Alaska to EPA – “We don’t need your help.”

Alaska steps into legal battle over hard rock mining regulation
Alaska Public Media, Krysti Shallenberger, June 21, 2018

The Environmental Protection Agency’s decision to roll back a regulation to make hard rock mining companies pay for cleanup is sparking a new legal battle between Alaska and environmental groups. The state is intervening in a lawsuit over the EPA’s decision to rescind an Obama-era rule that would make sure hard rock mining companies pay for cleaning up their messes, even if they go bankrupt.

Our Take: Rolling back Obama-era rules is no easy task – but it’s worth the effort. As Cori Mills, spokesperson for the Alaska AG’s offices notes, the state of Alaska already has a process in place to deal with the issue. “We don’t need the EPA’s help.”

AGDC selects shortest, least expensive Spur Highway route
The Peninsula Clarion, June 21, 2018

The Alaska Gasline Development Corporation has chosen a route for the Kenai Spur Highway around its planned natural gas liquefaction plant. The preferred route, announced in a public meeting in Nikiski on Wednesday evening, would stay relatively close to the edge of the planned plant near the bluff in Nikiski. The rerouted section would be about 3.4 miles long, departing the current highway around mile 19, joining North Miller Loop and rejoining the existing highway between miles 21 and 22.

Our Take: AKHEADLAMP is looking for some big news out of AGDC today. Stay tuned!

OPEC Influencers
S&P Global, June 21, 2018

OPEC and its oil-producing allies have an important decision to make on June 22. At their meeting in Vienna the group, which controls almost half of global supply, will decide whether to boost output to ease prices or stick to quotas and risk cooling demand. Their task would be easy if supply and demand were the only factors determining policy and prices, which climbed above $80/b last month. Oil markets are among the world’s most complex, with a diverse range of actors influencing sentiment. The S&P Global Platts OPEC Influencers interactive chart is designed to illustrate how various players drive prices through their actions and words.

Our Take: After all the news leading up to today’s meeting – AKHEADLAMP is pleased to see that someone has made a game, literally, out of the OPEC decision making process! Happy Friday!

Russia-Saudi Plans for Super-OPEC Could Reshape Global Order
Bloomberg Markets, Will Kennedy, Elena Mazneva , and Wael Mahdi, June 22, 2018

When the group overseeing the so-called OPEC+ deal met last night, proceedings were dominated by two nations: Saudi Arabia and Russia. It was probably a snapshot of the oil market’s future. Beyond the drama of this week’s diplomatic efforts to agree to an increase in oil production, the more significant longer-term development may be moves to make Russia’s role in managing global supply permanent, bringing together the two largest oil exporters. Russia isn’t a member of OPEC, but for the last two years has led a group of countries outside the group lending support to the cartel, creating a coalition of 24 producers that’s been dubbed OPEC+.

Our Take: Certainly, something to watch. Will it be a “seismic shift in oil’s world order” or will it go the way of Russia’s Gas Exporting Countries Forum, and have little impact on supply?

U.S. Asks Japan to Halt Iran Oil Buying in Harder Stance

Bloomberg Markets, Tsuyoshi Inajima  and Serene Cheong, June 22, 2018

The U.S. has asked Japan to completely halt oil imports from Iran, going beyond the reductions that were demanded when sanctions were imposed earlier this decade, according to people with knowledge of the matter. The request to stop imports entirely signals a tougher American stance than in 2012, when nations were allowed to continue buying at reduced levels in exchange for waivers from U.S. financial restrictions.

Inside a Heist of American Chip Designs as China Bids for Tech Power
CNBC, Paul Mozur, June 22, 2018

With a dragnet closing in, engineers at a Taiwanese chip maker holding American secrets did their best to conceal a daring case of corporate espionage. As the police raided their offices, human resources workers gave the engineers a warning to scramble and get rid of the evidence. USB drives, laptops and documents were handed to a lower-level employee, who hid them in her locker. Then she walked one engineer’s phone out the front door.

OPEC+ to Boost Oil Output After Saudis Secure Deal With Iran
Bloomberg, Javier Blas, Julian Lee and Salma El Wardany, June 22, 2018

OPEC and allies including Russia will boost oil production starting next month, offering relief to consumers after Saudi Arabia secured a last-minute deal to overcome Iran’s opposition. While it fudged some differences between members, the agreement is a victory for Riyadh and Moscow, which for a month have advocated for a production increase to alleviate high prices. It’s also a success for U.S. President Donald Trump, who has criticized the Organization of Petroleum Exporting Countries for inflating the cost of fuel.

Renewable energies won’t replace fossil fuels

Embracing the Energy Transition and Alaska’s Resources
Resource Development Council, Susan Dio, June 20, 2018

Yesterday, Susan Dio, Chairman and President of BP America, Inc., spoke at the Resource Development Councils 43rd Annual Membership Luncheon. Some key points:

Missed the luncheon? Watch Susan’s speech in it’s entirety below.

 

Fake News from ENGO’s as they are watched for relationships with foreign governments. 

House lawmakers step up probe on green groups’ international work
Reuters, Valerie Volcovici, June 20, 2018

U.S. Republican lawmakers on Wednesday stepped up their scrutiny of environmental groups’ work with foreign countries, requesting that the Center for Biological Diversity turn in a list of documents detailing their work with Japanese officials. It was the third action that Representatives Rob Bishop and Bruce Westerman have taken this month to put a spotlight on foreign governments’ relationship with green groups, who they allege can be used to influence U.S. policy or national security. Bishop heads the House of Representatives Natural Resources Committee and Westerman chairs the House Subcommittee on Oversight and Investigations. “The Committee on Natural Resources is continuing its oversight of the potential manipulation of tax-exempt 501(c) organizations by foreign entities to influence U.S. environmental and natural resources policy to the detriment of our national interests,” they said in a letter to the Center for Biological Diversity.

Our Take: Good. 

Executive Order Regarding the Ocean Policy to Advance the Economic, Security, and Environmental Interests of the United States
Executive Orders, Land and Agriculture, June 19, 2018

By the authority vested in me as President by the Constitution and the laws of the United States of America, it is hereby ordered as follows: I am repealing and replacing bureaucratic overreach created by President Obama (Headlamp’s simplified version of the President’s Executive Order)

Our Take: This is great news for Alaska and America. Here are some bullet points from the White House Fact Sheet about what the EO does:    

  • Promotes a strong ocean economy by rolling back excessive and unnecessary bureaucracy
  • Promotes expanded access by states, businesses, and the public to federal data and information, and maximizes taxpayer dollars by coordinating priority research
  • Empowers states by eliminating duplicative federal bureaucracy and supporting appropriate federal engagement with Regional Ocean Partnerships, pursuant to the scope described in the order
  • Directs Ocean Policy Committee to streamline federal coordination on ocean policy, with a focus on growing the ocean economy

State efficiency incentives averaged $24 per customer, ranged from $0 to $128 in 2016
Today in Energy, U.S. Energy Information Administration, June 20, 2018

Alaska is number 50 in energy efficiency customer incentives according to the Energy Information Administration.  Most state reported spending supported residential and commercial energy efficiency: 43% of spending targeted residential customers, and 49% targeted commercial customers. The remaining 8% of spending targeted industrial customers. Average reported spending per customer varied by state, from $0 in Alaska to $128 in Massachusetts.

Shell sells $1.3 billion of oil and gas assets in Norway, Malaysia
Reuters, Ron Bousso and Nerijus Adomaitis, June 20, 2018

Royal Dutch Shell (RDSa.L) announced the sale on Wednesday of oil and gas assets in Norway and Malaysia for over $1.3 billion, bringing it closer to a target of $30 billion in disposals by year-end. The Anglo-Dutch company agreed to sell to OKEA, a Norwegian producer backed by private equity firm Seacrest Capital, its 45 percent interest in the Draugen Norwegian offshore field and a 12 percent in the Gjoa block for a total of $566 million, the two companies said. Earlier, Shell announced the completion of the sale of a 15 percent stake in Malaysia LNG (MLNG) Tiga to the Sarawak State Financial Secretary for $750 million.

OPEC Races for Oil Deal as Iran Strikes More Conciliatory Tone
Bloomberg Markets, Laura Hurst , Javier Blas , and Grant Smith, June 20, 2018

OPEC officials meeting in Vienna raced to salvage an oil-production deal on Wednesday after Iran said it was likely to reject any agreement that raised output from the group. With two days before OPEC ministers formally meet in Vienna to decide on policy, delegates were in closed-door talks to find a way to boost production and ease consumer anxiety about high oil prices. Making his first comments after arriving in Vienna, Saudi Oil Minister Khalid Al-Falih said “of course” there’ll be a deal this week.

Our Take:  Does it really matter if Iran objects to increasing output?  Read the next story…

China has an Iran oil lever over Trump and it’s all playing out at OPEC meeting
CNBC, Patti Domm, June 20, 2018

The U.S. trade dispute with China, in a roundabout way, could determine how successful the U.S. will be in sanctioning Iran’s oil this time around — and that uncertainty is also playing out at OPEC. In the tit-for-tat tariff war with the U.S., China said last week it would put tariffs on U.S. oil imports. The U.S. is not a major oil exporter, but it has been growing exports and is exporting about 2 million barrels a day of crude. About 300,000 barrels of that heads to China each day, and China could stop those purchases depending on how the trade dispute develops with the U.S., according to Scott Sheffield, executive chairman of Pioneer National Resources.


From today’s Washington Examiner, Daily on Energy:

PROTESTS ABOUND AT COMMENT DEADLINE FOR ARCTIC DRILLING: The comment period for drilling in the Arctic closed at midnight, which inspired a number of protests from conservationists and environmental groups.

Our Take: Lots of fake news from the ENGO’s today. “Only the drillers were heard, promises not to undercut environmental laws were broken, requests for more hearings were denied.” Claims of 700,000 comments submitted in favor of protections fails to reveal how many form letters (that are considered one comment) were included in the 700,000, and how many came from non-residents. All stakeholders had the same opportunity, requests for more hearings and an extension of the comment deadline came from both sides and were denied.

Germany flops on climate change. Natural Variability is culprit – not drilling or fracking

Germany Flops on Climate Change Goals
Reason, Nikhil Sridhar, June 18, 2018

Germany won’t be able to meet the goal of cutting emissions by 20 percent before 2020. But the attempt caused residential energy prices to double.  State-sponsored ventures into renewable energy have hit a wall in Germany, the supposed leader of the war on climate change. The Associated Press reports that Germany’s environment minister, Svenja Schulze, said that the country will probably not meet its carbon emission reduction goals for 2020. This follows the government’s official decision to abandon these goals in January.  Germany set out to establish itself as a leader in the international fight against man-made climate change by promising to cut carbon emissions by 40 percent by 2020 and up to 95 percent in 2050, relative to 1990 levels. The German government now says it will miss the 2020 target by eight percent.

Our Take: The author calls Germany’s efforts “a noble goal.” AKHEADLAMP will eschew rhetoric and call it what it is – political pandering that ignored the impact on its citizens – doubling the residential energy rate – to appease other nations and environmental groups. If government subsidies couldn’t  help the “supposed leader of the war on climate change” – perhaps it’s time to change course. 

 

China expected to spare LNG imports from tariffs
Chron, Katherine Blunt, June 18, 2018

China’s response has been swift and predictable: When the Trump Administration on Monday threatened to expand tariffs to include some $200 billion in Chinese goods, Asia’s economic powerhouse promised swift retaliation should that occur. The back-and-forth picked up on Friday, when the U.S. announced tariffs on $50 billion of Chinese goods. China countered with measures that will affect a wide range of American imports, including many energy and petrochemical products. But China’s list excluded one notable commodity: liquefied natural gas.

Our Take: Good for Alaska LNG!! How will Governor Walker handle the situation? In an interview with KTUU he said ““Next week, I will meet in Washington with leaders from both governments who have been at the table leading the efforts to avoid an unnecessary trade war. I will continue to work directly with both sides to make sure Alaska’s interests are protected.”   

 

China tariffs could halt surging US crude oil exports to a huge growth market
CNBC, Tom DiChristopher, June 18, 2018

The escalating trade war between China and the United States threatens to halt surging U.S. crude oil exports to China, which has become the biggest Asian market for American drillers over the last 2½ years. Beijing on Friday announced plans to slap a 25 percent duty on U.S. crude oil in response to President Donald Trump’s decision to hit $50 billion in Chinese goods with an equivalent tariff. The impact on overall U.S. crude oil exports could be muted in the near-term, provided drillers are able to find other buyers. But if the standoff persists, it could destroy a huge source of future demand growth, drive down the cost of U.S. crude and weigh on the balance sheets of America’s shale drillers.

 

Oil producers face their ‘life or death’ question
Financial Times, June 19, 2018

It is a question that dominates the energy industry and will determine what the oil majors, including Shell and BP, look like in the future. Driven by investor pressure and a need to rein in costs after the oil price halved in 2014, the industry has largely abandoned new investment in the type of mega-projects, from Arctic exploration to Canadian oil sands, which were once its forte. In the second half of this decade total capital expenditure by the large oil and gas groups is projected to fall by almost 50 per cent to $443.5bn from $875.1bn between 2010-15, according to Norwegian consultancy Rystad Energy. Although partly offset by a fall in oilfield development costs, the drop also coincides with the big groups ploughing more capital into shorter-term projects, which pay off quickly, as well as renewable energy.

 

OPEC at the Crossroads
The Oxford Institute for Energy Studies, June 2018

In this Energy Insight, we consider the hard realities of oil market and price dynamics for 2018 and 2019 to draw, analyze and assess the most prevailing oil output policy scenarios that are likely to drive the discussion during the upcoming OPEC Ministerial Meeting, through the lens of a structural VAR model of the global oil market. The study does not take a stance on what will be the outcome of the June 22nd OPEC Meeting, but rather it attempts to quantify and evaluate the risks associated with each policy scenario in terms of the impact on oil prices and global demand growth for the remainder of 2018 and 2019.

Our Take: Oxford on OPEC. This is a very helpful look at the impact of each  potential policy outcome from the OPEC meeting scheduled for June 22nd. Not for the faint of heart. 

 

U.S. oil pipeline companies, producers seek relief from steel tariffs
Reuters, Liz Hampton, June 18, 2018

Major U.S. energy companies including Plains All American Pipeline (PAA.N), Hess Corp (HES.N) and Kinder Morgan Inc (KMI.N) are among many seeking exemptions from steel-import tariffs as the United States ratchets up trade tensions with exporters including China, Canada and Mexico. There have been nearly 21,000 requests overall for exclusions submitted to the U.S. Commerce Department since the Trump administration imposed levies this year. Of those, more than 500 petitions involve pipes and related materials.  Initial decisions are expected this month, offering the first clues as to how the administration will balance an agenda favoring oil and gas exports while also supporting the U.S. steel and aluminum industries.

Our Take: 21,000 requests for exclusions – what could go wrong? 

 

Studies show groundwater holding own against drilling boom
ABC News, The Associated Press, June 18, 2018

Energy companies have drilled more than 11,000 wells since arriving en masse in 2008, making Pennsylvania the nation’s No. 2 gas-producing state after Texas. Residents who live near the gas wells, along with environmental groups and some scientists, have long worried about air and water pollution. Two new studies that looked at groundwater chemistry did not find much of an impact from horizontal drilling and hydraulic fracturing — or fracking — the techniques that allow energy companies to extract huge volumes of oil and gas from shale rock deep underground. The results suggest that, as a whole, groundwater supplies appear to have held their own against the energy industry’s exploitation of the Marcellus Shale, a rock layer more than a mile underground that holds the nation’s largest reservoir of natural gas.

Our Take: A team from Yale collected water samples every few weeks for two years and concluded that natural variability, not drilling or fracking, led to rising methane levels. AKHEADLAMP awaits acknowledgment from the ENGO’s that natural variability is the root cause.    Waiting…

STURGEON WILL BE HEARD AGAIN BY US SUPREME COURT. 

From the man himself this morning as he spoke to Suzanne Downing: “Going to the Supreme Court is a miracle. And of the 8,000 petitions this term, they took 20. It means that hopefully the federal government will understand the state sovereignty issues: The State of Alaska owns the rivers and navigable waters, and it gets to manage them. Above all, this is about state sovereignty.”

A big thanks to Downing and Must Read Alaska for this great news! You can see for yourself on the Supreme Court’s website SCOTUS adds 5 cases to it’s merits docket for next term.  

Cheney bill proposes fee for fed land oil and gas protests
AP News, June 15, 2018

A bill sponsored by Wyoming U.S. Rep. Liz Cheney would impose fees on protests against oil and gas projects on federal land. The Republican introduced the bill in the U.S. House of Representatives on Wednesday, saying it aims to deter intentional burdens to Wyoming’s energy development. Cheney says in a statement that some groups are flooding the permitting agencies with frivolous protests. The Casper Star-Tribune reports that under the measure, individuals or groups would be charged $150 to file a protest under 10 pages, with additional pages charged at $5 each. If a single filed protest concerns multiple parcels of land, each is assessed at an additional $10.

Our Take: AKHEADLAMP likes it – PAY TO DELAY! Last Thursday we shared information about the House Republicans submitting a plan to penalize states that stopped the federal government from hosting lease sales in their states and depriving them of revenue, Headlamp likes where these elected officials are going. 

From today’s Washington Examiner, Daily on Energy:

CHINA TARGETS U.S. ENERGY IN TARIFF COUNTERATTACK: China is targeting U.S. energy in response to President Trump’s decision Friday to place tariffs on $50 billion in goods from the Asian power. Two-part counter attack: China announced that it would launch its $50 billion counter attack in two waves. The first will begin July 6 and will impose a 25 percent tariff on soybeans, agricultural products, automobiles, and even water originating in the U.S., according to the Chinese foreign ministry. Energy tariffs coming soon: The second round of tariffs, of 25 percent, will include energy commodities from the U.S., including natural gas and crude oil. China didn’t announce a start date.

China’s tariffs on U.S. oil would disrupt $1 billion monthly business
Reuters, Henning Gloystein, June 17, 2018

In an escalating spat over the United States’ trade deficit with most of its major trading partners, including China, U.S. President Donald Trump said last week he was pushing ahead with hefty tariffs on $50 billion of Chinese imports, starting on July 6.  China said Friday it would retaliate by slapping duties on several American commodities, including oil. Investors expect the spat to come at the expense of U.S. oil firms, pulling down the share prices of ExxonMobil and Chevron by 1 to 2 percent since Friday, while U.S. crude oil prices fell by around 5 percent.

Our Take: The President says the US can withstand the “trade tiffs”, AKHEADLAMP hopes so as this is not good for Alaska seafood and not good for Alaska LNG. Related: Google is investing $550m with the Chinese

ExxonMobil considers importing LNG to Australia
Upstream, June 18, 2018

ExxonMobil, southeastern Australia’s biggest gas supplier, is considering importing liquefied natural gas to help plug a looming gas shortage from 2021 and protect its market share.  The move would compete with plans by both Australia’s number two energy retailer AGL Energy to start importing LNG by 2021 and a consortium involving Japan’s JERA to start imports from 2020. ExxonMobil is also stepping up exploration off the coast of Victoria and considering developing a gas field called West Barracouta close to an existing field, it said in an emailed statement sent to Reuters on Monday

Rich donor gave $250K to Trump after EPA reversed decision on Pebble Mine
ABC News, Stephanie Ebbs, June 16, 2018

A wealthy activist who has funded efforts to block a proposed mine in Alaska’s Bristol Bay donated $250,000 to President Donald Trump’s re-election effort six weeks after the administration abruptly decided to prevent the mine from moving forward. The move to block the Pebble Mine in Bristol Bay from moving forward seems to diverge from a trend in policy under the leadership of Environmental Protection Agency chief Scott Pruitt – seen as one of President Donald Trump’s most productive cabinet members in moving to undo environmental regulations put in place under the Obama administration. During the Trump presidency, the EPA in 2017 had previously allowed the mine to move forward.

Our Take: Hmmm – this seems more like a “placed” story by people who want to feel important than a reality. 

Headlamp – Exxon doubles down; Steve Martin responds to BP; Pipeline deal with North Korea?

Exxon Doubles Down on Oil
Bloomberg Businessweek, Kevin Crowley, June 15, 2018

At a time when most of Big Oil is restraining spending, in part because of uncertainty over the future of energy markets, Exxon plans to boost expenditures every year from now until 2025. It wants to invest a total of more than $200 billion, almost all on traditional oil and gas megaprojects around the world, from Brazil to Papua New Guinea. The company has no plans to follow global rivals such as Royal Dutch Shell, Total and BP into wind, solar, or battery storage.

Our Take: 130 years ago, faced with the declining use of kerosene, John. D. Rockefeller doubled down on oil – not surprising that today Exxon still follows his “bet-on-what-you-know” mantra. AKHEADLAMP will bet on Exxon being successful.

India, China Look To Form ‘Oil Buyers Club’
Oil Price.com, Tsvetana Paraskova, June 14, 2018

India and China have discussed creating an ‘oil buyers’ club’ to be able to negotiate better prices with oil exporting countries and will be looking to import more U.S. crude oil to reduce OPEC’s sway, both over the global oil market and over prices, India’s Petroleum Ministry said on Wednesday. “With oil producers’ cartel, OPEC, playing havoc with prices, India discussed with China the possibility of forming an ‘oil buyers’ club’ that can negotiate better terms with sellers as well as getting more US crude oil to cut dominance of the oil block,” a tweet from the Petroleum Ministry’s Twitter account reads.

Our Take: A bit of dictionary history on their relationship: “Although the relationship has been friendly, there are border disputes and an economic competition between the two countries that have at times led to strained relations. China and India are the two most populous countries and fastest growing major economies in the world. Growth in diplomatic and economic influence has increased the significance of their bilateral relationship.”

Statistical Review of World Energy
BP Global, June 15, 2018

Introducing the 2018 edition of the BP Statistical Review of World Energy, Bob Dudley, BP Group Chief Executive, said: “2017 was a year where structural forces in the energy market continued to push forward the transition to a lower carbon economy, but where cyclical factors have reversed or slowed some of the gains from prior years. These factors, combined with rising demand for energy, has resulted in a material increase in carbon emissions following three years of little or no growth.”

Our Take: Click here to watch Navin (Steve Martin) best express how AKHEADLAMP feels about the annual arrival of the BP Statistical Review of World Energy. The report contains everything you ever wanted to know about world energy, and more – plan to spend hours reviewing!  

Trump sets $50 billion in China tariffs with Beijing ready to strike back
Reuters, David Lawder, Ben Blanchard, June 15, 2018

U.S. President Donald Trump announced hefty tariffs on $50 billion of Chinese imports on Friday as Beijing threatened to respond in kind, in a move that looks set to ignite a trade war between the world’s two largest economies. Trump, whose hardline stance on trade has led him to wrangle with allies, said in a statement that a 25 percent tariff would be imposed on a list of strategically important imports from China. He also vowed further measures if Beijing struck back.

There’s a Gas Pipeline Deal to Be Done With Kim Jong Un. Any Takers?
Bloomberg Businessweek, Marc Champion, June 13, 2018

The idea of building a conduit to carry natural gas from the Russian Far East to South Korea has been around since the 1990s. From 2008 to 2011, as Russia’s gas giant, Gazprom PJSC, was building a pipeline as far as Vladivostok, the company signed a memorandum of understanding with North Korea and a framework agreement with Seoul’s Korea Gas Corp. to extend it south. It went nowhere, primarily because of the politics surrounding Kim’s bid to build up his nuclear and missile programs. With North Korea’s relations with the U.S., Seoul, and China now on the mend, and South Korea trying to reduce its dependence on coal and nuclear power, the pipeline would seem an obvious piece of economic diplomacy.

From today’s Washington Examiner, Daily on Energy:

FEDS SAY UNCERTAINTY FACES TRUMP’S ALASKA OIL WIN IN TAX BILL: The Energy Department’s analysis arm finished a review of the president’s December tax bill on oil drilling in Alaska Thursday, saying crude oil won’t be added to U.S. production until well after 2030. The Energy Information Administration looked at several ways opening the Alaska National Wildlife Refuge to drilling, called for in the Republicans’ tax law, would affect oil production in the U.S.

Lack of certainty: “Much uncertainty surrounds any projection of production from ANWR,” the energy agency said in the report.

The great oil unknown: “The only well drilled in the coastal plain was completed in 1986, and the results have remained confidential. Federal resource estimates are based largely on the oil productivity of geologic formations in neighboring state-owned lands in Alaska and two-dimensional seismic data that had been collected by a petroleum industry consortium in 1984 and 1985.”

Who will be president in 2031? Three estimates done by EIA, including low, average, and high, all showed that production from the Arctic refuge would not start until 2031, because of the time needed to acquire leases, explore, and develop the required production infrastructure.

Murkowski talks nuclear while Walker declares victory for Alaska’s economy.

To meet demand for rural power, communities can look to nuclear energy
CNN, Lisa Murkowski and Jay Faison, June 8, 2018

In 1994, the Clinton administration shut down a small sodium reactor that had operated without incident at Idaho National Laboratory for 30 years. This small reactor was termed “walk-away safe” because when the liquid sodium coolant got too hot, it expanded and shut itself down. Now, entrepreneurs are bringing it back from the dead. These sodium and other advanced microreactors could be a godsend for those in Alaska communities who spend up to half of their annual income on energy. Costs are so high in some remote Alaskan villages that mothers have had to choose between heating their homes and buying formula for their babies, a burden that most of the US cannot fathom and a choice that families should not have to make.

Our Take: As noted in the Senate Majority press release, for Alaska, that could mean the opportunity to reliably replace costly diesel fuel with emission-free nuclear, lowering costs that will empower small communities and boost their economic development.

Alaska credit rating receives stable outlook
KTVA, Steve Quinn, June 13, 2018

A major credit rating agency last week raised Alaska’s outlook from negative to stable, citing changes in how it will use Permanent Fund earnings to cover some of the state’s operating budget. On Wednesday, Gov. Bill Walker signed the legislation – Senate Bill 26 – which allows the state to use a portion of the fund’s overall market value for state spending. This change drove Standard & Poor Global Ratings to raise its outlook but not the AA rating, which determines Alaska’s creditworthiness. “The outlook revision to stable reflects recent fiscal reforms that recognize the state’s vast Permanent Fund Earnings Reserve Account (ERA) as unrestricted general fund revenue with provisions for its use,’ the June 8 S&P report said.

Our Take: STOP SPENDING! While Governor Walker declares victory for the economy, “This is independent confirmation of something we already knew: Alaska’s economy has turned the corner,” Headlamp would point out that finding a new source of revenue to feed a bloated state government isn’t a victory for the private sector. The incentive to reduce the size and scope of government has been removed and use of the earnings reserve account could lead to much larger budgets in the future.

Republicans propose penalties for states that oppose offshore drilling
The Hill, Luis Sanchez, June 13, 2018

House Republicans unveiled a draft proposal this week that would place fines on states that block offshore gas and oil drilling. The Republican draft proposal, first reported by The Washington Post, will be discussed at the Natural Resources Committee on Thursday. It would allow states to disapprove of offshore drilling for gas and oil in half of its lease blocks without facing any penalties. However, states with proposed lease sales that disapprove of drilling in more than 50 percent of the blocks would have to pay a fee equal to at least one-tenth the estimated revenue the government would have made if it had leased the blocks.

Our Take: A new take on state’s rights? State’s responsibilities? If you deny the federal government their opportunity to make revenue from lease sales in your state – you can pay a fine.

Committee Seeks Information from Defense Department on Impact of Environmental Litigation on Military Readiness
House Committee on Natural Resources, June 14, 2018

Today, House Natural Resources Committee Chairman Rob Bishop (R-Utah) and Subcommittee on Oversight and Investigations Chairman Bruce Westerman (R-Ark.) sent a letter to U.S. Department of Defense Secretary James Mattis requesting information about foreign entities using U.S.-based 501(c) organizations as proxies in environmental litigation against the United States or to influence domestic environmental and natural resources laws.

Our Take: AK HEADLAMP is sufficiently terrified when thinking about foreign adversaries using U.S. based organizations to engage in environmental “lawfare.” Adding to our fear? The letter specifies China, the Center for Biological Diversity and the Natural Resources Defense Council- all players in Alaska.

Salmon initiative risks Alaska’s economic future
Juneau Empire, Jack Rafusea, June 13, 2018

A niece of mine and her husband have owned a restaurant in Homer for at least 20 years. I worked on energy policy at the White House before and during the Arab Oil Embargo. After that, I often worked on Unocal projects that took me to Alaska; I’ve spent decades on issues involving Alaska’s energy sector. I know that investments in Alaskan oil and gas reserves have helped sustain the economy and meet the nation’s energy demand. I know the business, and like most in Alaska, I believe in the vital role energy has played, and must continue to play in the state’s future.

Our Take: This former energy advisor for the White House during the Arab Oil Embargo does a great job detailing the threat to Alaska’s economy from wealthy outside investors. “It’s never a good sign when single-minded big-money activists from elsewhere want to dictate regulatory policy in a state where they’ve never lived, let alone visited.” Get the facts before you vote. Stand for Alaska.

3 Oil companies are suing Gov. Walker’s administration

3 oil companies are suing the state, saying a reinterpretation of Alaska tax law cost them millions
Anchorage Daily News, Nathaniel Herz, June 13, 2018

Three companies in Alaska’s oil and gas industry have sued Gov. Bill Walker’s administration over what they assert is a change in tax policy that could cost companies tens of millions of dollars. Two of the plaintiffs are big oil producers, ExxonMobil and Hilcorp. The third is a company that searches for oil, SAExploration, which says the policy has reduced the value of tax credits it’s earned. Both sides have a big stake in the outcome, with the oil companies protecting their revenues and the state defending its petroleum-based income. Alaska’s oil revenue is expected to be $1.8 billion this year, enough to cover almost half of the $4.4 billion the state spends on its yearly operating budget.

Our Take: Communication is key. Having open dialog with both parties could have prevented either from being in this situation. Click here to read the 19-page complaint.

Fort Knox expansion to extend mine life to 2030
Fairbanks Daily News-Miner, Rod Boyce, June 12, 2018

Kinross Gold Corp. announced Tuesday that it will proceed with an expansion of its Fort Knox gold mine northeast of Fairbanks, extending the mine’s life to 2030. The company expects the expansion will produce 1.5 million gold equivalent ounces, a term that includes byproducts mined along with the gold. Kinross possessed mineral rights to 709 acres immediately west of the Fort Knox in December but could not exercise the rights until the land came into state ownership.

Our Take: This is great news for Alaska. Developing our resources responsibly is one of the things we do best. This is also great news for anyone (which is everyone) who uses products produced from mining. Click here to view some of the everyday products in your life thanks to mining.

IGU approves final purchase of Pentex
Fairbanks Daily News-Miner, Robin Wood, June 12, 2018

Within the next two days, Interior Gas Utility’s general manager will fly to Anchorage and sign the final paperwork approving the roughly $60 million purchase of Pentex Natural Gas Company. The Alaska Industrial Development and Export Authority currently owns Pentex and is providing IGU the loan to purchase the company. IGU’s board of directors voted 4-1 on Tuesday night to give IGU General Manager Jomo Stewart authority to sign the final paperwork.

Our Take: Hopefully this is a step towards more affordable energy for Fairbanks.

From today’s Washington Examiner, Daily on Energy:

SENATE APPROPRIATORS SAY NO TO TRUMP, AGAIN: Senate appropriators reversed Trump-proposed cuts to the EPA and Energy Department budgets on Tuesday to advance a $35.85 billion spending bill.

The Appropriations Committee’s subcommittee on EPA and related agencies rejected many of the fiscal 2019 budget proposals put forth by the president with wide-ranging cuts that neither GOP and Democrats could support.

Up, up, up: The proposed funding level that the subcommittee passed is 26.7 percent higher than what was proposed. The funding represents about a $600 million increase from the funding Congress approved for fiscal 2018.

Trump’s ‘unwarranted decreases’: The bill admonished the “unwarranted decreases proposed in the budget and [makes] investments in our highest priorities, especially infrastructure investment for the land management agencies, Indian country and wastewater and drinking water improvements,” said Sen. Lisa Murkowski, R-Alaska, the chairwoman of the appropriations subcommittee.

Our Take: A $600 million increase from last year’s budget makes us question the need for such a large increase.

Headlamp – 3% of Alaska’s ANWR revenue share could shift to native corporations.

Bill would shift 3% of state’s ANWR revenue to Native corporations
KTOO Public Media, Liz Ruskin, June 12, 2018

At the request of Alaska U.S. Rep. Don Young, a bill pending in the U.S. House would reduce Alaska’s share of revenues from oil drilling in the Arctic National Wildlife Refuge and give that money to Alaska Native corporations. Last week Rep. Tom Cole, R-Okla., proposed to reduce the state’s share to 47 percent and direct 3 percent to Alaska Native corporations. “It’s fitting that I should offer the amendment under the larger than life picture of Don Young that’s staring down on us,” Cole told the House Appropriations Committee. “Because to be fair to everybody, this is an amendment that Don Young asked me to offer.”

Our Take: The congressional delegation and our Governor support this move and see it as a good first step to make up for past failures to honor promises made to Alaska by the federal government. Senator Murkowski will have a tougher time in the Senate with the amendment. AKHEADLAMP knows she is up to the challenge!

OPEC will squeeze oil buffer to historic lows with an output hike
Reuters, Ahmad Ghaddar, June 12, 2018

The oil industry will face the biggest squeeze on its spare production capacity in more than three decades if OPEC and its allies agree next week to hike crude output, leaving the world more at risk of a price spike from any supply disruption. Spare capacity is the extra production oil producing states can bring onstream and sustain at short notice, providing global markets with a cushion in the event of natural disaster, conflict or any other cause of an unplanned supply outage. That buffer could shrink from more than 3 percent of global demand now to about 2 percent, its lowest since at least 1984, if the Organization of the Petroleum Exporting Countries, Russia and other producers decide to increase output when they meet on June 22-23, U.S. bank Jefferies said.

Read the full text of the Trump-Kim agreement here
CNBC, Everett Rosenfeld, June 11, 2018

President Donald Trump and North Korean leader Kim Jong Un signed an agreement at the end of Tuesday’s historic summit. Here’s what it says, according to a photo of Trump’s signed document:

  1. The United States and the DPRK commit to establish new U.S.-DPRK relations in accordance with the desire of the peoples of the two countries for peace and prosperity.
  2. The United States and the DPRK will join their efforts to build a lasting and stable peace regime on the Korean Peninsula.
  3. Reaffirming the April 27, 2018 Panmunjom Declaration, the DPRK commits to work toward complete denuclearization of the Korean Peninsula.
  4. The United States and the DPRK commit to recovering POW/MIA remains, including the immediate repatriation of those already identified.

Our Take: While the mainstream media spends days analyzing what happened at the summit and what it means – AKHEADLAMP looks at China’s reaction – since they have the potential to be our business partner on Alaska LNG: China is having a ‘big day’ after Trump-Kim summit: Ex-diplomats

From today’s Washington Examiner, Daily on Energy:

REPORT: NATURAL GAS, NOT TRUMP, WILL KILL THE PARIS DEAL: The Group of 20 industrialized nations are expected to invest more than $1.6 trillion in natural gas production, which will jeopardize the goals of the Paris Agreement. That’s according to a report issued Tuesday by the anti-fossil fuel group Oil Change International that favors moving to 100 percent renewable energy. As the G20 meets: The report was released as G20 energy ministers gather in Argentina this week. The advocacy group says it has “debunked” most industrialized nations’ belief in the “Clean Gas Myth.”

Bridge myth: “The concept of fossil gas as a ‘bridge fuel’ to a stable climate is a myth,” according to the group. “Emissions from existing gas fields, alongside existing oil and coal development, already exceed carbon budgets aligned with the Paris Agreement.”

Coal vs. gas: The report finds that even if coal were phased out tomorrow, the natural gas and oil from already developed fields would break the global carbon budget needed to keep the climate from rising 1.5 degrees over the next 20 years.

Global gas boom: The U.S., Russia, Australia, China, and Canada will be responsible for 75 percent of capital expenditures in natural gas production in G20 countries from 2018-2030, according to the report.

South America eyes fracking: Argentina is vying to open its own shale deposits to produce natural gas, which the report says, “risks undermining its commitment to the Paris Agreement and the work of the Energy Transitions Working Group during its G20 Presidency.”

Our Take: We question the validity of a report issued by an anti-fossil group that wants 100% renewable energy. We applaud the industrialized nations who are investing in natural gas production!

Administration looks offshore for wind energy boom
The Washington Examiner, Josh Siegel, June 12, 2018

The Trump administration is “bullish” about offshore wind, working with governors in the Northeast to transform what was once a fringe and costly investment into America’s newest energy-producing industry. “When the president said energy dominance, it was made without reference to a type of energy,” Interior Secretary Ryan Zinke told the Washington Examiner in an interview. “It was making sure as a country we are American energy first and that includes offshore wind. There is enormous opportunity, especially off the East Coast, for wind. I am very bullish.” Facing widespread opposition from politicians in states fearful of oil spills along their tourist-drawing coasts, Zinke is likely to scale back a draft plan to open nearly all federal waters for drilling, which he says has attracted “modest interest at best.”

Our Take: An “all of the above” energy policy is good for Alaska and good for America. Secretary Zinke’s recognition of market forces that are moving towards offshore wind is refreshing.

Headlamp – Is Fairbanks one step closer to low-cost energy? Obama-era WOTUS take another hit.

Alaska gas utility deal set to close this week
KTUU, June 10, 2018

A multimillion-dollar business deal with ramifications for the cost of energy in Fairbanks is set to close this week. The Fairbanks Daily News-Miner reports the deal is between the Fairbanks North Star Borough and the State of Alaska to expand natural gas availability. The Interior Energy Project says the deal will “bring low-cost energy to as many residents and businesses of Interior Alaska as possible, as quickly as possible.” The borough-owned Interior Gas Utility is purchasing Fairbanks Natural Gas and other assets from the state-owned Alaska Industrial Development and Export Authority, which is financing the purchase along with major expansions to natural gas piping and storage for $330 million. The Interior Gas Utility board is set to meet Tuesday. The deadline to close the deal is midnight Thursday.

Our Take: If this deal brings “low-cost energy, as quickly as possible” to Fairbanks – AKHEADLAMP will be thrilled. We are always skeptical of a government entity pushing aside the private sector to “make” something happen instead of letting the free market work. Cautiously optimistic.

New LNG contract framework to spur oil-like trading model
Reuters, Oleg Vukmanovic, June 7, 2018

A new umbrella contract meant to streamline trading of liquefied natural gas (LNG), bogged down in red tape and wrangling over terms, could boost liquidity, draw in new entrants and speed up the market’s transition to an oil-like model. Already a mainstay of crude oil and pipeline gas trading, general terms and conditions (GTCs) provide a framework that traders can opt into by reference, scrapping the cumbersome system which currently sees LNG bought and sold through a web of bilateral master sales agreements (MSAs).

U.S. Sanctions Russian Firms for Energy Grid Cyberattack
Bloomberg Politics, Saleha Mohsin, June 11, 2018

The U.S. imposed new sanctions Monday on Russian firms and individuals for helping the country’s state security service conduct cyberattacks targeting the American energy grid and other key infrastructure. Russian hackers conducted a broad assault on the U.S. electric grid, air transportation facilities and other infrastructure since at least March 2016, the Homeland Security Department and FBI warned in March. The attacks are still ongoing, according to a person familiar with the matter. At least a dozen U.S. power plants – including one nuclear facility – have been breached as part of the coordinated attacks, Bloomberg reported last year.

Former Alaska senator, Mark Begich, runs for governor
KMXT, Kayla Desroches, June 8, 2018

Former Alaska U.S. senator and Anchorage mayor, Democrat Mark Begich, is running for governor. Begich says, as governor, he’d boost his role in the area of climate change. He says the state is “ground zero” when it comes to climate change and says the transition to renewable energy is one possible move forward.

From today’s Washington Examiner, Daily on Energy:

HOUSE GOP BLOCKS OBAMA-ERA RULES ON COST OF CLIMATE CHANGE: The House GOP on Friday took a step forward in reining in the Obama administration’s method of assessing the cost of carbon dioxide pollution when developing regulations. The House voted 212-201, along party lines, to include a rider blocking the use of the climate change cost metric to an energy and water spending bill. The amendment offered by Texas Republican Rep. Louie Gohmert bars any and all funds from being used under the bill to “prepare, propose, or promulgate any regulation that relies on the Social Carbon analysis” devised under the Obama administration on how to value the cost of carbon.

Our Take: How did we get to the point of using “social carbon analysis” as a cost metric on energy projects? Credible science should be the metric. Kudos to the House for blocking the use of this crazy climate change metric.

FEDERAL JUDGE GRANTS INJUNCTION AGAINST WATER RULE IN 11 STATES: A federal judge granted on Friday a preliminary injunction against the Obama administration’s Waters of the U.S. rule in 11 states. Judge Lisa Godbey Wood for U.S. District Court for the Southern District of Georgia, a George W. Bush appointee, said the states have a strong chance of winning their arguments against the 2015 rule, known as WOTUS, so she stayed it.

Half and half: The ruling applies to Georgia, Alabama, Florida, Indiana, Kansas, North Carolina, South Carolina, Utah, West Virginia, Wisconsin and Kentucky. The rule has now been halted in 25 states, after a previous court ruling against it. It may have little lasting impact, however, as Pruitt’s EPA has already finalized a rule delaying the rule until 2020 and is writing a new version. Chasing waterfalls: The rule seeks to expand which U.S. waterways are considered part of the national water system to be regulated by the EPA.