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Northern Gas Pipelines is your public service 1-stop-shop for Alaska and Canadian Arctic energy commentary, news, history, projects and people. It is informal and rich with new information, updated daily. Here is the most timely and complete Arctic gas pipeline and northern energy archive available anywhere—used by media, academia, government and industry officials throughout the world. Northern Gas Pipelines may be the oldest Alaska blog; we invite readers to suggest others existing before 2001.  -dh

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Reader Comment

6-16-15 Is Alaska's Governor Seeking Control Of The Ak LNG Project; Or, A Governent Owned Project?

16 June 2015 1:11pm

Alaska Governor Bill Walker's June 8 Letter To AK LNG Participants Doesn't Exactly Radiate Cooperation 

by

Dave Harbour

(In fairness, we wish to provide this comment from an anonymous reader.  -dh)

Bill Walker, AK LNG, Governor, Alaska, 49th State, oil taxes, fiscal certainty, Photo by Dave HarbourToday, we ask if Alaska Governor Bill Walker (NGP Photo) is seeking cooperation with participants in the AK LNG project, or is he seeking to control those free market participants, or is he angling toward a separate, government owned project?  

Here is a letter Walker sent yesterday to House and Senate resource committee leaders which included the copy of a letter he dispatched back on June 8 to producer leaders of the AK LNG project. 

We hate to be judgmental; after all, we all have our own ways of doing business.  And, we should grant the Governor some leeway for lack of experience in dealing in the world of business and free enterprise.

If it were our call, we'd have met with Ak LNG on a regular basis to resolve ongoing issues; after all, there will be plenty more hurdles for participants to cooperatively overcome over the years if the project goes.  

In meeting with participants regularly, we'd have engineered a process like the governor "proposes/unilaterally mandates" in this correspondence, sought concurrence among the parties and made a joint announcement on how the project will proceed.  "Peace to all in an atmosphere of cooperation"....

Instead of a cooperative joint announcement, we now have a Governor presuming to call the shots, dictate the process.

In less formal circumstances, we would likely ask, "who in the blazes does this guy think he is?"

Readers will find one of the dictated matters occurring in the Governor's correspondence, item #3.  In it he acknowledges that one of the big issues to be resolved is "fiscal stability" (See our 4-part series).

Government bullying can turn a reasonably profitable project into a loser.  

The bigger the investment, the more need there is for assurance that property will not be expropriated by fiat, as in the case of Argentina, or more indirectly taken by predatory taxation occurring after investments have been made.  

Just think about this: if an investment goes south on a manufacturing plant or commercial fishing boat, there are often plenty of potential buyers.  But when you bury a pipeline into the earth and the investment goes south, statutes require you spend billions more dismantling and removing the asset, and restoring the right of way.

In our opinion, the AK LNG investors have no choice but to seek full fiscal certainty on all of their oil and gas assets in return for the big gas transportation system investment.

If the Governor wishes not to use his bully pulpit supporting that need with the Legislature and the citizenry, we think it obvious that he either does not believe that full fiscal certainty is needed or he holds back on offering fiscal certainty knowing participants will have a difficult time justifying the investment.

This does not mean "fiscal stability" of the oil companies.  It means, basically, that if the investors pour $45-$60 billion into the state of Alaska to build a gas pipeline/LNG project, they need to know that they will not be treated here like Repsol was treated in Argentina less than a decade ago.

Alaska has demonstrated in the past that in the 49th state, "A Deal Is Not Necessarily A Deal".  Readers can explore the link for background.  Basically, Alaska's elected officials have taught investors that they don't mind raising taxes after an investment decision is made and they don't mind doing it RETROACTIVELY.

Being hopeful, but not stupid, Alaska's oil industry has said for a generation that when and if a gas transportation project is built, the state will have to guarantee fiscal stability of the project.

In the June 8 letter, Walker, agrees that fiscal stability should be part of the process, but that it will exclude oil.

In other words, he is saying, "I'll agree to not tax gas after the investment is made but you'll get no guarantee from me regarding the oil."

So if one is trusting enough in Alaska's state government to invest scores of billions in a gas pipeline, one is not concerned that oil taxes will be raised after the gas project is built?

We have talked to no one about this correspondence, either in the Administration, Legislature or oil industry.  If we had, we'd have undoubtedly been smarter.

But we are compelled based on an independent reading of the correspondence to conclude that the Governor thinks he can charm or coerce industry into investing billions into a gas transportation project by providing only half a loaf of fiscal stability.  Either that, or he is trying to infiltrate so many skunks into the gasline parade that any rational investor would say, "Sorry, not today".  By multiple skunks, I refer to but do not have space to explore other troubling provisions of the correspondence, including gas marketing, government ownership and pipe routing issues.  

If you are an investor hoping for a cooperative government partner, read the June 8 letter and weep.

The June 8 letter, causes one to wonder if the Governor -- a lawyer who spent a undistinguished, quixotic career advocating a government owned LNG project -- will finally get his wish to be Master and Commander of some imagined, but not yet real, government-owned, Alaska LNG project.

We hope this is not Walker's motivation for the June 8 letter, nor his pipe dream.

If it were, we fear that to the innocent citizens of Alaska the dream will morph into a pipemare.

-30-

 

See reader comments below with my responses in red....

If I were an alien drop kicked to this planet; my main takeaway of a cursory reading through is that the author implicitly dislikes the Governor. I am unable to discern the GOA's motives.  I do not dislike the governor and am as 'charmed' by him as the next citizen; but my role here is to draw logical conclusions from actions.  If that discipline is judged to be personal or subjective, so be it.
 
Is he trying to dictate the process, or is this type of simpleton action an honest outworking of his character; further evidence of an acute lack of understanding/experience in matters of import.
 
By being public, should his motive be to blow up the JV, it may grant a certain cover for future unilateral actions by the administration undoubtedly. But as to his motive, I cannot speak. 
 
As to the point of oil tax stability vs. a single specific large scale activity and tax implications; I don't think it is appropriate to expect similar treatment. For the SOA to execute an agreement on fiscal terms for a specific project over a specific time period would be a difference of kind rather than degree in relation to oil taxation.  Nevertheless, stability for an oil and gas producer's gas and not his oil is no stability at all.
 
As a sovereign we do not execute contracts on projects or with companies, we have a broad base tax system and the premise that it would remain unchanged over a period of decades is untenable. Alaska better question its premises if it wants a gas project, particularly with the competition it faces and with its unreliable, predatory tax history.  Current activity in the oil patch is resplendent with renegotiations due to a changing market dynamic, but those center around specific contracts i.e. shipments of LNG pricing being renegotiated due to market conditions in the same manner service companies have renegotiated to maintain a position with producer companies. In fact, Apache reports their earnings are now greater at $60 bbl than previously under $90 bbl pricing. Both they and their service providers are profiting.   Perhaps Alaska should re-explore the idea of a Constitutional amendment to permit a fiscal stability 'contract' under certain conditions.
 
Ideally, the SOA would develop a taxing scheme that would be appropriate and applicable over wide market dynamic, lasting for decades; that would be a challenge, but perhaps ELF was a good example. When Frank gained office, pundits claimed that ELF was broken. I would posit it as being outdated under the conditions at that time. Even oil companies expected changes to be made. 
 

 

 


(Note: Editors are welcome to reprint our opinion pieces; attribution should occur and we would appreciate being sent a link.  Readers may send any thoughtfully written responses to this address and we will reprint them alongside this editorial for the Archives.)

Dave Harbour, publisher of Northern Gas Pipelines, is a former Chairman of the Regulatory Commission of Alaska and a Commissioner Emeritus of the National Association of Regulatory Utility Commissioners (NARUC).  He served as NARUC's official representative to the Interstate Oil & Gas Compact Commission (IOGCC).  Harbour is past Chairman of the Alaska Council on Economic Education, former Chairman of the Anchorage Chamber of Commerce, and past President of the American Bald Eagle Foundation and the Alaska Press Club.  He is Chairman Emeritus of the Alaska Oil & Gas Congress.


Opinions or viewpoints expressed in this webpage or in our email alerts are solely those of the publisher and in no way reflect the opinion(s) of any affiliated company, person, employer or other organization.

 

Categories:

6-11-15

11 June 2015 8:51am

Polar Bear, Photo, Copyright by Dave Harbour

 

Tomorrow....

 

 

Commentator Thorpe Watson advises us to get ready for a medieval lifestyle.  This morning he emails us that:

The G7 countries have declared war on hydrocarbon fuels (aka “fossil fuels”). 
 
They have pledged to end the production and use of coal, oil, and gas by 2100. (The Telegraph  9 June 2015 G7 pledges to end fossil fuel use this century”).
 
In other words, it is a pledge to commit economic suicide and to make us more vulnerable to natural climate change. It is a bleak future as depicted in this cartoon.
 
 
 
Does this mean that Prime Minister Harper has finally succumbed to the wishes of the opposition parties and the radical, foreign-funded, protest organizations; that is, to decarbonize Canada’s economy?
 
It should be noted that the anti-fossil-fuel narrative is driven by the unproven anthropogenic (CO2 induced), global-warming hypothesis.Please be assured that there is no scientific basis to relate climate changes to our emissions of carbon dioxide ("CO2"). The planet's climate has always been changing and is characterized by four major climate cycles.
 
Furthermore, our emissions are insignificant compared to natural emissions and, unfortunately, will never be sufficient to double the CO2 content of the atmosphere. Such a doubling (or more) would be highly desirable for crop production. The store of CO2 that supports life on this planet is at a record low level, having been seriously depleted by natural processes. It is delusional to believe that restricting the generation of this trace gas gives us the power to stabilize the planet's climate.
 
However, I strongly believe that denying the world's poor access to affordable, reliable energy is immoral. It not only condemns them to perpetual poverty but it also makes them more vulnerable to the four natural climate cycles.
 
The G7 needs to take a hard, independent look at climate science and wake up to the reality that the warming campaign's case is collapsing on its merits.  Climate computer models have failed to predict the current 18-year pause in global warming. More important, the weather is well within natural variability.  The proposed solutions would enrich an elite few, impoverish the masses, and do nothing meaningful to alter the climate.
 
It is tragic that this scientific fraud continues to be endorsed by politicians. For example, Ontario is accelerating down the green road to bankruptcy under its so-called Green Energy Act.
 
Any person, who rejects the evidence and supports the anti-fossil-fuel policy, should be prepared to immediately adopt a Medieval life style, which is devoid of modern conveniences and the many products provided by the petrochemical industry (e.g. polyester clothes, computers).
 
We must demand that our politicians stop this anti-fossil-fuel insanity!

Today's Energy Links From Consumer Energy Alliance:

Town Hall: Follow the Trend: Support Energy Development 
A new trio of polls shows what’ll be at the top of Americans’ minds when they hit the voting booths next year to elect a new commander-in-chief – energy production. Surveys administered recently by Consumer Energy Alliance show that more than 80 percent of voters in Iowa, New Hampshire and South Carolina – the first three primary states – said that candidates’ energy policy would be a key decision point on how they vote next year. This resonated not only with Republicans but also with Democrats and the much-coveted Independents.
 
MarketWatchPoll: Energy and Infrastructure Will Play a Key Role in 2016 Election 
Recent polling conducted for Consumer Energy Alliance (CEA) continues to examine what role the Atlantic Coast Pipeline, Keystone XL Pipeline, offshore production and other energy issues could play in the 2016 presidential election. And as echoed in recent poll results from Iowa, New Hampshire and South Carolina, voters in Virginia, North Carolina and West Virginia reinforced that energy policy will be an important issue when they cast their votes for president next fall.
 
Hot AirAtlantic Coast Pipeline pretty much as popular with voters as Arctic drilling When you think of pipelines making news, Keystone is usually the first one to come to mind. But you may not be aware of another project on the eastern seaboard which is on the way and generating its own share of controversy among domestic energy opponents. The Atlantic Coast Pipeline is a project being undertaken by a coalition of energy companies consisting of Dominion Resources, Duke Energy, Piedmont Natural Gas and AGL Resources.

E&E NewsEnergy issues will be key for Mid-Atlantic voters -- poll 
Mid-Atlantic voters in a trio of states reported that energy issues will play a key role in how they cast their ballots in the 2016 presidential election cycle, while also endorsing a variety of measures to expand domestic energy production, according to a survey released yesterday.
 
Politico’s Morning EnergyPOLL SHOWS KEYSTONE, DRILLING SUPPORT 
The pro-drilling Consumer Energy Alliance has a new poll showing a majority or plurality of voters in Virginia, North Carolina and West Virginia want construction of the Keystone XL oil pipeline, the Atlantic Coast Pipeline feeding natural gas into the region, more offshore energy exploration, keeping coal power plants running and expanding shale production through hydraulic fracturing. The poll also showed energy policy being a major issue in the upcoming election, along with a tightly packed Republican presidential field and Hillary Clinton leading big among Democrats in all three states.
 
FierceEnergy: Energy policy top of mind among voters 
The results of a new poll by the Consumer Energy Alliance suggests that voters in Virginia, North Carolina and West Virginia strongly support the Atlantic Coast Pipeline and the development of energy infrastructure.  The poll takes the pulse of how these issues could play in the 2016 presidential election.
 
WHSV-TV3Poll: Virginia Voters Support Atlantic Coast Pipeline 
A new poll conducted by the Consumer Energy Alliance (CEA) has found that a majority of voters in North Carolina, Virginia and West Virginia have heard about the Atlantic Coast Pipeline and support it.
 
Augusta Free PressPoll: Voters in Virginia, North Carolina and West Virginia support pipeline 
Recent polling conducted for Consumer Energy Alliance (CEA) continues to examine what role the Atlantic Coast Pipeline, Keystone XL Pipeline, offshore production and other energy issues could play in the 2016 presidential election. And as echoed in recent poll results from Iowa, New Hampshire and South Carolina, voters in Virginia, North Carolina and West Virginia reinforced that energy policy will be an important issue when they cast their votes for president next fall.
 
Rapid News NetworkAppeals court tosses suits challenging climate change plan 
“I wouldn’t put high odds on it, either”, Anderson said, because EPA has been “very careful from the outset in trying to cover their legal bases”. The lawsuits from a coalition of 15 states and the nation’s largest privately held coal mining company claim the EPA exceeded its authority past year when it proposed new curbs on pollution from the nation’s coal-fired power plants.
 
EnergyBizCourt throws out challenges to EPA power plant rule 
In a unanimous decision, the U.S. Court of Appeals for the District of Columbia Circuit tossed out lawsuits filed by Ohio -based coal producer Murray Energy Corp. and a group of 15 states. They claimed the Environmental Protection Agency exceeded its authority last year by proposing a 30-percent national cut in emissions from existing plants through plans that individual states must design.
 
Consumer Energy AlliancePoll: Energy and Infrastructure Will Play a Key Role in 2016 Election
Recent polling conducted for Consumer Energy Alliance (CEA) continues to examine what role the Atlantic Coast Pipeline, Keystone XL Pipeline, offshore production and other energy issues could play in the 2016 presidential election. And as echoed in recent poll results from Iowa, New Hampshire and South Carolina, voters in Virginia, North Carolina and West Virginia reinforced that energy policy will be an important issue when they cast their votes for president next fall.
 
New York TimesE.P.A. Takes Step to Cut Emissions From Planes
The Obama administration said on Wednesday that it would take the first step toward regulating greenhouse gas emissions from airplanes, but it acknowledged it would most likely take years before stringent standards are enacted.
 
ReutersIn twist, Obama emissions plan satisfies industry, worries greens
For two years, President Barack Obama has used his executive power to impose new rules to cut carbon emissions, targeting cars and power plants, buoying environmentalists and infuriating industry. His latest foray - regulating commercial aviation - had the opposite effect.
 
BloombergU.S. Ousts Russia as Top World Oil, Gas Producer in BP Data
The U.S. has taken Russia’s crown as the biggest oil and natural-gas producer in a demonstration of the seismic shifts in the world energy landscape emanating from America’s shale fields. U.S. oil production rose to a record last year, gaining 1.6 million barrels a day, according to BP Plc’s Statistical Review of World Energy released on Wednesday. Gas output also climbed, putting America ahead of Russia as a producer of the hydrocarbons combined.
 
MarketWatchWhy shale producers are happy with this EPA fracking study
The energy industry agrees with the U.S. Environmental Protection Agency — at least when it comes to the findings of an EPA study on hydraulic fracturing. Michael Krancer, partner and chair of the energy industry team at law firm Blank Rome LLP said a draft report on the EPA study shows that fracking is “safe,” with “no widespread issues.”
 
Fox BusinessAre the EPA and Anti-Frackers Drinking the Same Water?
The EPA says that fracking does not cause “widespread” harm to drinking water, but some anti-frackers claim to have found evidence that proves it does.  “Anti-frackers are just being clever,” FrackNation Producer Phelim McAleer told FOX Business Network’s Stuart Varney.
 
International Business TimesUS Coal Production Will Decline Significantly If Obama EPA's Clean Power Plan Takes Effect: Report
The Obama administration’s signature plan to slash carbon emissions from power plants will deal a hefty blow to U.S. coal miners. America’s coal production could plunge to levels not seen since the 1970s if the proposed power plant rule takes effect, federal energy analysts said Wednesday. The dire forecast comes as major U.S. coal companies already are struggling with fierce competition from cheap natural gas, rising coal prices and waning demand from overseas customers like China.
 
Wall Street JournalExxon Tells Texas Regulators Its Wells Didn’t Cause Earthquakes
Exxon Mobil Corp. rejected any role in a string of recent earthquakes hitting the Dallas-Fort Worth area, saying geological data points to natural causes, not its operations.
 
BreitbartObama Expands Refuge to Stop Oil Drilling – Where No Oil Exists
To buy peace with climate change activists after the Environmental Protection Agency (EPA) determined that oil fracking does not poison water, President Obama has signed an executive order tripling the size of the Farallones National Marine Sanctuary, just north of San Francisco. The order bans oil drilling in the area Obama renamed the “Greater” Farallones National Marine Sanctuary. The move is merely symbolic, since there are no oil reserves in the area.
 
NPRAmerica's Next Economic Boom Could Be Lying Underground
There's a serious problem in the American economy right now: Big corporations are doing well, but real household income for average Americans has been falling over the past decade — down 9 percent, according to census data. "That's not good for America," says Harvard economist Michael Porter. "That's not good for America's standard of living. That's not good for our vitality as a nation."
 
Business WireCalifornia Dreaming: Water, Energy and Reality
California doesn't have a water crisis - it has an energy problem, according to Joe Petrowski, the managing partner of energy investment firm Mercantor Partners. Petrowski explains that the issues surrounding water are the foundation for the state's energy woes, and are destroying the underpinnings of the agriculture industry and limiting economic growth. As water rates rise and rationing takes hold, he warns that California's economy will take a hit.
 
ReutersU.S. should ditch 'outdated' oil export ban -Harvard
The United States must lift an "outdated" ban on oil exports to take full economic and geopolitical advantage of its hydraulic fracturing boom, according to a study by Harvard Business School and Boston Consulting Group released on Wednesday.
 
Associated PressCalifornia oil spill cleanup costs $62 million
The cost of cleaning up last month’s oil spill on the California coast has reached $62 million so far. An official with Plains All American Pipeline told The Associated Press on Wednesday that the costs are running at $3 million a day, and there’s no timetable for when the cleanup will be complete.
 
Associated PressCourt strikes down rules aiming to cut pollution from Talen Energy's Montana coal plants
A federal appeals court has struck down pollution rules intended to reduce haze from coal that is burned in Montana to provide electricity for people in the Pacific Northwest. Haze reduces visibility and is caused by tiny particles of nitrogen oxide and sulfur dioxide.
 
San Antonio Business JournalWhat does the Eagle Ford Shale need more of? ... And less of?
They say that two heads are better than one but the University of Texas at San Antonio's Eagle Ford Community Development Program brought nearly 100 business and community leaders together at an Wednesday conference to decide what the region needs.
 
InforumFracking rule would hurt ND income, jobs, state says
North Dakota stands to lose $300 million a year in oil income and 1,900 jobs if a federal rule on hydraulic fracturing takes effect later this month, state officials argue in court documents.
 
KERA NewsWhy Advocates Who Helped Pass Denton's Fracking Ban Now Want to See It Repealed
When voters in Denton banned the oil drilling technique called fracking there last year, the North Texas city took center stage in a national debate over oil and gas, property rights and the environment. But now some of the same people who pushed for the ban are calling to repeal it.
 
Eagle Ford TexasTexas oil fighting an unfair fight, claims David Porter
This means war! So says newly appointed Railroad Commission of Texas chairman David Porter of the oil output levels established by the Organization of Petroleum Exporting Countries (OPEC).
 
Victoria AdvocateDespite slowing production, shale's economic impact continues
While the Eagle Ford Shale's oil production has slowed down, drilling - and in turn, economic impacts in Victoria County - are expected to continue through the next decade.
 
Times-PicayuneSmall players -- not Big Oil -- drive Gulf of Mexico drilling amid downturn
Low oil prices have prompted major companies to slash drilling budgets and delay projects in the deepwater Gulf of Mexico this year. Oil and gas service companies are now looking to Big Oil's smaller, more nimble competitors to prop up activity in the region.
 
New Orleans AdvocateStagnant oil prices create opening for smaller firms, conference is told
Stagnant oil prices have led some major energy companies to delay new offshore drilling projects while creating an opening for smaller independent oil and gas firms to take advantage of lower equipment costs, industry leaders said Wednesday during the opening day of the Louisiana Energy Conference in New Orleans.
 
Washington TimesNuclear energy may have big future in Virginia: study
Virginia could supply virtually all of its future energy needs from nuclear power and even become a player in the global market to supply power from nuclear sources, according to a new think tank report released Wednesday. The case for the Old Dominion’s potential nuclear future was outlined in a new analysis from the Thomas Jefferson Institute for Public Policy, which argued that with the proper investments, Virginia could emerge as the newest contender in the international nuclear power market.
 
York Daily RecordYork County to receive more than $420,000 in natural gas revenue
York County will receive more than $420,000 in natural gas drilling impact fee revenue from activity in the Marcellus Shale starting in early July.
 
Observer-ReporterWashington County top recipient of gas impact fees for 2014
Washington County and its municipalities led the state in reimbursements from impact fees paid by drillers in Pennsylvania’s Marcellus Shale in 2014, with the county receiving $6.5 million and its municipalities garnering $11.1 million for a total of $17.63 million, according to a list provided Wednesday by the Pennsylvania Public Utility Commission.
 
Casper Star-TribuneNorth Dakota joins Wyoming and Colorado, oil and gas groups to urge delay in new federal drilling rules
North Dakota joined two other states and two oil and gas industry groups in asking a judge to postpone new rules for drilling on federal land while their lawsuit contesting the regulations moves ahead.
 
Albany Times UnionNew York fracking supporters pin hopes on EPA study
Supporters of the currently banned practice of hydraulic fracturing — or hydrofracking — for gas in New York state haven't given up hope entirely despite a decision by the Cuomo administration in December to continue the ban, which has been in place for more than five years.
 
Canton RepositoryIndustry executives say Utica Shale remains full of promise
Fewer permits are being issued and the number of rigs has dropped, but executives of companies that ship oil and natural gas said the changes shouldn’t be viewed as a sign that folks are backing out of the Utica Shale.
 
The Columbus DispatchFracking tax won’t be part of final budget deal, Ohio House insists
House leaders are largely holding their tongues on the sweeping Senate changes to their two-year, $71.3 billion budget, but they continue to make one thing clear: They will not pass a severance tax as part of the budget.
 
Winston-Salem JournalOpposition to test drilling for fracking faces entrenched power
There is no nice way to say it. The neighborhood where crews are drilling a 1,750-foot hole on public land to look for signs of natural gas isn’t pretty. Walnut Tree isn’t Buena Vista, Brookberry Farm Bermuda Run. Many of the homes along Crestview and Middlefork drives are two- and three-bedroom, one-bath jobs that sit on slabs of concrete.

Categories:

6-2-15 New Alaska North Slope Discoveries!

02 June 2015 9:32am

Rebecca Logan, Alaska Support Industry Alliance, Armstrong, North Slope Discoveries, Dave Harbour PhotoNEW Alaskan Discoveries Are Significant: See TODAY'S NEWS!  (Note: we thank Rebecca Logan {NGP Photo}, Alliance General Manager, for alerting us to this important announcement!)


Robert Dillon, US Senate Energy Committee, Lisa Murkowski, Keystone XL, Photo by Dave Harbour

Keystone XL Commentary by Robert Dillon (NGP Photo), U.S. Senate Energy and Natural Resources Committee


TODAY'S RELEVANT ENERGY LINKS, COURTESY OF CONSUMER ENERGY ALLIANCE


 
 
British Columbia's energy projects lure companies stung by Alberta downturn
Still, all of the LNG terminals proposed for the British Columbia coast remain in the planning stage while gas and crude- oil pipeline projects face ...
 
 
Kinder Morgan Trans Mountain pipeline expansion could cost Canada $22.1B, says SFU study
"Investing some $20 billion in potentially empty pipeline space imposes a very large cost on Canada, to the oil and gas sector, to the Canadian public ...
 

WASHINGTON, D.C. – On Wednesday, June 10, 2015, at 11:00 AM, in room 1324 Longworth House Office Building, the Subcommittee on Indian, Insular and Alaska Native Affairs will hold a legislative hearing on the following bill:

  • H.R. 2387 Don Young, Alaska Congressman, Native veterans, Photo by Dave Harbour(Rep. Don Young, NGP Photo), To amend the Alaska Native Claims Settlement Act to provide for equitable allotment of land to Alaska Native veterans.

 

 

 
 
 
 

Armstrong Announces Significant Discoveries on the North Slope of Alaska

June 02, 2015 07:00 AM Eastern Daylight Time

DENVER--(BUSINESS WIRE)--70 & 148, LLC (Armstrong) announced today the successful completion of the 2014/2015 winter campaign.

“These new discoveries show the immense potential that still exists on the North Slope of Alaska”

Two Nanushuk wells were tested this year, including the Qugruk 8 (Q-8) vertical well, which tested a small portion of the net pay zone and flowed 30 degree API gravity crude at rates of up to 2,160 barrels of oil per day (BOPD). The Qugruk 301 (Q-301), two miles north of Q-8, tested a 2,000 foot horizontal lateral. The well flowed at tubing constrained rates as high as 4,600 BOPD with minimal bottom hole pressure drawdown.

In the East Alpine field, two new penetrations were completed in the Alpine Formation, adding to the previous two penetrations. Three of these wells have encountered oil productive Alpine sand in excess of 95 feet thick at a depth of 6500 feet with porosities ranging from 15% to 25%. Well control and seismic data indicates the oil pool covers an area in excess of 15,000 acres.

The successful drilling program is the result of a joint exploration effort underway since 2012. Repsol operates the consortium and holds a 70% interest, Armstrong holds a 22.5% stake and GMT Exploration Company has 7.5%.

The activity to date since the beginning of exploration has resulted in the discovery of several oil fields on the North Slope of Alaska. All 16 wells (including sidetracks) drilled by the consortium have found hydrocarbons, most with multiple pay zones. In the Nanushuk reservoir, the consortium has drilled seven appraisal wells to date and has proven an oil pool that covers more than 25,000 acres, at a depth of 4,100 feet, with an oil column of 650+ feet, and up to 150 feet of net pay with an average porosity of 22%.

Although additional drilling is needed to confirm the ultimate size of some discoveries, this season’s results justify moving forward with development, and two of the fields are in the process of being permitted for development -- one in the Nanushuk and another in the Alpine Fm.

“These new discoveries show the immense potential that still exists on the North Slope of Alaska,” said Bill Armstrong, President of Armstrong Oil & Gas. “We strongly believe that there are many great conventional oil projects yet to be found and developed in Alaska, and with the passage of the More Alaska Production Act (SB 21), the state has encouraged new drilling and future developments.”

 
 
 
 
 
TODAY'S RELEVANT ENERGY LINKS FROM CONSUMER ENERGY ALLIANCE....
 
Washington Examiner: Offshore drilling would continue under most 2016 hopefuls
A May poll of South Carolina voters by Consumer Energy Alliance, a coalition of business and energy industry groups, showed 63 percent supported Arctic drilling compared with 32 percent who opposed it. Eighty-five percent of the Palmetto State voters polled said energy issues will play an important role in the 2016 election.
 
Associated Press: Things to know about the Calif. oil spill
The May 19 spill occurred along the same stretch of Santa Barbara County coast as the devastating oil platform blowout in 1969 that galvanized the environmental movement. While the impacts of the latest spill have been far less severe, the episode has angered conservationists and residents who lived through the earlier disaster.
 
Los Angeles Times: Santa Barbara fisherman files suit against oil pipeline company
As Santa Barbara fisherman is suing the Texas owners of the oil pipeline that ruptured last month, spilling up to 105,000 gallons of crude along the coast near Refugio State Beach, for economic damages.
 
Huffington PostOpinion: U.S. needs to back oil, gas boom to strengthen job market
Federal leaders should support the oil and natural gas boom and ease the permitting process for infrastructure projects to continue bolstering the nation's strong job market, writes Sean McGarvey, president of North America's Building Trades Unions and chairman at the Oil and Natural Gas Industry Labor-Management Committee. Energy infrastructure expansion could add jobs and generate savings for the nation with about $1.14 trillion of investments through 2025, McGarvey notes, citing the American Petroleum Institute. "The family-sustaining jobs that the boom is creating are exactly the type of jobs we need to rebuild the great American middle class," he writes.
 
National Journal: EPA Climate Plan Sent to White House for Review
The Obama administration has teed up a busy summer on climate change, with the final review of its tentpole climate rule swinging into action.
 
The Hill: Obama climate rule nearly complete
The Obama administration is conducting the final review of its controversial rule to limit carbon emissions from power plants. The White House Office of Management and Budget (OMB) said it is putting the regulation into the final review process after receiving the texton Monday from the Environmental Protection Agency (EPA).
 
The HillFrench official says climate deal should bypass
 

The French foreign minister said Monday that any international deal that comes from a climate conference in Paris this winter should be written so it avoids needing ratification by Congress. "We know the politics in the U.S." Foreign Minister Laurent Fabius said, the Associated Press reports. "Whether we like it or not, if it comes to the Congress, they will refuse."
 
The HillKansas governor signs bill to comply with power plant rules
Kansas will formulate a plan to comply with the Obama administration's climate rule for power plants despite ongoing opposition to it within state government. Republican Gov. Sam Brownback signed a bill last week directing the state's Department of Health and Environment and the Kansas Corporation Commission to work on a strategy to meet the goals of the Clean Power Plan, which looks to cut greenhouse gas emissions from power plants.
 
E&E News: FERC commissioner says EPA carbon rule may usurp state powers
States complying with U.S. EPA's Clean Power Plan run the risk of ceding jurisdiction over energy policy decisions to the federal government, according to Federal Energy Regulatory Commission member Tony Clark.
 
Breaking EnergyFERC Advances Reliability Safety Mechanism in Final Clean Power Plan
On May 15, 2015, the Federal Energy Regulatory Commission (FERC) provided the Environmental Protection Agency (EPA) with a letter signed by all five Commissioners that details its role in implementing a Reliability Safety Valve (RSV) in the proposed Clean Power Plan (CPP). The CPP proposal, issued on June 2, 2014, aims to reduce power sector emissions by 30 percent by 2030 relative to 2005 levels. It provides state-specific, rate- or mass-based targets to reduce power plant carbon dioxide emissions and guidelines for state plans to meet the targets.
 
Bloomberg: Global oil companies refocus businesses, promote gas
Royal Dutch Shell, Total and other global oil producers said Monday that they are collaborating to encourage the use of natural gas as an alternative to coal. The companies are increasing their gas production to levels greater than those of their oil output as they refocus their businesses on gas.
 
Reuters: The U.S. oil HF’s dilemma: crouch or pounce?
U.S. shale oil producers, having weathered the worst price plunge in their industry’s brief history, now face a dilemma: whether to stay in a defensive crouch after slashing their rig fleets, or start drilling more wells to capture a partial recovery in prices.
 
Financial PostThe great HF revolution paradox
One of the great paradoxes of the fracking revolution is that its “father,” the late George P. Mitchell, was a fan of sustainable development. This might not quite rank with cotton manufacturer Friedrich Engels supporting Karl Marx, but it comes pretty close. That’s because if sustainability has one key tenet, it is that the fossil fuel industry must be killed to save the planet. Instead, fracking has revitalized it.
 
OilPrice.com: Why natural gas may become the fuel of choice in this coal state
Kentucky has long been a coal state, and as such has consistently resisted efforts by the federal government to limit greenhouse gas emissions from its coal-fired power plants. Nevertheless, Kentucky may end up complying with the new rules by default.
 
Environmental Leader: HF Drives New Water Management, Treatment Technologies
As the water footprint created by hydraulic fracturing and directional drilling continues to grow in the US, water management issues are projected to become more challenging, Industrial WaterWorld reports. Fortunately, technical advancements and new initiatives are beginning to address water access, reuse and recycling issues.
 
Roll Call: Dems should back offshore drilling expansion
Democratic members of Congress should stop using false arguments to rationalize restrictions on offshore oil and natural gas production and exploration, and instead overcome "the Arctic myth" and expand access to such activities, writes Randall Luthi, president of the National Ocean Industries Association. He notes that contrary to the beliefs of some lawmakers and groups, knowledge has been developed for decades on "nearly every aspect of the Arctic seascape" through technologies and research funding from the industry and federal regulators.
 
Bloomberg: Corn Ethanol Is Worse Than Keystone
For years, environmental activists have opposed the Keystone XL pipeline, claiming that development of Canada’s oil sands will be “game over for the climate.” But if those same activists are sincere about climate change, why aren’t they getting arrested outside the White House to protest the use of corn ethanol?
 
International Business Times: HF Resumes in Denton
Natural gas drilling is starting up again in Denton, Texas, despite the city’s 7-month-old ban on hydraulic fracturing. Vantage Energy resumed operations Monday at its Denton well just weeks after Gov. Greg Abbott passed a law prohibiting cities from banning fracking on their home turf. Three activists were arrested at the drill site Monday morning after attempting to block an access road.
 
VICE News: Denton, Texas Banned Fracking — But the Drillers Are Back
In November of last year, voters in Denton, Texas sent the oil and gas industry packing, passing with a 58 percent majority a referendum banning fracking within city limits. But now the frackers are back. Last week, Colorado-based Vantage Energy began operations — legally.
 
NBC DFW3 arrested in Denton HF protest
The return of fracking came with protests and arrests in Denton. On Monday morning, three members of the Denton Drilling Awareness Group, also known as Frack Free Denton, were arrested by police on criminal trespassing charges.
 
Fierce EnergyDOE driving tribal clean energy in Alaska
The Department of Energy (DOE) is giving select Alaska Native villages assistance to implement President Obama's Climate Action Plan through the Alaska Strategic Technical Assistance Response Team (START) Program, which provides federally-recognized Alaska Native corporations' governments with technical assistance to accelerate tribal clean energy projects and initiatives.
 
FuelFixNew lawsuit filed against seven-year-old Arctic drilling auction
A 2008 government sale of Arctic drilling leases to Shell and other companies is set to face fresh scrutiny in the federal courts, with a dozen environmental and Alaskan groups preparing to file a new challenge to the auction.
 
Associated PressCelebrity make splash with Calif. drought awareness
Cher, another Malibu resident, has also let her grass go brown and has talked about the water shortage on Twitter. In a post last month, she complained California used fresh water for fracking. "We’re in a catastrophic drought, water means life??" she wrote. "We can’t drink oil."
 
Associated Press: HF halt sought in N.W. New Mexico
Environmental groups Monday renewed their call to end hydraulic fracturing in northwestern New Mexico as part of an ongoing battle over oil and natural gas development and the protection of cultural and archaeological sites. The groups delivered a letter to the Bureau of Land Management in Farmington, saying increased development has led to more truck traffic and dozens of new well pads during the last year, and that is harming the region that includes Chaco Culture National Historical Park.
 
E&E NewsCourt keeps activists out of HF lawsuit
The Colorado Court of Appeals on Thursday upheld a lower court's decision that the grass-roots group East Boulder County United had no legal right to intervene in a lawsuit between the Colorado Oil and Gas Association and the Front Range city of Lafayette, which passed a fracking ban in 2013.
 
Post IndependentNo oil and gas in North Fork Valley
Most here feel that oil and gas development simply does not fit into the lands where we live, grow our food, have our businesses and recreate. If oil and gas development is to happen in some places, we need to see other places removed from the threat of it happening there in the future. We want to have a say and direct input into how, where, if and when this activity occurs.
 
Associated PressNatural gas drilling on upswing in Lincoln Parish
A Texas energy company has purchased or leased about 71,000 acres in and around Lincoln Parish, where it is operating as many as eight rigs with plans for perhaps 10 more by the end of the year. The News-Star reports Memorial Resource Development Corp. of Houston is drilling for natural gas and natural gas liquids.
 
Morning Journal News: Drilling severance tax off the budget table, House speaker says
Any plans to raise the state tax on shale gas production and earmarking some of the proceeds for counties impacted by the drilling boom appear to be on hold, at least for now. That was the message delivered by someone who should know - Ohio House Speaker Cliff Rosenberger - who was among state legislators attending a forum held Monday and hosted by state Rep. Tim Ginter.
 
Columbus Business FirstOhio shale gas production up in 2015, but growth slowing
Natural gas production increased more than 11 percent during the first three months of 2015 compared with the previous three months. Gas production had increased by 25 percent in the fourth quarter compared to the third, according to the Ohio Department of Natural Resources.
 
American City Business JournalsOhio shale gas output rose 11% in Q1, regulator says
Natural gas production in Ohio's Utica Shale in the first quarter rose over 11% from the previous quarter to 183.6 billion cubic feet, according to the state Department of Natural Resources. The figures indicate a slower output growth than that of the fourth quarter of last year, when production increased by 25% from the third quarter.
 
Pittsburgh Post-GazetteAnalyst: Proposed Pa. severance tax would be highest among gas-producing states
Pennsylvania would have the highest severance tax rate among seven natural gas-producing states if it adopts Gov. Tom Wolf's proposed severance tax on shale gas production, state Independent Fiscal Office Director Matthew Knittel said Monday at a joint hearing held by state Senate committees on environmental resources, energy and finance. The tax rate for both value and volume of output should average about 7.3% after the end of the decade, Knittel said. He added that about 80% of the tax would be paid by consumers outside of the state.
 
Patriot-News: Pa. severance tax would be highest among natural gas states, report says
Gov. Tom Wolf's proposed severance tax would take Pennsylvania from last place to first among major gas-producing states in taxing the extraction of natural gas, according to the Independent Fiscal Office. In testimony before a Senate committee Monday, IFO Director Matthew Knittel said the effective tax rate after all state taxes are accounted for would be 7.3 percent. Neighboring states like Ohio and West Virginia levy taxes of 0.8 and 5 percent, respectively, while Texas' taxes range from 3.1 to 3.5 percent.
 
Pittsburgh Post-Gazette: Proposed severance tax would be paid by out-of-state consumers, agency says
Gov. Tom Wolf’s proposed severance tax on shale gas would shift Pennsylvania from having the lowest to the highest effective severance tax rate among seven major gas-producing states, but most of the tax likely would be paid by out-of-state consumers, the head of Pennsylvania’s Independent Fiscal Office testified on Monday. Matthew Knittel, director of the non-partisan office that provides budget analysis, gave the new assessment of the tax during a joint hearing of the state Senate’s energy and finance committees.
 
Patriot-News: HF, severance tax issues will dominate Senate hearings
Questions about how Pennsylvania regulates and taxes the natural gas industry will dominate two Senate hearings, including the vetting of Gov. Tom Wolf's environmental secretary pick. On Monday, the Senate Environmental Resources & Energy committee will scrutinize the governor's proposed 5 percent tax on natural gas drillers. The following day, the same panel will consider the nomination of John Quigley to run the Department of Environmental Protection.
 
Legal IntelligencerWolf creates natural gas pipeline task force
Pennsylvania is missing an even bigger opportunity for a return on Marcellus Shale drilling due to an inadequate system of pipelines, business officials have repeatedly said. Now Gov. Tom Wolf has formed the Pipeline Infrastructure Task Force to help coordinate thousands of miles of additional pipeline needed to take advantage of all the markets for the shale gas.
 
Associated PressVa. panel recommends new HF regulations
A Virginia advisory panel is recommending that energy companies disclose the chemical ingredients they use in horizontal fracking, a type of natural gas drilling that has spawned environmental concerns. The proposal is among 14 recommendations that have been sent to Gov. Terry McAuliffe for review.
 
Charleston Daily MailDavid McKinley: Connecting the dots on regulations
Too much of anything is a bad thing. If you plug too many appliances into an outlet, it will blow a fuse. If you overload a boat, it will sink.
 
Orlando Sentinel: Advocate: Fla. can lead on energy
Central Florida faces stronger storms and population surges due to global warming, an advocate warns. Florida trails the nation in promoting renewable energy, says an advocate for more action on climate change. Promoting renewable and more-efficient energy won't kill jobs — it'll create them, and advocate says.

 


Keystone Commentary and Status Report

by

Robert Dillon

U.S. Senate and Natural Resources Committee

Keystone – Four (More) Months and Counting

Just wanted to bring to your attention that today marks four full months since the State Department’s deadline for interagency comments on the Keystone XL pipeline.

We’re sure that like all of us, you’re shocked – shocked! – that the project remains stranded in completely arbitrary regulatory purgatory.  And by that we mean, not shocked in the slightest.

In mid-January, during the Senate debate on bipartisan legislation to approve the cross-border permit for this long-delayed pipeline, the State Department announced a deadline of February 2 for interagency comments on whether it would be in the national interest. 

The Washington Post reported that as a result of this “tight deadline” the Department was “picking up the process where it suspended it last spring.”  And the State Department confirmed on February 4th that it had received comments from all eight relevant agencies.   

So, what has happened over the past four months?  By all appearances, a whole lot of nothing. The State Department could have spent two full weeks on the comments submitted by each agency. (We wish we had that sort of time to meander through our daily work.) Yet Keystone XL remains in limbo due to an administration that won’t make a decision.

The Keystone XL pipeline’s cross-border permit has now been stranded for more than 2,447 days and counting. The president has dismissed the project as a “single oil pipeline.” And the Quadrennial Energy Review spent hundreds of pages diagnosing our nation’s energy infrastructure needs and challenges. 

Somewhere along the way, you’d think that President Obama would make a final decision on Keystone XL, instead of validating the Senate’s decision to start the 114th Congress with a bipartisan bill on this subject. You’d think thepresident would recognize the project’s potential for job creation in a still-struggling economy. 

You’d think he would recognize that pipelines are a safe, clean, and efficient option for transporting the energy that America needs in an increasingly unstable world. But at four (more) months and counting, you’d be wrong.

CNN: As Keystone vote looms, it's crunch time for federal agencies to weigh in

By Kevin Bohn, CNN

Updated 1:28 PM ET, Sun January 18, 2015

Washington (CNN) – With the Senate expected to vote soon on the controversial Keystone XL Pipeline, the State Department is now giving eight federal agencies two weeks to weigh in on it.

The State Department on Friday notified those agencies have only until February 2 "to provide their views on the national interest with regard to the Keystone XL Pipeline permit application," a department official told CNN Saturday, adding that the department "continues its review" (More....)


 

 
Categories:

5-21-15 In Memoriam: Chuck Becker; Our Recent Commentary Reverberates

21 May 2015 6:35am

Today's News and Commentary


In Memoriam

Point of personal privilege: Our great friend, Chuck Chuck Becker, In Memoriam, Photo by Dave Harbour, Alaska Support Industry Alliance, World Trade Center, World Affairs CouncilBecker, passed away this morning (Photos).  Today, family and countless friends are mourning his passing.  We will attempt to provide more official information as the family makes it available.

Chuck and I met in the mid-1970s in Washington D.C.  Another dear friend, the late Anchorage Mayor George Sullivan was his client and I was representing the first North Slope gas project, the Arctic Gas Consortium, with Washington and Anchorage offices.

After Chuck had moved to Anchorage and completed his economic development assignment with the Sullivan administration, and I had joined Atlantic Richfield Company, he and I worked on some communication projects.  He soon became a respected communications consultant to some of the most important businesses in the 49th state.

Chuck was deeply involved in support of reasonable development of Alaska's resources through leadership positions with the Alaska Support Industry Alliance and after years of service was named "Director Emeritus".

A veteran of the United States Department of Commerce, he served as the long-time director of the Alaska Export Assistance Center, revered for his accomplishments by the Alaska World Affairs Council which he also served as a director and past president.

Indeed, I have always considered Chuck to be deserving of the title, "Alaska's Diplomat"; for his every mission at home or abroad uniquely reflected great credit upon the United States, Alaska, his personal integrity and his own considerable abilities.

I believe the world, the country and the State of Alaska are better for having hosted the life of this dedicated man.

I believe that Chuck's friends and family will remember him as much for his patient, gentle and principled nature as for his professional accomplishments.  

I also believe those memories will be enduring: multiplied and cherished many times over in the hearts of family and friends as their own years of service continue.  

-dh

 


ALASKANOMICS: 

ISER Publication: The Path to a Fiscal Solution: Use Earnings from All Our AssetsScott Goldsmith, ISER, Alaska Permanent Fund, Fiscal Crisis, Photo by Dave Harbour

By: Scott Goldsmith, NGP Photo

Our Commentary Last Week Continues to Reverberate  

One of our commentaries last week was edited and reprinted by the national, Master Resource Blog, and concluded with a number of interesting reader comments.  (It was followed by a more heavily researched piece dealing with the environmental strategy to defeat capitalism.)

From Master Resource, it was adopted into an Austrian Economics Addict editorial: "In this article by Dave Harbour titled, Seattle Hearing On Shell’s Arctic Rig Docking: A Clash Of Visions, he talks about the differences between the two sides in this battle. Here are some excerpts from the article.

“If our civilization is to continue, our well-grounded public and private leaders need to wake up and undertake communication programs designed to better articulate...."

*     *     *

Would we like to see your reaction?  Yes we would, and we will reprint or link selected submissions.

Readers wishing for a more in-depth look at the role of environmental armies in securing their avowed goal of 'the destruction of capitalism' may be interested in our less politically correct editorial last week, "Useful Idiots".

-dh

Calgary Herald Editorial:  Everyone seems to agree that more pipelines are needed to carry Alberta bitumen to new markets, so let’s hope premier-designate Rachel Notley puts a lid on any further talk that could endanger approval of Enbridge’s Northern Gateway project.


Today's Energy Links by Larry Persily:

B.C. agrees to fiscal terms with Petronas for LNG project
 
(Wall Street Journal; May 20) - The province of British Columbia and Malaysia’s state-owned energy company Petronas on May 20 said they had agreed on fiscal terms to promote construction of a liquefied natural gas export terminal near Prince Rupert.  
 
First Nation opposition presents legal question for LNG project
 
(Business in Vancouver; May 19) – The decision by the Lax Kw’alaams First Nation in British Columbia not to accept an offer from Pacific NorthWest LNG raises a number of questions, such as whether Petronas, which has yet to make an investment decision, might cut its losses if First Nations mount an all-out battle. 
 
Companies deny Wood Mackenzie report of delays for Australia LNG
 
(Bloomberg; May 19) - Chevron and Japan’s Inpex Corp. face potential delays in starting liquefied natural gas projects in Australia, according to consulting firm Wood Mackenzie. Chevron’s Wheatstone and Inpex’s Ichthys ventures could start output in mid-2017, later than the companies forecast, Angus Rodger, Asia-Pacific analyst at Wood Mackenzie, said in an interview....
 
U.S. exports could help push LNG market toward more spot sales
 
(Bloomberg; May 19) - The U.S. is about to change the global LNG market. When the first tanker carrying liquefied natural gas leaves Cheniere Energy’s Sabine Pass terminal in Louisiana in December, it will turn traditional consumers into new traders with more bargaining power. 
 
Cheniere says it is talking with LNG buyers in China
 
(Reuters; May 19) - Chinese buyers are eyeing long-term supplies of liquefied natural gas from Cheniere Energy’s U.S. export operations....
 
Tokyo Gas looks to invest in more U.S. production as price hedge
 
(Reuters; May 18) - Tokyo Gas, Japan's biggest gas utility, is looking to invest in more U.S. shale gas production ....
 
GAIL signs preliminary deal to sell some of its U.S. LNG to Shell
 
(Reuters; May 20) – GAIL, India's largest state-owned natural gas distributor, has signed a preliminary deal to sell some of its contracted volumes of liquefied natural gas to Shell....
 
Proposed Nova Scotia LNG project gains provincial permit
 
(The Chronicle Herald; Halifax, Nova Scotia; May 19) - After an environmental assessment, Nova Scotia’s provincial environment minister has granted Bear Head LNG approval to build an 8-million-tons-per-year liquefied natural gas plant. 
 
 
Australia’s LNG industry has its share of worries, survey says  
 
(Sydney Morning Herald; May 18) - A lack of competitiveness, unwieldy regulations and inflexible industrial relations threaten to derail a bonanza from the liquefied natural gas sector in Australia as it transitions from a $250 billion investment phase into production. 
 
BHP says Australia LNG project ‘falls lower’ on its list of priorities
 
(Bloomberg; May 17) - BHP Billiton is lowering the priority of its proposed $10 billion Scarborough liquefied natural gas project with partner ExxonMobil in Australia amid a fall in prices and ....  
 
Natural gas industry faces increasing opposition to pipelines
 
(USA Today; May 17) - The U.S. is producing record amounts of natural gas.... But building the infrastructure necessary to bring that fuel to market is increasingly difficult.  
 
North Dakota farmers, ranchers frustrated over salty wastewater spills
 
(Wall Street Journal; May 16) - For most of the years since wildcatters began tapping the North Dakota prairies for oil, energy companies have existed peacefully with the farmers and ranchers ....
 
State legislatures act to protect drilling from local restrictions
 
(Wall Street Journal; May 19) – A Texas city last year banned fracking; state lawmakers want to make sure that never happens .... 
 
Yukon Territory gold mine would consider using LNG for power
 
(CBC News; May 16) - Kaminak Gold Corp. is aiming to finish a feasibility study for its Coffee Gold project near Dawson City....
 
Yukon First Nation will invest in LNG-fueled power plant
 
(Yukon News; Whitehorse, Yukon Territory; May 15) - The decision to invest in Yukon Energy’s liquefied natural gas-fueled power plant in Whitehorse, the Canadian territory’s capital city, is supported by the Kwanlin Dun First Nation community, according to ... Chief Doris Bill.... 
 
Oil exports to Canada help ease pressure on U.S. storage capacity
 
(Wall Street Journal; May 19) – Crude oil exports to Canada provided a crucial relief valve for U.S. producers this year, according to a new report from ...

Categories:

3-20-15 Alaskan and Canadian Energy Investors Face a Competitive New World

20 March 2015 7:46am

See this week's Petroleum News, just released.

Compared to Russian and Canadian Arctic energy initiatives, U.S. efforts are pathetic.  Russia's Arctic power could well influence competitive factors discussed below in ways detrimental to the world's democracies.  Read more....    -dh 


Decision makers: look below, and ignore the competitive, new, worldwide oil & gas market at your own peril and at the risk of removing opportunities from your succeeding generation of young, hopeful, ambitious children that you and your friends enjoyed.  -dh

Today, an energy analyst friend privately opines on natural gas pricing, which should be of some interest to potential investors in a $40 - 60 billion Alaska natural gas pipeline--as well as Canadian project participants.  Read below.

We hasten to add that natural gas supply and pricing is still not as "world-wide fungible" as oil.  

Until now, the North American gas market has focused almost completely on North American supply/demand factors...unlike oil which has traded within a fairly narrow worldwide price range--offsetting U.S. prices somewhat because of the multi-decade crude oil export ban.  

U.S. Sen. Lisa Murkowski yesterday stressed the economic and national security benefits of ending the 1975 federal ban on exporting domestically produced crude oil at a hearing before the Senate Energy and Natural Resources Committee.  See the video, also featuring ConocoPhillips Chairman & CEO Ryan Lance (NGP Photo).  

However, because of extensive, competing world-wide LNG export projects, the continuing expansion of world-wide shale technology, and the increasing attraction of natural gas for power generation it is probably only a matter of time before we approach a worldwide pricing range and supply balance for natural gas.  

Investors must absorb and interpret these rapidly changing and multi-dimensional factors as they consider different lease sale bidding strategies and varied projects in different jurisdictions with wide-ranging rules and risks.  This reality makes it essential that Alaska's and Canada's energy decision makers (i.e. our readership base) retreat from unpredictable, greedy and provincial tax, royalty, regulatory policies and lavish spending practices--which affect tax policies.  

Everywhere, those blessed with oil and gas supply should keep one eye on the competition and one eye on reducing public spending to sustainable, essential levels.   See yesterday's examples, "Lessons For Alaska From Canada".    -dh


Our energy analyst friend writes, "Natural gas has seemingly had a lot going for it in the past year:

  • The US came out of last winter at record low inventories
  • Pipelines keep getting added and redirected to distribute natural gas to hungry markets (although slowly)
  • The weather has been brutal east of the Rockies, all the way into the South
  • More gas keeps displacing coalmoving to Mexico, and benefiting slightly from a modestly improving economy
  • The number of gas (and especially oil) rigs has dropped off big-time

"Despite it all, natural gas is in the doldrums  price-wise. The HH is $2.83, and some recent negative basis-priced gas has sold for 99 cents.  The worst of it all, however, is that it is hard to see the end of the “tunnel”. There is no futures monthly price that hits $4 until 2022."


For our Alaskan and Canadian decision maker friends: here is the face of worldwide oil & gas competition from Energypedia:

GoM: Statoil adds acreage in the Gulf of Mexico Central Lease Sale
http://www.energy-pedia.com/news/gulf-of-mexico/new-162961?editionid=101595

Brazil: Petrobras breaks record for well drilling depth in Sergipe-Alagoas Basin http://www.energy-pedia.com/news/brazil/new-162960?editionid=101595

Ophir Energy announces full year results - updates operations  http://www.energy-pedia.com/news/general/new-162959?editionid=101595

Tower Resources announces corporate update
http://www.energy-pedia.com/news/general/new-162958?editionid=101595

Trinidad: Range Resources announces Trinidad operational update 
http://www.energy-pedia.com/news/trinidad/new-162957?editionid=101595

Iran upstream could be open for business this year
http://www.energy-pedia.com/ajax.aspx?advertid=11045&referurl=http://www.af
razadvisers.com/toolkit.html&editionid=101595

Colombia: Anadarko awards CGG the largest proprietary 3D marine seismic survey in Colombia
http://www.energy-pedia.com/news/colombia/new-162956?editionid=101595
 
Bulgaria’s Mizia Oil and Gas awarded four exploration blocks in Bulgaria  <http://www.energy-pedia.com/news/bulgaria/new-162955?editionid=101595>

UK: Britain hands lifeline to North Sea oil industry with tax cuts  http://www.energy-pedia.com/news/united-kingdom/new-162954?editionid=101595

UK: Grangemouth operator INEOS begins fracking consultation  http://www.energy-pedia.com/news/united-kingdom/new-162953?editionid=101595

Australia: Gardline CGG to acquire Gippsland 2D infill seismic survey for Geoscience Australia  http://www.energy-pedia.com/news/australia/new-162952?editionid=101595

US shale oil firms brace for more pain as crude resumes slide  http://www.energy-pedia.com/news/usa/new-162951?editionid=101595  

UK Budget lays strong foundations for regeneration of the UK North Sea  http://www.energy-pedia.com/news/united-kingdom/new-162950?editionid=101595
Oil & Gas UK welcomes the Chancellor’s decisive move to restructure the North Sea tax regime ....

GoM: Gulf of Mexico Lease Sale 235 yields $539 million in high bids on nearly one million acres in Central Planning Area http://www.energy-pedia.com/news/gulf-of-mexico/new-162949?editionid=101595

Canada: Conoco to cut 7 percent of Canadian workforce
http://www.energy-pedia.com/news/canada/new-162948?editionid=101595  ConocoPhillips plans to cut about 7 percent ... as tumbling oil prices have made its operations in the country less profitable.

Israel's Tamar group to sell gas to Egypt via pipeline
http://www.energy-pedia.com/news/israel/new-162947?editionid=101595.  A group of private customers in Egypt has agreed to buy at least $1.2
billion of natural gas from Israel's ....

Iraq: Gulf Keystone ramping up Shaikan production
http://www.energy-pedia.com/news/iraq/new-162946?editionid=101595  

Morocco: Mubadala Petroleum signs geological study agreement with Morocco  http://www.energy-pedia.com/news/morocco/new-162945?editionid=101595

Indonesia: Statoil awarded new licence offshore Indonesia  http://www.energy-pedia.com/news/indonesia/new-162944?editionid=101595


While the U.S. administration characteristically fumbles with global warming and Arctic regulatory issues, Russia -- and to a similar but smaller degree, Canada -- moves out smartly to take the initiative while establishing and enforcing jurisdiction -- and sovereignty.  More below....  -dh

Barents Observer by Atle Staalesen.  As Russia is unfolding a major combat alert drill in its Northern Fleet, the country’s government approves the setup of a new federal Arctic Commission. Headed by hardline Deputy Prime Minister Dmitry Rogozin, the Commission will coordinate all government authorities involved in regional developments.

Included in the Commission mandate are issues of social, economic, political, as well as military, importance, newspaper Kommersant reports.

...

Rogozin will have five Commission deputies to his disposal: Minister of Natural Resources Sergey Donskoy, Minister of Energy Aleksandr Novak, Minister of Economic Development Aleksey Ulyukaev, Minister of Transport Maksim Sokolov and Deputy Secretary of the national Security Council Vladimir Nazarov. A total of 60 people will be included in the new structure, among them representatives of the oil and gas industry, the ministry of Defence, the FSB, the Presidential Administration and regional governors.

Categories:

3-16-15 The Future of Oil Prices According to An Astute Reader - Senators Sullivan's Reputation Spreads

16 March 2015 5:35am

Dan Sullivan, US Senator, Alaska, Maiden Speech, Master Resource, Dave Harbour PhotoOur friend, Rob Bradley, Master ResourceRob Bradley (File Photo-R) of the Master Resource Blog, saw U.S. Senator Dan Sullivan's (NGP Photo) Maiden Senate Speech on this website and has further promoted it to his large international audience (here).  (Our original coverage and speech text)  -dh


Halloran Opines On Proposed Ohio Severance Tax and Future of Oil Prices

James Halloran, Energy Analyst, Ohio, Severance Tax, Oil Prices, Northern Gas PipelinesRepublican Governor Proposes Ohio Severance Tax?  Our friend, Independent Energy Analyst James R. Halloran (File Photo) just returned from the Ohio Oil and Gas Association Winter Meeting where he reported that, "the big issue is Governor Kasich’s proposal for a (completely mis-named) “severance tax”. We will have a lot more on that topic after (maybe) cooling off slightly. Momma did not train this writer to suffer fools gladly, and that is what Ohio is faced with on the topic of taxation of the oil & gas business."

Steve Heimel of APRN retires, Personal, Photo by Dave Harbour(Point of personal privilege: our friend and longtime APRN senior reporter Steve Heimel (NGP Photo)  is retiring after decades covering countless Alaska issues.  -dh)

On oil prices, Halloran says, "The overwhelming question (outside of Ohio) is,  When will oil prices go back up (how high is a second implicit question)? That question was posed to us numerous times at the Winter Meeting. Our standard answer is that oil pricing is a process, not an event. Assume for the moment that Brent oil (we try to stay with the international price for analysis purposes) were to return to $70 by midyear (this is NOT a prediction; it is for discussion purposes): Can we tell them what will happen to the price in the next six months after that?

"The relevant questions that need answering first", he says, "are:

  • "Have there been fundamental changes in the market that will cause crude oil to trade at a different price range than $94-114 for an extended period of time? If so, what are they, and how will they affect the industry longer term?
  • "If the the major inputs to the current market are more likely of a transient nature, what will have to change for prices to recover? Will a price recovery cause some of these transient inputs to recur?"

He elaborates that, "there are some effects that are of a transient nature (maybe) that are significant contributors to the oil price drop, of which we have commented heavily in the last several months:"

  • "The strong dollar, which is following a trend to get even stronger, and which will likely provide a major head wind for any near-term recovery
  • "Massive amounts of capital and incredibly low interest rates, putting many PE, Major, and vulture players ready to jump into the Energy pit. This is related to the strong dollar, and will provide no relief from the fact that there are too many players.
  • "Too much production, which is having a hard time to find a home (see the chart of inventories below, courtesy of Mike Bodell), which graphically illustrates the situation.
  • "Much of the capital cutbacks are coming out of the hide of service companies, so that lower costs will not really bring lower production volumes soon."

"No one is cutting back to the point of ceding “market share” to others. This capitalism at its purest. Unfortunately, it is being done in an environment in which central banks are imposing zero effort to observe capital discipline: Nothing. Nada. Rien. Zip.

"The only “good news” (but less helpful than one might think) is that the rig count continues to drop.  It is too much to try to get trends from the rig count on a weekly basis, so we will be looking at it monthly. This should make it easier to spot trends. Our observations are as follows:

  • "The downturn in rigs is much more directed toward oil (no surprise). Oil rigs are down 45% from our base date last December, compared to 25% down for gas rigs. The Marcellus, Utica, and Eagle Ford, which have large dry gas plays, are not down in rigs as much as the other basins.
  • "Vertical rigs are down much more than horizontals. Also, Small Basins are harder hit than the major basins.  This consistent with the WSJ article, which indicates that major players are still drilling big wells (just not completing them).

"BOTTOM LINE:  The beatings will continue until capital discipline improves and/or the number of players is reduced.  There may be rallies, but they will likely be shallow."  (Note: While Halloran has sources to back his statistics, we removed them in the interest of space.  -dh)

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