within agencies with respect to implementation of Arctic policy and strategic priorities and provides recommendations to increase coordination and reduce any duplication of effort, which may include ways to increase the effectiveness of existing groups; and
(ii) provides recommendations to address any potential gaps in implementation.
Sec. 4. Duties of the Executive Officer. The Executive Officer shall be responsible for facilitating interagency coordination efforts related to implementing the guidance and strategic priorities developed by the Steering Committee. The Executive Officer shall coordinate with the Chair and the Special Advisor on Arctic Science and Policy at the Department of State to provide regular reports to the Steering Committee on agency implementation and planning efforts for the Arctic region.
Sec. 5. Engagement with the State of Alaska, Alaska Native Tribal Governments, as well as other United States Stakeholders. It is in the best interest of the Nation for the Federal Government to maximize transparency and promote collaboration where possible with the State of Alaska, Alaska Native tribal governments and similar Alaska Native organizations, and local, private-sector, and nonprofit-sector stakeholders. To facilitate consultation and partnerships with the State of Alaska and Alaska Native tribal governments and similar Alaska Native organizations, the Steering Committee shall:
(a) develop a process to improve coordination and the sharing of information and knowledge among Federal, State, local, and Alaska Native tribal governments and similar Alaska Native organizations, and private-sector and nonprofit-sector groups on Arctic issues;
(b) establish a process to ensure tribal consultation and collaboration, consistent with my memorandum of November 5, 2009 (Tribal Consultation). This process shall ensure meaningful consultation and collaboration with Alaska Native tribal governments and similar Alaska Native organizations in the development of Federal policies that have Alaska Native implications, as applicable, and provide feedback and recommendations to the Steering Committee;
(c) identify an appropriate Federal entity to be the point of contact for Arctic matters with the State of Alaska and with Alaska Native tribal governments and similar Alaska Native organizations to support collaboration and communication; and
(d) invite members of State, local, and Alaska Native tribal governments and similar Alaska Native organizations, and academic and research institutions to consult on issues or participate in discussions, as appropriate and consistent with applicable law.
Sec. 6. General Provisions. (a) Nothing in this order shall be construed to impair or otherwise affect:
(i) the authority granted by law to an executive department, agency, or the head thereof; or
(ii) the functions of the Director of the Office of Management and Budget relating to budgetary, administrative, or legislative proposals.
(b) This order shall be implemented consistent with applicable law and subject to the availability of appropriations.
(c) This order is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.
Our friend, Robert Dillon, of U.S. Senator Lisa Murkowski's Energy and Natural Resources Committee writes that, "The Senate is poised today to vote on the 15th amendment on the floor just three weeks into the new session. That’s the same number of amendment votes that Sen. Reid allowed in all of 2014. Sen. Lisa Murkowski last night praised the return of regular order in the Senate and the open processing of amendments. As she said on the Senate floor at the close of business last night, “While some may suggest these are hard votes to take, nobody ever said that voting should be easy here in the United States Senate. The issues that come before us are issues that the nation considers and that we as their representatives should take seriously. And so sometimes there are hard votes and we will argue and debate over the wording… and that is appropriate.” -dh
Senate to shatter 2014’s amendment milestone (Politico)
The Senate held just 15 votes on amendments in 2014. This year, it’s set to surpass that mark after just three weeks.
1/22/15 12:36 PM EST
The Senate is about to reach a milestone: By the end of this week, it will have held more amendment votes than it did in all of 2014.
On Thursday — just three weeks into the new year — the chamber is set to surpass last year’s total of 15 amendment votes, thanks to a flurry of voting centered almost entirely on the Keystone XL pipeline. The only non-Keystone vote so far this year came on an amendment by Sen. Elizabeth Warren (D-Mass.) on changes to the Dodd-Frank financial law.
Thursday’s milestone followed a raucous two-day period of votes in the Senate on multiple proposals regarding climate change, including the adoption of an amendment that says climate change is real — but doesn’t pin the blame on humans.
“Just 15 roll call amendments, that was in all of 2014,” said Senate Energy and Natural Resources Committee Chairwoman Lisa Murkowski (R-Alaska). “My hope is that we’re going to exceed last year’s total, hopefully here today.”
Majority Leader Mitch McConnell (R-Ky.) has made opening up the Senate’s amendment process a key mark of his new reign. Thus far, he’s been amenable to allowing votes on Democratic messaging amendments on climate change on the Keystone bill, a measure that’s still headed toward a presidential veto.
“It’s great to see a real debate on the floor of the Senate again,” McConnell said Thursday. “I saw some action in the chamber yesterday, even some unpredictability.”
But Democrats are expressing happiness about the trend too: With seven Republicans up for reelection next year in blue states that President Barack Obama won in 2008 and 2012, Democrats hope to pile up the votes as ammunition on the campaign trail. As one example of potential attack-ad fodder for 2016, aides mentioned Republican votes that torpedoed an amendment aimed at requiring U.S. steel to be used to build the Keystone pipeline.
“We would love nothing better than for Senator McConnell to make his members take as many amendment votes on as many bills as possible, and his caucus members would love nothing less,” said one Democratic aide.
Aside from a bill preventing cuts to the U.S. Postal Service, Democratic leaders have mostly focused on environmental and energy amendments to Keystone. Sen. Chuck Schumer of New York, the Democrats’ top message man, said the focus for now is on relevant amendments but, eventually, they may turn to non-germane amendments.
Asked recently about whether Democrats may offer amendments on proposals like raising the minimum wage and encouraging pay equity between men and women, Schumer responded: “You will see those.”
“There will certainly be times when we do non-relevant amendments, since we believe almost everything can be seen through the prism: We’re helping average Americans,” Schumer said.
Democratic leader Harry Reid of Nevada has taken most of the blame for producing last year’s dearth of amendments by using Senate procedure to protect bills from alteration. But the Senate’s byzantine procedural rules also make things more complicated given that any senator can reject an agreement to vote on amendments.
Last year, red state Democrats up for reelection balked at votes on divisive energy, health-care and social issues that Republicans were pushing in a rash of unrelated amendments to bills. A number of bills also never advanced past initial filibusters into the amendment stage.
Robert Dillon | Communications Director
Senate Energy and Natural Resources Committee
Essay: Maintaining Optimism In A Challenging Environment
An essay to assist both Alaska citizens and our thousands of readers abroad in understanding the critical circumstances now confronting the 49th state.
America invented the term, “Keep a stiff upper lip”, exactly two hundred years ago in a book entitled, "Massachusetts Spy". The Brits adopted the term and now oil producers throughout the world are repeating it to stay calm in the face of what may be a prolonged period of low oil prices.
We will first sympathize with Alberta’s new Premier, one of the best and brightest elected officials in North America. Jim Prentice (NGP Photo) inherited a southern neighbor whose president is guided more by political debts to environmental extremists than the public interest.
Prentice also entered office just as oil prices began to plummet, putting his Province in a similar but much less severe fiscal crisis than Alaska faces (See box, lower left).
Alaska's situation is more critical than Alberta's, because its budget is over 90% dependent on its declining oil production vs. Alberta's 10% dependency on oil sands royalties. Note in the link above the decisive steps Premier Prentice is considering. With a much more dire fiscal challenge, will Alaska undertake decisive measures this legislative session, as Alberta seems to be doing, or will Alaska fund deficits with the remaining state savings?
Note to: Elected Officials
We hope there is not one elected official in Alaska (i.e. Governor, Mayor, Assembly or Council or School Board member) who has had a conversation at home with a significant other, like this:
"Honey, you know the situation is dire. We have had deficit budgets for some time now. But with 50% lower oil prices, we'll burn through the savings in a couple years. And still, we have almost a $10 billion unfunded PERS/TERS liability. (Though if worst comes to worst a bankruptcy court would order the permanent fund to keep our state pensions whole, I think). Hopefully, we'll see another boom in discoveries or in prices...but if not, we have to make plans. So I'm thinking we just stay in office through 2017, keep a low profile, then make our move. Are you O.K. with that?"
Surely no elected official would swear an oath of office and decide to do nothing requiring courage or sacrifice to confront the fiscal shortfalls -- like cut capital projects, operational spending, even matching government programs and even entitlement programs.
We realize that these challenges are not fun for politicians.
But we hope we elected statesmen and not politicians, for the latter care too much about pleasing constituencies and guaranteeing reelection.
Statesmen will be willing to be vilified and defeated in order to make decisions that best serve the public interest.
So now, we suggest that all those who wanted to serve and are serving will meet their moments of truth in short order.
Will they take the easy road and keep all beneficiaries of state spending whole -- subsidized by remaining savings, then split...?
Or, will they lay it all on the line for their fellow citizens knowing that their 'thanks' may well be the disdain of thousands of constituents who wanted and did not receive money transfers from government.
We truly do sympathize, Honorable Elected Officials...just as we sympathize and respect military veterans who have served their country and been willing to give it all for the rest of us.
Thank you, in advance, for your service.
Exacerbating President Obama’s delay and perhaps an ultimate blockade of TransCanada Corporation's Keystone XL oil pipeline --designed to move stranded oil sands oil in Northern Alberta to America’s gulf coast -- is a second negative development. Environmental groups and utility interests in Quebec are trying to block the converting of an old gas pipeline into an oil pipeline, through which TransCanada could ship Alberta’s oil to European markets (See our commentary).
Then we have TransCanada’s effort (i.e. along with that of dozens of companies and governments) for a half century to move stranded Arctic gas from Alaska and the McKenzie Delta to Midwestern markets via a number of projects. We could certainly sympathize with TransCanada shareholders and those paying tariffs on its existing pipelines, for they have been sporting stiff upper lips for a long time.
Surging oil and gas shale technology less than a decade ago, evolved into a true energy revolution. The extended and expanded reach of shale production on mostly private lands touched almost everyone. Consumers have experienced lower prices for gas fired electricity, home heating and gasoline. Manufacturers depending on low cost energy began expanding North American operations. Investors launched several dozen American and Canadian LNG export projects. Job growth has been phenomenal. European energy markets began to envision a day when Russian producers could not control their destinies through price and supply manipulation. Finally, Asian markets used to paying premium prices for imported LNG began to see a softening of consumer prices.
The Canadian provincial and federal governments were supporting energy development in spite of significant environmental activism. Oil prices supported the relatively expensive production of Northern Alberta bitumen.
In the US, the last few years saw production on private land cause economic rejuvenation in many pro-energy states, in spite of Federal government support of environment activism aimed at killing projects on both private and public lands. Ironically, the Administration has gone on to claim credit for the economic improvements, even as it intensifies EPA opposition to energy specifically and job development generally.
As economic cycles would have it, all is not well in the world. The shale revolution was not just good for consumers; it was GREAT. So great that with supply increasing oil & gas prices began to retreat along with commodity values. That, in turn, has brought many shale operational revenues beneath or close to the cost of production. Combined with Canada’s inability to export necessary volumes of Alberta oil, North America’s two great economies are now facing giant economic challenges.
Federal, provincial, state and local governments throughout the US and Canada are now engaged in cutting or plans to cut government services in response to the diminishing production of energy wealth.
* * *
Alaska may be facing the single greatest economic challenge in the free world for many reasons that, together, compose a perfect storm of economic hurdles, including:
- With its operating government budget over 90% dependent on oil income, along with over a third of its entire economy, Alaska is the most dependent of North America's state or provincial governments on oil revenue— now down by 50% over the last few months.
- Alaska is the U.S. producing area most dependent on high prices. High oil prices help compensate for some of the highest oil taxes, the harshest climate, the highest labor costs, its remoteness and distance to the markets and the additional cost liability of having to move its oil via an expensive, underused and ageing 800-mile pipeline to tidewater where it has to be loaded onto seagoing tankers capable of transporting it thousands of miles to markets. In stark contrast, its biggest competitors produce oil mostly at tidewater, mostly in temperate zones, mostly in lower labor cost areas, with lower logistical costs and cheaper transport to their market areas.
- Alaska’s nearly 40-year-old Trans Alaska Pipeline System (TAPS), has already moved the lion’s share of Prudhoe Bay oil. It once transported the greatest share of America's domestic production (i.e. But has now fallen behind North Dakota, Texas and California) at the rate of about 2.1 million barrels per day. That production rate has since sunk by over 70%.
- Governor Sara Palin’s (NGP Photo) administration succeeded, nearly a decade ago, in attaching high, progressive production taxes on Alaskan oil in spite of what was then a pattern of annual 5-7% declines in TAPS throughput. That economically suicidal action dried up new investment even though producers needed to hire more people and initiate more projects just to maintain the decades-old production and transportation facilities. Two years ago, the Legislature saw the error of Alaska’s shortsighted ways and passed SB 21, modifying the production tax. Talk quickly spread around the industry that new investment and exploration was now possible and being planned – hundreds of millions of dollars’ worth. Unfortunately, opponents of SB 21 and environmental groups undertook a voters initiative to repeal SB 21, inserting dark clouds of caution over the investment climate. After spending millions of dollars to combat the initiative Alaskan citizens and businesses defeated it last August. Still, investors are left with the nagging knowledge that in Alaska, “A Deal May Not Be A Deal”, since a few guys and gals with a volunteer lawyer and dozens of activist organization volunteers could initiate a new voters initiative at any time.
If Alaskan citizens and their leaders summon the faith, humility, wisdom, cooperation, sacrifice, initiative and diligence required by GREAT ACCOMPLISHMENT, the future can still be bright for this generation and those to follow.
This is where optimism is to be found.
One must add to this mix the fact that Alaska’s huge resource potential has been slowed or stopped at almost every turn by a hostile and overreaching federal administration whose cheerleaders are activist environmental groups that in the last 3 decades have implanted some three dozen anti-development campaign offices around Alaska.
- Alaska’s North Slope gas remains stranded. Several projects over the years – all involving TransCanada – have endeavored to free that energy wealth since the early 1970s. All of the projects have failed after having met the wrong end of unforeseen economic or technological forces. When natural gas prices exploded at the turn of the century, producers again began eyeing the economic feasibility of “monetizing Alaska North Slope gas”. After spending a hundred million dollars to update studies, they affirmed one of the critical requirements for investment to be, “fiscal certainty”. This meant that investors couldn’t justify building the largest construction project in history with the chance a “sovereign” state government could enact massive new taxes after a multi-billion dollar, high pressure gas pipe was buried into the frozen tundra. Then, just as feasibility was looking promising, came the Palin Progressive Production tax. Today, following the passage of SB 21, producers and the State of Alaska have dramatically changed the gas project. Because of shale, the gas is not needed in the Midwest. So now, with falling revenue and fading economic hopes, the state, producers and TransCanada are endeavoring to prove out the feasibility of an Alaska LNG export project …targeting Asia…just as gas prices are falling and over a dozen LNG projects (i.e. see map) throughout the US and Canada are mostly vying for the same markets.
- Alaska defends its high cost of government because of its enormous size (i.e. 20% the size of the entire US), its low population (i.e. less than a million), and logistical costs. But excuses don’t matter in a world of competition and excuses cannot erase the facts:
- Alaska spends more per capita than any other state.
- Alaska’s debt is larger per capita than that of any other state or the federal government.
- Its per capita education costs are the highest.
- Alaska government and citizens fund the most non-profit organizations per capita.
- Alaska’s anti-business legislators and activist groups normally seek higher taxes to meet the challenges rather than restrain government spending. The republicans locally, as nationally, are generally in support of a sustainable economy. But just as all democrats are not socialists, all republicans are not prudent guardians of other people’s money and often let spending/entitlement increases slide through in exchange for capital projects, constituent tax breaks, etc.
- Alaska’s legislative session is now beginning and the previous governor’s budget under consideration is now several billion dollars short. This requires a possible tapping into about $3 billion of nearly $10 billion in savings. Any second grader knows that’s not sustainable for long. But to make matters more interesting, rating agencies are noting that Alaska also has an unfunded liability to its retirement program of almost $10 billion. The obvious way to fund that deficiency is to tap Alaska’s $50 billion permanent fund. The permanent fund was created two decades after statehood to fund ‘rainy day’ budgets but has been traditionally used to pay citizens an annual allotment, last year approaching $2,000 for each man, woman and child. It has become sacred income to voters.
Last November Alaskans elected a new governor whose primary constituencies were rural Alaskans, democrats, and labor. So far, Governor Bill Walker (NGP Photo) has ordered a slowing of spending on capital projects but has not, at this writing, undertaken serious cuts to state government operations or entitlement programs. We'll hear more this week as he delivers separate state of the state and budget speeches.
Some hope, through stiff upper lips and gritted teeth that another boom of some sort will appear just in time to facilitate continued high state spending.
Others believe that Alaska’s unparalleled rise in oil riches has come to an end and that serious, adult decisions must quickly be made.
Still others believe that Alaska’s 1959 Statehood Compact has been mortally wounded; they believe that federal regulation has so exacerbated the scenarios described above that only the most brilliant, persuasive, intelligent, savvy and charismatic leadership can now save the “Last Frontier” from federal hostility and its own tax and spend decisions.
So join us now in observing the tensions that will surely appear over the next four months of Alaska’s legislative session as, together, we witness leadership rising to the occasion, or not.
Meanwhile, keep a stiff upper lip!
Dave Harbour is Publisher of Northern Gas Pipelines. A former Chairman of the Regulatory Commission of Alaska, he also served as Chairman of the Gas Committee, Western Conference of Regulatory Utility Commissioners. Harbour is former Chairman of the Anchorage Chamber of Commerce and the Alaska Council on Economic Education. He has served in executive positions with three producing/pipeline companies and as a board member and officer of a number of non-profit corporations. His articles have appeared in hundreds of magazines, newspapers and on-line publications. He has delivered hundreds of speeches throughout North America and chaired oil and gas programs and conferences from Houston to Calgary, Edmonton, Anchorage and Inuvik. Contact the author.
Forbes by Brigham A. McCown. The recent free-fall of crude oil prices has affected markets across the globe. Energy companies have responded by scaling back investments as their available capital shrinks. In British Columbia, delays are hampering the Pacific Northwest LNG project. Likewise, in Texas, a liquefaction project has been suspended off its coast by Excelerate Energy. Yet, meanwhile, Alaska is moving forward on an ambitious infrastructure project to develop and export its North Slope gas reserves.
The right hand column is undergoing construction and will be visible soon. -dh
12-22-14 Alaska Gas Project In Doubt - White House Still Stalls Keystone XL - Premier Creates Confusing Fracking Obstacle
Petroleum News by Alan Bailey (NGP Photo).
New Fracking Obstacle: What the heck is a "Social License?"
CBC News by Jacques Poitras.
Premier Brian Gallant says gaining social license will be one of the five conditions hydraulic fracturing will have to meet if his government is to lift its moratorium on the technique.
Steve Moran, the chief executive officer of Corridor Resources, says it’s a frustratingly vague concept that he doesn’t know how to achieve.
"Even the premier when he was asked didn't really have an answer in terms of what that mean," Moran told CBC News.
With estimated costs higher than anticipated and a concession agreement due to expire at the end of December, the board of the Alaska Industrial Development and Export Authority faces some tough decisions over the future of the Interior Energy Project, a project designed to bring affordable North Slope natural gas to consumers in Fairbanks.
The project involves the construction of a liquefied natural gas plant on the Slope; a trucking operation to ship LNG from the plant to Fairbanks; LNG storage and liquefaction facilities in Fairbanks; and utility distribution pipelines for delivering gas to customers.
Alberta Premier Jim Prentice (NGP Photo) and Canada’s ambassador to the United States talked about pipelines Friday as they met with Calgary's business community.
Gary Doer says there are a lot of positive signs in the coming year for approval of the Keystone XL pipeline. The TransCanada project would carry crude oil from northern Alberta to refineries in Oklahoma and the Gulf Coast in Texas.
12-19-14 Chevron Exits 'Economically Uncertain' Arctic OCS - Regulators Question Alaska's Arctic Gas Project
On December 11, 2014, the National Hydrocarbon Commission of Mexico announced the proposed terms for the shallow water bidding round, consisting of the Bid Conditions and the Model Contract. Our friend, Pedro van Meurs (NGP Photo), along with J. Jay Park, Q.C., prepared a joint commentary on both these documents. This report is available for free to interested parties. Click Here to download the document.
BP's Alaska Hire rate continues to exceed 80%, and spending with Alaska companies is 81% of total in-state spending, according to its 2014 Alaska Hire report. BP Publishes Alaska Hire each year to focus on education, training and mentoring programs that are designed to bring more Alaskans into the oil and gas industry. Readers may access Alaska Hire here
Reuters (Reporting by Scott Haggett; Editing by Cynthia Osterman) - Chevron Corp said on Wednesday a plan to drill for oil in the Beaufort Sea in Canada's Arctic is on hold indefinitely .... In a letter to Canada's National Energy Board, the company withdrew from a hearing into Arctic drilling rules because.... (More)
REGULATORS QUESTION ALASKA LNG PRELIMINARY PLANS (From Office of the Federal Coordinator)
In their first feedback on Alaska LNG's preliminary construction plans, federal and state agencies raised dozens of questions and issues they want to make sure are covered as the project sponsors progress with design and environmental analysis.
The agencies on Dec. 11 asked the project sponsors for more information about where they plan to get construction gravel, how they plan to lay a pipeline across Cook Inlet and what kind of wear and tear state roads and bridges would endure as tons of materials move across Alaska during construction.
The requests for more information were expected as the sponsors are in the early stages of their design, route selection and construction planning for the LNG export project.
Today's Consumer Energy Alliance Energy Links:
Downstream Today: Keystone XL: Oil, Gas Industry Awaits Fate of the Pipeline's Final Phase.
If oil sands from Canada will make it to the market whether the pipeline is built or not, then moving the product through a pipeline would not only produce fewer emissions than transporting it using other methods, such as rail or truck, but it would also be safer than other methods of transport, according to the President of the Consumer Energy Alliance, David Holt (NGP Photo), during a broadcast of Houston Public Radio.
“Pipelines are an order of magnitude safer and more environmentally responsible than any other mode of transportation for crude and natural gas. Whether or not we permit the Keystone pipeline, the crude oil in Canada is going to be produced. In the State Department’s own report, they said that without Keystone, the emissions impact to ship that [Alberta oil sands] to the east and the west, and to take it to China and elsewhere, could be a 600 percent increase in emissions,” Holt said.
New York Times: Cuomo Bans HF
Gov. Andrew M. Cuomo’s administration announced on Wednesday that it would ban hydraulic fracturing in New York State because of concerns over health risks, ending years of debate over a method of extracting natural gas.
Reuters: NY unlikely to face lawsuits over shale ban, experts say
When Governor Andrew Cuomo announced a ban on fracking in New York on Wednesday, he predicted "a ton of lawsuits" against the state. But that is unlikely as the end of a drilling boom has left the industry in no mood for a fight, industry experts and lawyers said.
Associated Press: McConnell Wants to Stop Coal Rules
Incoming Senate Majority Leader Mitch McConnell, R-Ky., pledged on Wednesday to do all he can to stop President Barack Obama's coal plant regulations, saying a White House "crusade" has devastated his state's economy.
SNL: House Republicans slam EPA carbon rule for existing plants as 'unrealistic'
The Republican majority on the U.S. House Energy and Commerce Committee contends the EPA's draft carbon dioxide regulation is illegal under the Clean Air Act and that the proposal's goals are "unrealistic."
Reuters: Chevron cancels Canadian Arctic drilling as oil prices slide
Chevron Corp is putting a plan to drill for oil in the Beaufort Sea in Canada's Arctic on hold indefinitely because of what it called "economic uncertainty in the industry" as oil prices fall.
Bloomberg: U.S. Talking Oil Exports Just When World Needs It Least
The U.S. Congress is talking about allowing unfettered oil exports for the first time in almost four decades. Its timing couldn’t be worse.
Bloomberg Businessweek: TransCanada’s Keystone Fight Turns to Exports on Oil Glut
Russ Girling’s Keystone XL saga is taking a new twist with a global glut of cheap oil. Americans, including President Barack Obama, are increasingly questioning whether the pipeline is needed or if it will just be a corridor for Canadian oil-sands crude to reach China. Girling’s answer is that the U.S. isn’t weaning itself off foreign oil anytime soon and that Gulf Coast refineries will be the buyers, not Asia.
The Denver Post: Tilting the Keystone
Being an ardent opponent of the Keystone XL project in rural Colorado isn't a popular position. The vision for this 21st century pipeline has been sold as a necessary component of our energy challenges and a massive job creator. Unfortunately, the pipeline is neither, and would be better characterized through the lens of American rural landscapes as an assault as opposed to an asset.
KMTV: Fight over Keystone XL continues, landowners vow to fight until very end
TransCanada has until mid January to acquire the land needed to build the Keystone XL Pipeline through Nebraska. A new offer from the company is on the table for landowners.
Fresno Bee: Plunging oil prices are good for us, bad for Putin
Plunging gas prices are a gift in more ways than one. They mean more cash in people’s pockets during the holiday shopping season, so hopefully local retail will get a boost. They will soften the blow next month for any price spike when fuels come under California’s cap-and-trade system to combat climate change.
CBS 4 News: Falling Gas Prices Could Harm Colorado’s O&G Industry
While prices at the pump are pleasing to many drivers so far this holiday season, the plummeting prices of oil are a bit concerning for Colorado’s oil and gas industry. Coloradans are paying an average of $2.52 per gallon. That’s 54 cents less than a year ago when it was $3.06. “Colorado has had a significant increase in production. At these prices I’m not sure that will continue,” said Stan Dempsey, president of the Colorado Petroleum Association.
Associated Press: Colorado drillers warn of closures with fines
Colorado oil and gas industry leaders say new fines for rule violations could lead in some cases to companies shutting down or curtailing operations. An attorney for the Colorado Oil and Gas Association industry group told regulators penalties should be waived for minor infractions.
News & Observer: NC Rules Review Commission approves HF standards
North Carolina’s proposed fracking safety standards sailed through a rules reviewWednesday despite a staff attorney’s warning that several rules failed to meet state standards and should be put out for public hearing. The Rules Review Commission’s approval means the fracking rules won’t be delayed by several months for extra reviews and hearings. Instead, the rules, written by the Mining and Energy Commission, are now headed to the state legislature, which is expected to lift North Carolina’s fracking moratorium in a matter of months.
Baltimore Sun: Shale ban in NY prompts calls for MD to follow suit
With New York's governor banning hydraulic fracturing for natural gas in that state, environmental groups are calling on Maryland's lawmakers to follow suit. New York Gov. Andrew Cuomo ended six years of study in that state and sided with his top advisers in deciding the potential environmental and health risks of "fracking," as it's commonly known, were too great to allow it to go forward there.
Lancaster Online: Home heating costs are down
Lancaster County residents should get some relief on their heating bills this season — unless there’s a repeat of last winter’s deep freeze. The administration estimated in its winter report on winter fuels that the decline in average price for some heating sources also will contribute to savings.
WOAI: Eagle Ford Production Strong--Won’t be Killed by Saudi Moves
The plummeting price of oil has not yet begun affecting drilling in the Eagle Ford shale south of San Antonio, an investigation by News Radio 1200 WOAI's Michael Board has concluded. Benchmark West Texas Crude fell nearly a dollar again on Tuesday to settle at $55.05 a barrel. That's down from $116 in April, and $110 as recently as June.
Dallas Morning News: Lawmaker files bill to discourage cities from passing HF bans
Rep. Phil King, R-Weatherford, proposed on Wednesday a bill that would require cities to make up for any revenue lost as a result of passing a municipal oil and gas ordinance–a requirement that could dissuade cash-strapped cities from considering or approving some local regulations.
Express-News: 500+ rigs may shut down as oil slides, analysts say
As many as 550 drilling rigs may have to sit on the sidelines of U.S. shale oil patches over the next few months, analysts say, as oil prices have folded nearly in half since this summer. The projections come a few days after Texas drilling rigs led the nation in a 1.4 percent weekly decline in the U.S. active rig count, according to oil-field services firm Baker Hughes.