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      This is your public service 1-stop-shop for Alaskan and Canadian Arctic energy commentary, news, history, projects and people. We update it daily for you. It is the most timely and complete northern energy archive 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 name others existing before 2001.  -dh

 

12-29-15 Wilson Condon Passes

29 December 2015 2:06pm

Wil Condon Passes, Photo by Dave HarbourOur friend, former Alaska Attorney General Wilson Condon Passes: Anchorage Daily Planet.  NGP Photo.  

Wilson and I became closely acquainted during his service with the Hammond administration.  In subsequent years, as he served in the Knowles and Murkowski administrations we had additional reason to confer an a number of gas pipeline policy matters as well as oil and gas tax, royalty and regulatory issues.  

He was an accomplished Alaska attorney.  He was a gentleman, a kind man, and an objective, fair-minded professional.  Here is the Family obituary:

Wilson L. Condon, 76, former Alaska attorney general and Department of Revenue commissioner, died on Sunday, Dec. 27, 2015, at the Anchorage Pioneer Home.

In public and private practice, Condon was closely involved in the most important oil and gas issues facing Alaska over the past 35 years.

His central legal achievement was leading the Amerada Hess royalty litigation against oil and gas producers. Facing determined legal and political opposition, Condon helped win $1 billion for the state and set the rules for Alaska to get a fair share for its royalty oil.

Personally, Condon may have been most proud of coaching the 1968 Stanford University crew team to victory. He died after several years battling the effects of Lewy Body Dementia.

A celebration of life will be held at 4:30 p.m. on Wednesday, Jan. 13, 2016, at the Egan Convention Center. Attendees are encouraged to honor Wilson's flare for the cravat by donning their favorite ties.

After working from 1971 to 1980 as an assistant attorney general and then deputy attorney general for the Department of Law, Condon was named attorney general by Gov. Jay Hammond, serving in that position from 1980 to 1982.

He was Department of Revenue commissioner under Gov. Tony Knowles from 1995 to 2002, and then continued his public service under Gov. Frank Murkowski, heading the oil and gas section at the Department of Law from 2003 to 2005.

In between the departments of Law and Revenue, he was a partner in Anchorage law firms where he led the state's complex royalty litigation against North Slope oil and gas producers.  Alaska had accused the companies of underpaying royalties to the state. The case settled after more than 15 years of legal battles, with the last settlement agreement signed in 1995.

Condon was born on Sept. 28, 1939, in Livingston, Mont., just north of Yellowstone National Park, where his father worked for the National Park Service.

He graduated from Phillips Exeter Academy in New Hampshire, and in 1963, earned a bachelor's degree in political science from Stanford University in Palo Alto, Calif. He went on to receive his law degree from Stanford in 1971.

In between degrees, he served as assistant director of student financial aid at Stanford from 1965 to 1968. Condon was a founding member of the Stanford Environmental Law Society. While there, he served as a member of the Stanford University Crew Board and coached Stanford's freshman and varsity crews from 1961 to 1970.

Condon served as chairman for the Alaska Governor's Commission on the Administration of Justice from 1980 to 1982, was on the Governor's Alaska Gas Pipeline Task Force from 1980 to 1981, was a member of the Alaska Code Revision Commission from 1983 to 1991, served on the board of trustees of the Alaska Permanent Fund Corp. from 1980 to 1982 and also from 1995 to 2002, and served on multiple state boards and commissions during his tenure at the Department of Revenue.

After leaving state service, he worked at the Anchorage office of K&L Gates from 2005 to 2011, continuing to assist with oil and gas cases on behalf of the state.

Condon is survived by his wife of 41 years, M. Susan, of Anchorage, Alaska. The couple lived in Juneau and Anchorage during his tenure with the state. He is also survived by his sister, Marianne (Dennis) Donnelly of Pocatello, Idaho. He was preceded in death by his father, David and mother, Lorna.

Wilson Condon was a longtime supporter of several nonprofit organizations in Alaska, including the Anchorage Youth Court, KSKA public radio, United Way and the Gastineau Humane Society (animal shelter) of Juneau, Alaska.

In lieu of flowers, friends are invited to make donations to the Anchorage Youth Court, PO Box 100359, Anchorage, AK 99510 (http://www.anchorageyouthcourt.org/donate.html), or Phillips Exeter Academy, 20 Main St., Exeter, NH 03833-2460 (https://secureportal.exeter.edu/supportexeter/makeagift/Pages/MakeAGiftO...). Arrangements are with Janssen's Evergreen Memorial Chapel. - See more at: http://www.legacy.com/obituaries/adn/obituary.aspx?n=wilson-condon&pid=1...

 

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12-28-15 Tax Policy, Spending Policy, Oil Policy and Gas Pipeline Policy Are All Related!

28 December 2015 2:44pm

Northern Gas Pipeline Readers Join Us In Commenting On Current State of Affairs

Bill Walker, Alaska Governor, bankruptcy, insolvent, state subsidy, tough times, 49th State, Photo by Dave Harbour

From a liberal friend, and our reply.  
Mark Neuman, Finance Co Chairman, Alaska Legislature, government spending, Photo by Dave HarbourPetroleum News.   House Finance Co-Chair Mark Neuman (NGP Photo) says if Gov. Bill Walker wants to generate new revenue, part of that solution needs to be removing regulations that could stifle {More....}

From Ak-Headlamp: 

The New York Times covered Alaska’s ongoing fiscal woes as oil prices continue to fall.

... although other resource-based economies are also seeing the long-term impact of declining oil prices, Alaska’s situation is unique as Governor Bill Walker (NGP Photo) must address new taxes and Permanent Fund issues as well.

While the [More…]

Hi Dave:

As you know, I have a poor opinion of politicians. They really only have one issue, ”re-election”.  

This then brings us to this year and the giant problem they face. Will they act in the best interest of the state or the best interest of themselves?

For that matter, what is the best interest for the State? The spectacle of taxing our citizens while paying them dividends is to me, incomprehensible.

The obvious solution is to use the permanent fund earnings for which they were intended, to fund state government, but eliminating the dividend  could be sure death for some politicians.

My prediction, for what it’s worth, is that they will do little more than talk, putting off any decision for as long as they can while hoping for a re-bound in oil prices. It’s going to be an interesting session.

Best regards and wishing you a Merry Christmas and happy new year.

Neil Bergt, Homer, Ak

Our Commentary:  Alaska faces formidable challenges.  

Its oil production is a quarter of what it was a quarter century ago.  

The state operating depends on oil for 90% of its operating budget and the entire economy is a third dependent on fossil fuel wealth production.  

Alaska's rate of spending is unrestrained by both logic and the reality of constituent demands for more spending, more money.  

Alaska subsidizes its lavish spending with available savings accounts (i.e. not including the constitutionally protected Permanent Fund) to the tune of $3.5-4 billion a year.  Those available savings accounts will be depleted within two years.  Thus, the legislative session beginning in January will be on of the most critical ever: with the pressures to spend facing the pressures of an insolvent government.

Government insolubility may not happen for another few years, assuming current spending practice, but -- note this -- the upcoming 2016 election will come sooner.  Will voters support those who support their spending requests?  Or, will voters support those who cut funding of their spending requests?  

Place your bets now; the cards will be turned up and revealed this next November.  -dh

From a liberal friend, and our reply:

Merry Christmas, Dave!

It now looks like oil will never recover quickly enough to save Alaska from financial hardship.  The more oil that moves through the pipe, the lower the price will be, so that won’t save us or the oil companies.  Barring some disruption in some other country that sends the market higher on the world stage, oil will probably languish at about where it is now: not high enough for anybody.  Oil companies will have a tough time with those places that cost a lot to drill (like Alaska) and shale oil looks doomed.

Our note: In the reply below, we did not comment much on the content of our friend's opinion since we have answered similar emails from him over the past few years.

We would note, however, that:

  • Higher past taxes, based on Alaska's history, would have produced higher entitlement spending, not a "bigger cushion".
  • Shifting tax gun sights on the mining, timber and fisheries industries, as my friend wishes would produce very little tax.  More tourist tax will produce fewer jobs and taxes.  What more tax would produce would be at the expense of jobs and economic wealth production in industries that are much more "people intensive" than is the "capital intensive" oil industry.
  • Liberal federal policies have already decimated Alaska's forest industry.
  • Sales taxes are the fairest taxes, but become predatory when combined with a plethora of other taxes and fees -- and little spending reform.
  • Suggest anyone who wants to sell California glaciers first get federal and environmental activist approvals before wasting the time and money.'
  • As to raising and selling cariboy and moose: same answer as the above...but add the Paris Climate Change objections to greenhouse gasses produced by flatulent herbivores.

In short, the legislature has no easy solutions, but clearly a major one is cutting the cost of spending!    -dh

So, what we should have been doing is taxing the hell out of oil when it was high so we would have a bigger cushion to fall back on.

Maybe you should begin shifting your newsletter now to the mining, timber and fisheries industries as Alaska will now have to look to them as the next cash-cow.  Cutting the state budget to the bone will only cause people to leave and you remember what happened when they did that back in the late 1980s!  We have to tax the resources or ourselves and we don’t seem to have the guts to tax ourselves.

Allan

PS.  What about these ideas, Dave:

1.     10% tax on tourists purchases.

2.     Sales tax in the summer only with rebates to Alaskans who actually live here.

3.     Eliminate the Permanent Fund altogether and call the rebate from #2 above “your dividend”.

4.     Sell the water from the melting glaciers to California before they melt anyway!

5.     Start state run moose and caribou farms and sell the meat to the lower 48 as “certified Alaska Wild”!

Merry Christmas to you, A......., and your dear ones.
 
I don't ask that you love the wealth makers among us.  
I only pray that the new year finds us all grateful for our comfortable lifestyles and aware of both their temporal and eternal origins and of their ultimate ends.
 
I further hope that we and our fellow citizens will  come to fully appreciate the timeless value of honesty and fair dealing: that Alaska should become the place where "a deal is a deal",  devoid of hostility and infused with good will toward all.
 
A stable, reputable state provides a predictable investment climate that begets yet more investor interest.  Such a place does not demonize those with whom it bargains.  
 
And may you find peace in your relationship with your Maker through His Son -- and the Holy Spirit He sends to sustain, direct, and protect us as we edge closer to the portal of eternity.
 
Thus, you have my prayer and wish for calmness and peace in your life.
 
Dave
 
P.S.  We did "tax the hell" out of oil investors and are about to do it to other industries to compensate for intemperate spending practices.  
 
We changed/increased oil taxes about 20 times after investments were made.  We created discriminatory taxes and even made some tax increases retroactive.  
 
The approach you advocate is well established in the 49th State and is one of the reasons we are where we are today.  You, I and our kids have both taught and studied in Alaska's lavish halls of education, made possible by men and women who supported our culture as they took multi billion dollar risks that we would live up to our bargained commitments and that they would find and market something that would produce returns both on and of their investments.  
 
That said, I realize how hollow this logic may seem if one is wedded to the notion that Alaska's government should own the means, manner and all location of natural resource production.  In that case, one would be advocating for socialism, a "fundamental change" in our system.  And that would require a different, "ends justify means", logic which I find abhorrent, and a harbinger of worse economies to come -- as socialist government throughout the ages have shown us.
Sent from my iPhone
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12-23-15 Chamber fights oil and other taxes in the name of investment climate "certainty".

23 December 2015 10:43am

Job providing chamber urges legislators to resist job killing taxes as tax advocate Harry Crawford prepares for legislative bid.  -dh

The day before Christmas Eve, we're just connecting some dots, as usual....  -dh

Ak-Headlamp.  Harry Crawford, organizer of the failed ballot initiative for a gas reserves tax has filed to run for office.  Again.  Crawford didn’t identify if he would run for the house or the senate – Rep. Lance Pruitt would be his opponent in a house race and Senator Cathy Giessel would be the opponent in a senate race. 

APRN by Josh Edge.  ... Among the potential solutions endorsed by members of the Anchorage Chamber are a system to leverage use of the Permanent Fund, a statewide sales tax, and even a statewide lottery.

Taxes targeting specific industries – whether it’s oil and gas, mining, tourism, or otherwise – however, are notably not endorsed by the Chamber, according to Bustamante.

“Anytime a state starts looking at taxes and regulation, then you create this air of uncertainty,” Bustamante said. “And that’s not a good message as it perpetuates out to investors – either investors in the particular industry, or just investors overall.”  ... Read more.

12-22-15 Wise Counsel from "Keep Alaska Competitive"

22 December 2015 8:04am

Wise Counsel from "Keep Alaska Competitive" (Caelus, et. al.)

Larry Persilyt, LNG, gas pipeline, Alaska, Federal Coordinator, Photo by dave HarbourLow LNG and oil prices threaten LNG projects and Alaska's economy....  dh

Alan Bailey, Petroleum News, Dave Harbour PhotoPetroleum News by Alan Bailey (NGP Photo).  

As oil prices tumble and with them the potential solvency of the state of Alaska's finances, a heated debate is emerging over both the extent of the problem and the means of putting the state's fiscal position back onto an even keel.

On Dec. 7, during Law Seminars International's Energy in Alaska c....

APRN by Rachael Waldholz.  This month, the state committed to another year of work on the Alaska LNG project. That’s the effort to bring natural gas from the North Slope to the Kenai Peninsula for export.

But natural gas prices have been plunging along with oil. In the Asian spot market, gas is selling for a third of what it did two years ago.

Should Alaska be worried Larry Persily (NGP Photo) says it’s true: the global market for natural gas is not so good right now.

“It’s wretched, it’s miserable, it’s lousy, it stinks,” he said. “There’s way more gas than there is demand…it’s like oil!”  Read more and play audio of interview....


Wise Counsel from "Keep Alaska Competitive"

More good news from Alaskanomics: a still stable unemployment rate.  

But, will it be sustained through the winter and the coming year?  

Part of the answer lies in how government policy faces the challenge of shortage: will government recognize its self-imposed reliance on oil to fund 90% of the operating budget and make appropriate operating budget cuts in wake of low oil prices.  

Or, will government avoid cutting its own operations and instead punish a struggling oil industry and private enterprises with new and/or increased taxes and fees that inhibit future investment?          

-dh

Despite challenging times, Alaska’s oil and gas industry is making significant investments in the state.

According to the Alaska Division of Oil and Gas, the industry spent $7 billion on North Slope assets in 2014. And in a climate of sub-$40 per-barrel oil, the state has seen far fewer capital and operating spending reductions than almost anywhere else in the world.      

ConocoPhillips announced that it would be cutting its Alaska capital spending by just 5 percent in 2016, compared to 15-30 percent cuts the company is making in other operations around the world. ConocoPhillips completed its CD-5 project and began producing the first oil from the National Petroleum Reserve-Alaska in the fall (see video below). The company also has plans to begin producing up to 30,000 barrels per day from another NPR-A field, the greater Moose’s Tooth unit, by 2018.

ExxonMobil continues to bring online the Point Thomson gas field west of Prudhoe Bay (see story below), and new, smaller players in Alaska’s oil patch, like Hilcorp, are investing in new projects (Liberty) and older fields on the North Slope.

Cook Inlet is also seeing renewed interest. Both Hilcorp and Furie Operations Alaska are investing heavily in reinvigorating legacy fields and exploring for new deposits. Furie announced it is bringing a jack-up rig to Alaska to begin drilling in its offshore Kitchen Lights unit. Since November, Furie has increased natural gas production from the unit from 2 million to 9 million cubic feet-per-day.

Casey Sullivan, Caleus Energy, Alaska North Slope, Alliance, Photo by Dave HarbourCaleus Energy’s plans for its $1.2 billion Nuna project depend largely on current state oil and gas tax credits. Nuna is located in the Oooguruk field, several miles offshore in the Beaufort Sea. Casey Sullivan, Caleus’s external affairs manager, told the Resource Development Council that the project could ultimately bring the state more than $1.2 billion in royalties and taxes over the lifespan of the project. He urged lawmakers in Juneau and the governor’s office to be careful making changes to the tax credit system as they look to find ways to fill a growing $3.5 billion state budget hole.

“This isn’t free money. We spend money in the economy, and no industry has a greater job-multiplier effect than oil and gas — about 9 to 1, meaning for every one job in the industry, nine other jobs are created indirectly by the spending,” Sullivan said.

 

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12-21-15 Port for future Arctic OCS efforts?

21 December 2015 1:30pm

Fairbanks News Miner.  Tucked away in this year’s Image result for shell oil logoCoast Guard Reauthorization Act, a $175 million bill that just passed the Senate by a unanimous vote, is a land transfer that could be consequential for Alaska’s future role in the Arctic. Conveying 2,500 acres of federal land to state control at Point Clarence on the Seward Peninsula, the provision could set the location for a long-sought deepwater port for the northern half of the state. It’s the latest in a slow-moving chain of events coming together into a framework for Alaska’s future role as a leader in arctic affairs — if those here and in Washington, D.C. maintain their focus.

Point Clarence is northwest of Nome, near the tip of the Seward Peninsula that constitutes the westernmost reach of the North American continent. It’s 786 miles almost due north of the state’s closest existing deepwater port in Unalaska. In shipping terms, that’s a world away. The port in Unalaska is well more than 1,000 miles from offshore oil exploration sites in the Beaufort and Chukchi seas, a fact that complicated producer Shell’s efforts to coordinate the movements of its oil platform and associated ships when drilling test wells.

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12-20-15

20 December 2015 2:44pm

CBC.  A landslide collapsed and buried buildings at and around an industrial park in the southern Chinese city of Shenzhen on Sunday, leaving 27 people missing, authorities said.  A nearby section of China's major West-East natural gas pipeline also exploded, the official China Central Television (CCTV) broadcaster reported.

Petroleum News by Gary Park.  The head of Canada’s leading energy pipeline organization is retiring, comfortable in the knowledge that, despite coming under frequent public disapproval, the industry can take pride in what it has accomplished.

For Brenda Kenny, president and chief executive officer of the Canadian Energy Pipeline Association for the past decade, the numbers are clear proof that the statistical record of pipeline safety by the association’s 12 member companies should make Canadians who live close to pipelines “feel more secure now than ever.”

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