Commentary:  Yesterday, BP's Dawn Patience provided a report demonstrating that the company spends $1.5 billion and supports more than 350 vendors, 2,300 BP employees and 22,500 total jobs in Alaska.  Here's the .pdf.  

The company's significant, Alaska projects include, "13 oilfields on the North Slope (including Prudhoe Bay, Endicott, Northstar and Milne Point), which account for about two-thirds of Alaska oil production."  The report goes on to note that the company spent over $25 billion with 15,000 vendors throughout the country in 2012, creating a national economic impact of $147 billion.  

The Alaska impact is great, but we believe it to be a fraction of what it could be were state and federal energy policies more reasonable.  BP spent about 6% of its total US expenditure in the country's largest  state.  We see that number as a reflection of two things: 1) the difficult cost challenge of producing new oil on Alaska lands and, 2) national regulatory restrictions on access to oil rich federal lands and 3) very competitive domestic energy investment alternatives.

We provide these Alaska and national numbers to emphasize the choices investors have.  Being truly aware of the competition for capital should convince policy makers that in order to retain investment, their areas need to be competitive.  

In Alaska's case, having some of the highest taxes, labor and operating costs in the free world does not translate to, "competitive" over the long haul…especially when most of our competitors don't need an 800 mile pipeline to bring oil and gas to a market hub and when most are located in more temperate zones that are less remote to the markets.  

To add insult to injury, Alaska's tarnished reputation is to increase taxes retroactively — after investment has been made — and when a moderate tax reform is enacted, lawmakers make its effective date prospective, not retroactive.  

Furthermore, a pending citizens initiative to repeal oil production tax reform, in effect, cannot but help delay if not derail certain investor decisions–which is probably what the environmentally oriented initiative sponsors hope for.

Investors are also mindful that Alaska's unsustainable spending/income trend makes any of today's investors potential targets for massive tax increases in the not too distant future. 

To ignore these realities is to ignore the responsibility of leadership and reflect a misunderstanding of economics.     -dh 

NEW ANWR BATTLE ERUPTS

Juneau Empire (TODAY).  U.S. Senators Maria Cantwell (D-WA) and Mark Kirk (R-IL) introduced legislation Wednesday that would designate 1.56 million acres of land in the Alaska National Wildlife Refuge as wilderness. …

Sen. Lisa Murkowski (NGP Photo) called the bill “anti-Alaska legislation” and said it would ban oil and natural gas development in the non-wilderness portion of ANWR.

“I cannot understand how, given Alaska’s decades of responsible energy development, this is still viewed as a good idea or a necessary action,” Murkowski said. “At a time when our nation clearly needs more jobs, more revenues, and more domestic energy, this bill defiantly ignores all three.”

Alaska State Rep. Charisse Millett (NGP Photo), R-Anchorage, issued a statement Thursday saying that it was unfortunate that “some members of Congress are more interested in waging a policy fight based on outdated beliefs that fly in the face of reality.”

“It’s disappointing, though not surprising, that senators from states claiming to be good faith neighbors with Alaska are once again attempting to dictate its economic future,” Millett said in the statement. “Alaska has a track record of responsible oil and gas development that spans decades.”

Petroleum News.  After a recent speech in which Interior Secretary Sally Jewell laid out the Obama administration’s vision for conservation, Alaska’s Democratic senator, Mark Begich (NGP Photo), fired her a letter promising a fight.  (See our Commentary)

 

 

 

 

Today's News Links From Consumer Energy Alliance:

Huffington Post: On Fracking, It's Time to Discuss Facts 

In the past few years, the use of the technology of hydraulic fracturing to produce oil and natural gas has dominated national energy policy discussions. Much of the discourse has been fraught with fear, misunderstanding and, in some cases, misinformation. However, in some cases, dispute is slowly being replaced by reasoned debate, acceptance and increasingly responsible regulation and use of this technology.

Breaking Energy: 10 Tips to Save Energy Consumers Money this Winter 

The EIA’s latest Short-Term Energy and Winter Fuels Outlook finds US households heated with natural gas, propane and electricity face higher heating bills this winter. Higher heating costs can hit families on fixed budgets hard, so the Consumer Energy Alliance compiled a list of winter energy-saving tips that can soften the increased heating cost burden anticipated this season.

1200 WOAI: USA Now Number One Oil and Gas Producer in the World 

Boosted by massive oil and gas production from the Eagle Ford shale oil play southeast of San Antonio, the U.S. Energy Information Administration reports that the U.S. is overtaking Russia and Saudi Arabia and will become the world's largest producer of oil and natural gas in 2013, 1200 WOAI news reports. The average production in the U.S. is the equivalent of about 22 million barrels of oil natural gas and related fuels.  That compares to Russia's daily production of about 21.8 million barrels per day.

Capital Soup: Consumer Energy Alliance-Florida Executive Director to Speak at the National Hispanic Caucus of State Legislators 2013 Summit

As if consumers don't have enough problems with a sputtering economy, heath care bills and a wheezing jobs market, winter and its bigger heating bills are around the corner. According to the U.S. Energy Information Administration, more than 90% of American households will see higher energy bills this winter. The EIA says the total cost for natural gas heat this year will climb 13%, to $679. Homes with electric heat (38% of the total housing stock) will fare better, as prices will climb by only 2%.Either way, homeowners and renters who handle their own utility bills should take steps to keep heating costs down — even before the weather really turns cold.    

Huffington Post: Where Is Obama on Climate Treaty?

n Warsaw, 189 countries are represented in the negotiations that started Monday. Many people are rightly wondering about the country responsible for the most climate pollution in the atmosphere. There are reasons for hope about the U.S. reducing its emissions, but Obama still shows no indication he's serious enough to give international climate policy the force of law. According to the Energy Information Agency, U.S. carbon dioxide (CO2) emissions have decreased to 1992 levels, achieving about a 13 percent cut since 2005 levels (other climate pollutants are uncertain). Much of this CO2 decrease is due to dropping coal for electricity.

 

Bloomberg: Tennessee Valley Authority Defies McConnell With Coal Cut

The Tennessee Valley Authority said it will cut its use of coal-fired electrical generation by about half of current levels, shuttering some units and converting others to burn natural gas to meet tighter emission-control regulations. The board of the Knoxville, Tennessee-based public utility voted today to close eight coal-burning generators. Among them are two that will be shut and converted to burn natural gas at Paradise Fossil Plant in western Kentucky, which U.S. Senate Republican leader Mitch McConnell, who represents the state, had urged be kept as coal units.

750KTRH AM: The U.S. is Headed for Energy Independence

Energy independence is coming for the United States much sooner than most oil industry watchers had expected. New advances in technology push developments like the Eagle Ford shale formation as a source of crude, meaning the U.S. could be the top oil producing nation in the world by 2016.  And, it goes further than that.

Kitsap Sun: California's Low-Carbon Fuel Rule Is Working, Study Says, but Threats Loom

California is replacing oil with cleaner-burning fuels in cars and trucks, thanks to a landmark low-carbon fuel rule, according to a recent report. But the rule's fate is uncertain amid legal chaos and a shortfall in the production of clean biofuels. The report, conducted by researchers at the Institute of Transportation Studies at the University of California, Davis, said California drivers saved more than two billion gallons of gasoline in the two years since the launch of the rule—about as much gas as the state uses in two months. The carbon emissions reduction is equal to taking half a million vehicles off the road.

The Wall Street Journal: West Virginia Preps for Shale-Gas Play

A Brazilian conglomerate unveiled a proposal Thursday to build a multibillion-dollar natural-gas refining complex in West Virginia—the biggest such development in the state as it tries to profit from the region's drilling boom. The proposed project by Odebrecht Group, a privately held São Paolo-based engineering, construction and petrochemical company, would include a plant known as an ethane cracker, where natural gas is turned into ethylene, a chemical-industry feedstock. It would also include three plants to produce polyethylene, which is used to make numerous products, from plastic bags to pipes.

Reuters: COLUMN-Shale 2.0, going global: Kemp

How quickly the shale revolution spreads from North America to the rest of the world is the single most important factor affecting the outlook for oil and gas markets over the next two decades. For pessimists, the conditions that made the shale revolution possible in the United States will be difficult to replicate, slowing the spread of shale oil and gas production. In its 2013 World Energy Outlook, the International Energy Agency projects shale oil production will reach almost 6 million barrels per day (bpd) by 2030, about 6 percent of global supplies.

Citizens’ Voice: Gas companies: 'We're hiring'

Although there won't be any wells in the Wilkes-Barre/Scranton area, there will still be lots of natural gas-related career opportunities, people in the industry say. From truck drivers to laborers, engineers to scientists, the jobs are out there. "We're hiring, and the pay is good," John Augustine of the Marcellus Shale Coalition said of the industry after a seminar at the East Mountain Inn on Thursday. Although the Marcellus Shale underlies Luzerne and Lackawanna counties, its natural gas was "cooked out" by the high temperatures that hardened the coal.

Breaking Energy: Energy Quote of the Day: Keystone XL’s Role in a Low Oil Price Scenario

Language on the proposed Keystone XL pipeline buried on page 491 of the International Energy Agency’s most recent World Energy Outlook may provide more fuel for opponents of the project, but it could offer a leg up to project proponents, as well. The WEO 2013 forecasts that oil sands production will average 4.3 million barrels per day in 2035, up from 1.8MM bbl/d last year, “contingent on the construction of major new pipelines to enable the crude to be exported to Asia and the United States.” The pipelines in question are Keystone XL, which would link Alberta oil sands to Gulf Coast refineries, and two pipelines from Alberta to Canada’s western coast to allow for Asia-Pacific exports.

Houston Business Journal: Rail vs. pipeline debate lacks facts and fairness

The production of oil in the Bakken Formation and revitalized Spraberry oil field is playing central roles in powering our country’s march toward energy independence and in reshaping our national energy debate. Unfortunately, one aspect of that debate has been tainted by bad research and dubious claims. None have been as egregious as one advanced by some increasingly desperate Keystone XL backers who have asserted in various forums that the use of rail to move crude oil from fields to refineries puts the public in jeopardy.

Juneau Empire: Legislation introduced would prevent drilling in ANWR

U.S. Senators Maria Cantwell (D-WA) and Mark Kirk (R-IL) introduced legislation Wednesday that would designate 1.56 million acres of land in the Alaska National Wildlife Refuge as wilderness. “The Arctic National Wildlife Refuge is a national treasure that must be preserved for future generations to experience and enjoy,” Cantwell said in a statement. “I’m proud to join Senator Kirk on this bipartisan bill to protect one of the last pristine public lands in America. We need to advance forward-looking solutions for America’s energy future, while preserving this treasured public land and the unique ecosystem that depends on it.”

Denver Business Journal: Broomfield vote flips, city says frack ban approved, will recount

Voters in Broomfield approved a ban on hydraulic fracturing, better known as fracking, within the town’s borders, by a razor-thin margin of 17 votes out of 20,683 cast, according to the latest tallies by city officials posted Thursday night. The margin is so narrow that a recount is mandatory, according to the city. That's a switch from the unofficial results posted after the elections ended Nov. 5, which showed the measure losing by about 13 votes. The ballot question called for a five-year moratorium on fracking.

The Wall Street Journal: The Right Way to Frack

What is one thing you wished the public understood about fracking? BILL RITTER: The public should understand that hydraulic fracturing can be done in a way that is both environmentally sound and socially responsible. Oil and gas producers have been developing and using hydraulic fracturing techniques for decades. It has only been in the last decade, however, that hydraulic fracturing has been combined with directional drilling, allowing producers to tap tight shale oil and gas reserves that previously were considered non-retrievable.

The Wall Street Journal: ‘Fracking’ Is a Loaded—and Misunderstood—Term

Pro or con, “fracking” has become a politically charged word. In the 1984 textbook “Fundamentals of the Petroleum Industry,” hydraulic fracturing or “fracking” is defined as follows: Modern fracturing uses pressured water, gels of various types, and other fluids that are compatible with the formation and hydrocarbons… to inject tons of fluid thousands of feet into the earth at nearly unimaginable pressures…great enough to lift and break up the producing formation…When the fracturing pressure is removed, overburden pressure reasserts itself and sometimes reseals the formation as tightly as before. The contractor, therefore, pumps a propping agent (e.g. usually sand) down the hole with the fluid. It props (tiny) fractures open against formation pressure when the fracturing pressure is gone.