Category: News

The Resource Development Council (RDC) is hosting its 42nd Annual Membership Luncheon tomorrow in Anchorage. The keynote speaker for the event is Hal Quinn, President & CEO of the National Mining Association who will speak on the “New Direction for American Mining and Energy Policy.”

Mr. Quinn sent an email this morning about the global increase in electric cars and the materials required to build those cars – most of which come from mining. He says, in part:

“The good news is the U.S. has abundant minerals required to meet this demand. For example, the U.S. Geological Survey estimates that one million tons of cobalt resources exist across states like Minnesota, Alaska, California, Idaho, Missouri, Montana, Oregon, Pennsylvania and Michigan—some of which could be produced directly and some in the form of byproducts to other metals.

In fact, Tesla’s Nevada Gigafactory has committed to sourcing the raw materials used to make its electric vehicle batteries strictly from North America.

While using U.S. mined minerals and metals is an important supply chain consideration and environmentally advantageous for Tesla, domestic production remains low. Why? The U.S. mine permitting process stands in the way of timely access to U.S. mineral resources by creating protracted delays that can last up to 10 years.”

That’s right, Alaska has some of the minerals we need. IF we are allowed to responsibly develop our resources.

Click here to read the blog post on the National Mining Association’s website and to learn more about the mining permitting process.

“If it can’t be grown, it must be mined.”

 

House Majority plays Battleship – or maybe Chutes and Ladders?  Even after threats of a state-wide shutdown were averted by the state legislature, some significant items remain for Alaska to address. A capital construction budget and the multi-million dollar budget deficit facing the state have yet to be resolved. Despite a continuance of the special session, little work is being done in Juneau. “I think that one thing that all of us in the Capitol can agree on is this has probably been the single most contentious legislative session that most of us have experienced,” Speaker of the House Bryce Edgmon said Thursday night. “I think we have more work to do. I think both sides understand that,” said Senate Majority Leader Peter Micciche, R-Soldotna, shortly afterward. “I think the Legislature needs to take some time off, cool down, come back together and work out solutions to the remaining issues that have to be dealt with this year.”

Headlamp would note that Rep. Geran Tarr has the ability to move things forward by calling a conference committee meeting on HB 111 – oil and gas tax credit  legislation – but has refused to do so.  Alaskans are tired of the games – do the job you were elected to do.

The last time I saw Paris.  The Trump administration intends to define what it means by “clean energy” during a week-long series of discussions, media appearances and discussions with businesses to explain its ideas for an America First energy plan, according to Energy Secretary Rick Perry. “This week will also reaffirm our commitment to clean energy,” Perry said. “The binary choice between being pro-economy and pro-environment that was perpetuated by the Obama administration, it set up a false argument,” he said. “We can do good for both, and we will.”

Epic Battle:  Oil vs. Natural Gas.  President Trump has uncorked yet another controversy over energy vs the environment and it promises to be a heavyweight battle. The White House budget proposal includes a revenue line of almost $2 billion from selling oil and gas leases in the richly oil-prospective northeastern coastal plain of the Arctic National Wildlife Refuge (ANWR) in Alaska. Until the climate change debate came along, leasing and drilling in the ANWR (pronounced an-war) Coastal Plain was arguably the most ferociously contested item on the oil and gas industry’s wish list at the national level.

Global domination Trump style. President Donald Trump will promote surging U.S. exports of oil and natural gas during a week of events to highlight the country’s growing energy dominance. Trump also plans to emphasize that after decades of relying on foreign energy supplies, the U.S. is on the brink of becoming a net exporter of oil, gas, coal and other energy resources.

Investors should prefer oil companies who can prove profitable in challenging times. BMO’s Brendan Warn and Nikolas Stefanou contend that major oil producers like Exxon and Chevron can survive at $40 oil, but life is a heck of a lot easier at $60 a barrel. At ~$40/bbl, the sector’s operating cash flows fail to cover current capex and dividend expectations, even with the aid of scrip, whereas at >$50/bbl, the majors should, on aggregate, be able to match full cash outflows. Note to legislators considering tax increases at current prices: when operating cash flows are negative, raising taxes doesn’t help anyone. 

AKLNG competition? Cheniere is looking at new ways to finance more terminals that chill gas to a liquid and ship it across the globe, including skipping banks altogether and seeking out other capital sources, Chief Executive Officer Jack Fusco said in an interview at the company’s headquarters in Houston. The company has room to grow: It’s leased additional acres at its flagship Sabine Pass terminal in Louisiana and has the option to purchase more land at a Corpus Christi, Texas, site, where another export project is under construction.

MORE AKLNG competition?  A gas company from Korea, one of the largest buyers of liquefied natural gas in the world, said it commenced a sales agreement with a U.S. supplier. The Korea Gas Corp. commenced a 20-year sales and purchase agreement with Cheniere Energy Inc., which operates the only facility in the United States with the permits necessary to export super-cooled LNG.

 

First Reads

Big Oil: Surviving at $40, Thriving at $60
Barron’s, Ben Levinsohn, June 26, 2017

Legislature averts shutdown, but more work remains
Alaska Journal of Commerce, James Brooks, June 26, 2017

Perry: Trump doesn’t need Paris to advance ‘clean energy’
The Washington Examiner, John Siciliano, June 26, 2017

Trump’s ANWR move could spawn epic oil, natural gas battle: Fuel for Thought
S&P Global Platts, Bob Williams, June 26, 2017

Trump to call for US ‘dominance’ in global energy production
Bloomberg, Jennifer A. Dlouhy, June 26, 2017

Cheniere Gets Ready for ‘Next Round’ in Global Gas Export Market
Bloomberg, Ryan Collins, June 26, 2017

U.S. now supplying LNG to South Korea
UPI, Daniel Graeber, June 17, 2017

Shutdown averted – now what? Despite passing stop-gap measures and averting a state-wide shutdown of government services, the Alaska Legislature’s special session continues until July 16, though most lawmakers say they are done for now. They were packing up Friday for their home districts. Legislative leaders wanted to adjourn but Walker told them to keep working, said Sen. Lyman Hoffman, a Democrat from Bethel who is part of the Republican majority and one of the architects of the budget deal. That means they will hold what’s known as technical floor sessions every few days with only a few members. Lawmakers have yet to pass a capital budget, but say they will get to that eventually, maybe in another special session. Capital projects such as roads and buildings won’t shut down if that budget isn’t approved by July 1, said Hoffman, who co-chairs the Senate Finance Committee. The operating budget now goes to Walker, who can veto or lower any of the spending particulars. Last year, Walker vetoed more than $1 billion in spending, most of it for dividends. Late Thursday night, Walker added one more item of unfinished business to the Legislature’s agenda for the special session. Some lawmakers said they expected it to be the capital budget, but in fact Walker said he wanted them to address the state’s “unsustainable oil and gas tax credit system” through House Bill 111. The bill could end payments of cash tax credits to oil companies, though about $1 billion from the past is still owed. Both chambers want to end those tax breaks. But the House also wants to increase the effective tax rate on oil.

If you build it…The energy infrastructure deficit is preventing the US from achieving energy independence as East Coast and West Coast markets continue to rely on imported oil due to a shortage of pipelines moving oil from US shale fields to refineries, writes David Gaffen. To achieve energy independence, the US must expand and upgrade its aging pipeline.

It’s a First!  Lithuania buys US LNG – Lithuania’s state-owned gas trader Lietuvos Duju Tiekimas (LDT) said on Monday it had signed a deal to buy liquefied natural gas (LNG) directly from the United States for the first time and expects to receive a delivery in the second half of August. The deal is with a unit of Cheniere Energy and is part Lithuania’s efforts to diversify its gas suppliers and reduce its reliance on Russia’s Gazprom. LDT, part of state-owned energy group Lietuvos Energija, signed a deal last year with Koch Supply & Trading for LNG supplies throughout 2017.  Cheniere Energy was expected to supply LNG from a U.S. field, an LDT spokesman told Reuters. “It will be the first time Lithuania imports gas from the U.S.,” he said.

Qatar back in the game. Iran’s rapid development of the shared North Field has caused Qatar to lift its 12 year development moratorium on the field.  Production has been averaging around 20 billion cubic feet a day.

Boroughs depend on State more than a decade ago. The average share of revenues a borough received from the state more than doubled between 2005 and 2015, from about 12 percent to 28 percent. There are three main kinds of state aid to communities: general government operating money, public works project grants, and school aid. These are the main findings in a new report released this week by the Institute of Social and Economic Research at the University of Alaska Anchorage.

First Reads

Alaska borough governments depend much more on state money now than a decade ago
Alaska Dispatch News, Annie Zak, June 26, 2017

The Alaska Legislature passed a budget and avoided a government shutdown. What happens now?
Alaska Dispatch News, Lisa Demer, Tegan Hanlon, June 26, 2017

Alaska’s 40 Years Of Oil Riches Almost Never Was
NPR, Elizabeth Harball, June 24, 2017

ANALYSIS-Clogged oil arteries slow U.S. shale rush to record output
Reuters, David Gaffen, June 26, 2017

Lithuania signs first deal for U.S. LNG
Reuters, Andrius Sytas, June 26, 2017

Qatar’s foot off the brake
Petroleum Economist, Gerald Butt, June 20, 2017

Shutdown Averted. The legislature has reached a budget compromise averting a statewide shutdown of government services and layoffs of thousands of state workers. The deal cleared the House and Senate late Thursday. The budget totals more than $4.1 billion in unrestricted general fund revenue spending, not including dividends, which is $179 million less than in the current budget year. The total operating budget is $8.8 billion. A House-Senate conference committee charged with resolving Alaska’s state budget agreed Thursday to fund public schools at the same level as this year and to pay Permanent Fund dividends of $1,100. The sole “no” vote in the Senate was Senator Shelly Hughes who gave up her seat on the finance committee with the vote.   “No” votes in the house came from Reps Eastman, Johnson, Neuman, Rauscher, Reinbold, Sullivan-Leonard, Tilton and Wilson.

Governor adds oil taxes to the call.  “I thank legislators for reaching a compromise on the operating budget to ensure government services continue after July 1,” Governor Walker said. “In doing so, they also appropriated a $1,100 permanent fund dividend (PFD) for each eligible Alaskan. Earlier today, legislators indicated in conference committee their intent to correct the state’s unsustainable oil and gas tax credit system. That’s why I am amending the call so legislators can complete work on House Bill 111. The conference committee for oil taxes:   Senators Giessel, Stedman, Olson and Reps Tarr, Josephson and Talerico.

Norway follows Alaska’s lead.  Norway‘s $960-billion wealth fund, the world’s largest, should be split from the country’s central bank, which has managed the fund since its launch in 1996, a government-appointed commission said on Friday. “The Commission proposes that (an) investment management company be established as a separate statutory entity,” it said in a statement. The recommendations will be closely examined by Norwegian politicians, who had said ahead of the publication they were waiting for the report’s conclusions before deciding what new asset, if any, the fund could invest in.

LNG Oversupply.   Some US natural gas liquefaction capacity likely will be temporarily shut before the end of the decade to try to balance an oversupplied global LNG market, a BP executive told Argus. “It’s very hard to say if capacity will shut down, but, based on what we know, I don’t see how else the market clears,” BP chief commercial officer Jimmy Straughan said on the sidelines of CWC’s LNG Americas Summit in Houston. One of the advantages of US LNG is that customers have the option to not take LNG if they don’t want it, leading to the possibility that US liquefaction trains would sometimes be shut when global LNG prices are low.

Mat-Su Dock Gets Another Cash Injection. Another $1.6 million will flow to the little-used and failing barge dock at Port MacKenzie after the Matanuska-Susitna Borough Assembly grudgingly approved the money this week. Several Assembly members voiced deep concern during a Tuesday meeting but voted 6-1 to move money from several borough accounts to pay for the repairs. The money is just the latest spent on a failing dock that saw just one barge call last year amid ongoing repairs. The Assembly previously approved $2.3 million for a 2016 repair to a large gap in a piece of steel that let seawater undermine part of the dock. The repair failed in October, triggering the need for the new repairs.

Tax Reformers Should See House Tax Proposal As Cautionary Tale. Sensible Tax reform is a very good thing. But the debate underway today in Alaska shows just how important the nuts and bolts of the reform process are, and how vital it is that significant tax policy shifts be handled thoughtfully. Poorly structured tax changes – such as the House oil tax measure proposed during the legislative session – could have left the state in even worse financial shape. The oil industry’s importance to Alaska is difficult to overstate. Analysts from the McDowell Group recently assessed the statewide and local impacts of the oil and gas industry, examining factors ranging from employment, to taxes, to royalties paid. Studying Alaska’s 14 major oil and gas companies and considering direct, indirect induced economic effects, McDowell found that in 2016 the industry employed 45,575 workers and paid $3.1 billion in wages; those same companies also paid $2.1 billion in taxes and royalties last year. A tax that targets job creators and income generators cannot be a strong long term fiscal policy.

 

First Reads

Alaska lawmakers approve budget compromise to avert government shutdown

Alaska Dispatch News, Tegan Hanlon, June 23, 2017

Mat-Su to spend another $1.6 million on failing Port MacKenzie barge dock

Alaska Dispatch News, Zaz Hollander, June 22, 2017

Commission proposes splitting Norway’s $960 billion wealth fund from central bank

Reuters, June 23, 2017

Some US LNG shutdowns likely in future: BP exec

Argus Media, June 23, 2017

National Tax Reformers Should Look to Alaska for Landmines

Real Clear Markets, William Shughart, June 23, 2017

Destroying a village to save it. Hats off to Andrew Jensen at the Alaska Journal of Commerce for another practical look at what’s really happening in Juneau. If you read one story this morning, make it his.

Budget deal “imminent.“ Alaska House and Senate leaders took a major step Wednesday toward averting a July 1 government shutdown by agreeing to an $8 million cut to the state university system — a move members said brings them close to a budget deal. “We still don’t have a deal. But I think a deal is imminent,” said Bethel Sen. Lyman Hoffman, co-chairman of the Senate Finance Committee and the sole Democratic member of his chamber’s Republican-led majority.

Headlamp will be watching the conference committee at 10am today to see how the final key details are handled: education funding, draws from the Earnings Reserve Account and Constitutional Budget Reserve and the Oil and Gas Tax Credit Capitalization Fund. 

Stormy Weather. Tropical storm Cindy  has shut one-sixth of the oil production in the Gulf of Mexico, halted vessel unloadings at a major oil-import terminal and triggered a force majeure on a system that collects natural gas from offshore platforms. Once Cindy makes landfall, it could threaten to disrupt even more energy operations in a region that accounts for about half of the nation’s oil-refining capacity. “The biggest impact would be on shipping activity which will remain suspended through Friday,” said Andy Lipow, president of Lipow Oil Associates in Houston. “Storm sets off high winds and waves that will impact ability of ships to go through open water.”

Pigs in the Pipeline. June 30 is a big anniversary for one of the most famous pipeline systems in the world. The Trans-Alaska Pipeline is 40-years-old. Alyeska engineers are working to make sure more anniversaries are celebrated. Hats off to Admiral Barrett and the team at Alyeska for dedicating their careers to protecting and maintaining the lifeblood of Alaska. Headlamp wishes you all a very Happy Birthday! 

Here comes the judge. Oil will continue to flow through the Dakota Access Pipeline through the summer while authorities conduct additional review of the environmental impact, after a judge on Wednesday ordered more hearings in coming months. Last week, U.S. District Court Judge James Boasberg in Washington ruled in favor of Standing Rock Sioux and Cheyenne River Sioux tribes, who said more environmental analysis of the Dakota Access line should have been carried out.

How do you like 10% unemployment? Kristina Andrew greets Nick Harvey as he steps into the Sustaining Bristol Bay Fisheries booth at the Dillingham harbor. He’s hoping to buy a “No Pebble Mine” flag for his boat to fly. Andrew, the director of Sustaining Bristol Bay Fisheries, is out of flags, but Harvey agrees to sign a letter to the Environmental Protection Agency instead. The letter is addressed to Environmental Protection Agency administrator Scott Pruitt. It expresses disappointment that the EPA and Pebble Limited Partnership recently reached a settlement that will allow the Pebble project to proceed into a normal permitting process. Headlamp is thrilled that that Pruitt is following the law and allowing a project to proceed through the established process. 10% unemployment in Dillingham won’t be reduced without responsible resource development. But we sure appreciate Nick Harvey’s interest in keeping responsible resource development out of the Bristol Bay area; his willingness to deny the region economic freedom as long as he can fish there is interesting. Headlamp notes Harvey lives in SEATTLE. 

Softer Blow to UA System. The state Legislature’s conference committee cut $8 million from the University of Alaska’s budget on Wednesday, a softer blow than the nearly $22 million reduction proposed by the state Senate. The six-member committee approved the UA budget without discussion at the meeting early Wednesday evening. Under the approved UA operating budget, the university system will receive $317 million in state funding for 2017-18, down from the $325 million it got in the current fiscal year.

Hilcorp Doubles Down On Cook Inlet. Hilcorp spent over $3 million for exploration rights to 14 federal offshore leases covering about 76,615 acres in Cook Inlet. Hilcorp, the dominant Cook Inlet oil producer, was the only company bidding in the U.S. Bureau of Ocean Energy Management’s lease sale held Wednesday. It was also the only company bidding in a state Cook Inlet lease sale held earlier Wednesday, picking up six tracts for a total $922,392.30 in bids, according to the Alaska Division of Oil and Gas. “This lease sale is good news for the future of affordable energy in southcentral Alaska, and a good sign for our ability to develop more of the prolific resources in Alaska’s OCS,” Senator Lisa Murkowski said. “I appreciate the new administration’s decision to move forward with this sale, and hope it marks the return of regular sales that restore access to more of our federal waters.”

 

First Reads

Alaska Senate leader: Budget deal to avert shutdown ‘imminent’
Alaska Dispatch News, Nathaniel Herz, June 22, 2017

University of Alaska budget cut by $8 million in legislative compromise
Alaska Dispatch News, Tegan Hanlon, June 22, 2017

Hilcorp makes industry’s first move in decades into federal waters of Cook Inlet
Alaska Dispatch News, Yereth Rosen, June 22, 2017

Storm Cindy Bears Down on Gulf Coast After Curbing Oil, Gas
Bloomberg, Brian K Sullivan, June 21, 2017

Oil to keep flowing in Dakota line while legal battle continues
Reuters, Pete Schroeder, June 22, 2017

AJOC EDITORIAL: Democrats destroying the village to save it
Alaska Journal of Commerce, Andrew Jensen, June 21, 2017

Advocates opposed to mining in Bristol Bay region ramp up summer outreach
Alaska Public Media, Avery Lill, June 21, 2017

Alyeska Pipeline is trying to engineer their way out of low oil flow in TAPS
KTVA, Emily Carlson, June 21, 2017

 AK Supreme Court hears case on PFD payouts. The Alaska Supreme Court heard arguments on Tuesday in a lawsuit over whether Gov. Bill Walker had the authority to veto part of the 2016 Alaska Permanent Fund dividend, an action he took last year in the face of a large budget deficit. The veto halved dividends to just over $1,000, causing divisions across the state over whether the governor took the right approach to dealing with Alaska’s fiscal crisis.

Headlamp watched the hearing and noted the justices took issue with Senator Wielechowski’s lack of delineation between “proceeds” and “income” as they related to the dedication clause and with his continued referral to voter and legislative intent. The state’s attorney compared the PFD veto to former Governor Frank Murkowski’s veto of the longevity bonus. 

Downgrade Again? S&P put Alaska’s AA+ credit rating on Credit Watch with Negative Implications. “(W)ithout structural fiscal reform in the 2017 legislative session, we would likely lower the state debt ratings,” S&P said, adding that it expects lawmakers to enact a budget for the 2018 fiscal year in the next 90 days. If the state adopts “a balanced budget with fiscal reforms that does not significantly rely on reserves,” the agency said it may remove the state’s ratings from the credit watch without a downgrade. The ratings agency indicated that the state finances have been essentially running on reserves the last several years.

Note to House Majority: you passed an 89 page amendment at the 11^th hour containing a $5 billion draw from the earnings reserve to fund your unicorn budget. THAT would be considered to be “significantly relying on reserves.” 

 Zinke defends budget cuts. Interior Secretary Ryan Zinke on Tuesday defended the $1.6 billion funding cuts President Donald Trump has proposed for his department, telling a Senate hearing that “this is what a balanced budget looks like. I support the president’s budget,” Zinke said, tough decisions and all. “It does not favor oil and gas and coal over any other strategy.” Committee Chairwoman Lisa Murkowski, R-Alaska, supported Trump’s effort to seek revenue from gas exploration in her state, which she said has the nation’s highest unemployment rate. According to Murkowski, developing “one-ten-thousandth” of Arctic refuge would generate tens of millions of dollars and create much needed jobs.

Deep in the heart of Texas. Hydraulic fracturing hasn’t contaminated groundwater in Texas, isn’t an earthquake hazard, and has been a boon for the state’s economy, according to a study released Monday.  The new study’s conclusions on drinking water are in line with multiple other studies of hydraulic fracturing, popularly known as fracking.

The Vikings. Norway offered a record number of blocks for oil and gas exploration in the Arctic Barents Sea on Wednesday, brushing off concerns about the risks of drilling in the remote, icy environment.

The oil ministry proposed 102 blocks, comprising 93 in the Barents Sea and nine in the Norwegian Sea.

The application deadline for Norway’s 24th Arctic licensing round is Nov. 30 and the aim is to announce awards during the first half of 2018, the ministry said.

Alaskan to head Fisheries Management for NOAA. Congratulations to Chris Oliver of Anchorage on his recent appointment to manage fisheries nationally for the National Oceanic and Atmospheric Administration! Oliver has since 2000 led the North Pacific Fisheries Management Council, for which he has worked for 27 years. He gained broad support for the position from fisheries groups and members of Alaska’s congressional delegation. The agency is responsible for managing sustainable U.S. fisheries under the Department of Commerce, as well as recovery and protection of species of whales, sea turtles and corals. “I can’t think of a more qualified or capable individual to manage America’s fisheries than Chris Oliver – the first Alaskan ever to permanently hold this important role,” said Alaska Sen. Dan Sullivan.

 

First Reads

Did Gov. Walker have veto power over PFD payouts? Alaska Supreme Court hears the case.

Alaska Dispatch News, Jeanette Lee Falsey, June 21, 2017

S&P warns Alaska again of possible credit downgrade, citing need for fiscal reform

Alaska Dispatch News, Annie Zak, June 21, 2017

Alaskan appointed to head U.S. fisheries management for NOAA

Alaska Dispatch News, Erica Martinson, June 21, 2017

Study Finds Fracking Doesn’t Harm Drinking Water in Texas
The Daily Signal, Fred Lucas, June 19, 2017

Norway offers record number of blocks for Arctic oil exploration
Reuters, Nerijus Adomaitis and Alister Doyle, June 21, 2017

Zinke defends Trump’s sharp cuts at Interior. ‘This is what a balanced budget looks like.’
The Washington Post, Darryl Fears, June 20, 2017 

How low can you go? Oil prices fell about 1 percent on Monday to a seven-month low as market players saw more signs that rising crude production in the United States, Libya and Nigeria undercut OPEC-led efforts to support the market with output curbs. OPEC supplies jumped in May as output recovered in Libya and Nigeria, two countries exempt from the production cut agreement. Libya’s oil production has risen more than 50,000 bpd after the state oil company settled a dispute with Germany’s Wintershall, a Libyan source told Reuters.

Oil in Middle Earth would be a win for everyone. An Alaska Native corporation’s third exploration well discovered remnants of crude oil that may have oozed through the area, raising hopes oil can be found elsewhere in large quantities in the Nenana Basin west of Fairbanks. Doyon has said a big gas discovery could lower energy costs for its Alaska Native shareholders. A large discovery of oil or gas could also boost incomes, through new jobs and shareholder dividends related to sales revenue. Oil, far move valuable a commodity than gas, would help Doyon’s bottom line.  Headlamp notes that exploration tax credits have helped Doyon in their efforts. 

Hilcorp sets sights on increased production. With the discovery of an overlooked pocket of offshore oil, Hilcorp’s Cook Inlet production is growing again. The so-called M28 well produced more than 1,000 barrels barrels daily, or about 10 percent of production in the aging basin. Scores of other Inlet wells produce a fraction of that amount, on average. Finding hidden gems is part of Hilcorp’s business plan. The privately held, Houston, Texas-based company rejuvenates old fields after oil and gas production has plummeted. Today, Hilcorp is the Inlet’s dominant producer, owning 15 of 17 offshore platforms in a region where oil and gas production peaked long ago. Hilcorp also elbowed its way onto the Slope, acquiring BP properties in 2014 to become Alaska’s fourth largest producer.

Fairbanks smoke ban requires waivers for burns. Under new smoke bans adopted by the Fairbanks North Star Borough Assembly, to burn wood when the air is bad will require a $100 waiver. “Things are going to have to get more mandatory as we move forward,” Borough Assemblyman John Davies said. Assemblymen Lance Roberts and Guy Sattley were opposed to the new rules. “Registration isn’t helping us solve the problem. This is paperwork,” Roberts said. Previously, burners who knew they had good stoves and dry wood could more or less ignore burn bans so long as their chimneys weren’t puffing out too much smoke. This winter, only those with a waiver will be allowed to burn during a Stage 1 ban. During a Stage 2 burn ban, no wood or coal burning will be allowed in the Air Quality Control Zone, which encompasses large portions of Fairbanks and North Pole. The borough is under pressure from the U.S. Environmental Protection Agency to reduce smoke pollution on winter days when the air is stagnant.

 

First Reads

Recovering from Cook Inlet leaks, Hilcorp targets increased production in Alaska

Alaska Dispatch News, Alex DeMarban, June 19, 2017

New smoke pollution rules make it harder to ignore burn bans

Fairbanks Daily News Miner, Amanda Bohman, June 20, 2017

Oil falls to seven-month low on more signs of growing crude glut
Reuters, Scott DiSavino, June 19, 2017

Evidence of oil pushes Doyon drilling campaign forward
Alaska Dispatch News, Alex DeMarban, June 19, 2017

Exxon Mobil lends support to a carbon tax proposal
New York Times, John Schwartz, June 20, 2017

Special Session Part 2. Unresolved as of Friday, the state’s budget gap lingers as Governor Walker called legislators back for a second special session. The Republican-led state Senate gaveled out Friday morning, rejecting a plan from the House which would have taken $5 billion dollars out of the earnings reserve account of the Permanent Fund. Four minutes after the Senate’s adjournment, Walker signed his proclamation convening the next special session, which began at 1 p.m. Walker, at a hastily called news conference in his third-floor Capitol office, said he remains committed to getting new revenue bills — like taxes — through the Legislature, adding that the state’s huge deficit will ultimately force their adoption. But he cited lobbying from “businesses, and business people” that convinced him that averting a shutdown should now be the Legislature’s sole focus.

How did we get here? With the Alaska Legislature unable to pass an appropriations bill and budget five months after it started work this year, a state government shutdown is looming on July 1. Their second special session began Friday. The operating budget is the only thing that the Legislature absolutely has to do and it is the only topic for this special session so far. If lawmakers don’t pass a budget by July 1, all but the most essential state government services will shut down.

Headlamp would note this line from the article “the goal is to fix the structural problem with Alaska’s finances caused by the crash in oil prices and long-term decline in production on the North Slope.”

If this is the “goal,” shouldn’t the House Majority explain whether hiking oil taxes will accomplish it?  Not to mention the impact a tax increase would have in the middle of a massive multiyear layoff? Just sayin’…

First Reads

What’s the holdup? The Alaska Legislature’s budget standoff, explained

Alaska Dispatch News, Nathaniel Herz, June 17, 2017

Walker calls 2nd special session to avert a state government shutdown, puts fiscal measures aside

Alaska Dispatch News, Nathaniel Herz, June 17, 2017

 

WHAT. JUST. HAPPENED? In a rare move, the House Majority turned their back on compromise discussions, inserted their version of the operating budget as an 89 page amendment to SB 23 (the capital budget), passed the bill and adjourned. The action took $5 billion dollars out of the earnings reserve account of the Permanent Fund. This move will lead to either another special session or a government shutdown. 

#drainandpray

Here’s what others are saying about their actions: 

“It was a stunning night for the Alaska House of Representatives, and for all the damage it’s done it won’t accomplish a thing.” Matt Buxton, The Midnight Sun

“The move, on what would be the second-to-last day of the special session, appears to be more of a restatement of the largely Democratic House majority coalition’s priorities than a negotiated agreement with the Republican-led Senate to avert a government shutdown July 1.”  Nat Herz, Alaska Dispatch News

“The House’s do-or-die move Thursday night was extraordinarily rare, but not unprecedented in the annals of the Legislature. In 1993, according to Legislative records, the House passed a drop-dead bill onto the Senate, which rejected it. If history is any guide, however, there’s room for optimism. A few days after the Senate rejected the bill, the two sides reached a compromise.” James Brooks, Juneau Empire

“House Speaker Bryce Edgmon told reporters it was not an ideal way to end the session and fell short in achieving his House majority coalition’s goal of getting in place a plan to address the state’s multibillion-dollar deficit.”  Becky Boohrer, AP

“We were surprised by the House Majority’s actions tonight. They did not get the job done for Alaska. A compromise is required to protect Alaskans and put the state on a stable fiscal path.” Gov. Bill Walker

“Tonight’s House floor action was a betrayal of many conversations between the two bodies in an attempt to compromise.” Senator Pete Kelly

 

First Reads

Alaska’s House passes a budget and adjourns, leaving the Senate to take it — or await another special session
Alaska Dispatch News, Nathaniel Herz, June 16, 2017

It’s ‘open season’ for those interested in buying or selling gas as part of Alaska LNG project
Alaska Dispatch News, Alex DeMarban, June 16, 2017

$50 million in federal funds headed to Alaska for fish and wildlife services
Alaska Dispatch News, Erica Martinson, June 16, 2017

The Senate and Walker swiftly reject the House Majority’s nuclear option budget
Midnight Sun, Matt Buxton, June 15, 2017

Two minds without a single thought. Speaker of the House Bryce Edgmon and House Rules Chair Gabrielle LeDoux threw their commitment to a fiscal plan out the window yesterday. The Alaska House passed a modified capital budget with a surprise, bipartisan amendment to inflate Permanent Fund dividends to more than $2,000 this year, nearly double what they had been prior to Wednesday. But the vote may have the effect of prolonging budget negotiations in the face of a government shutdown – all this after the majority claimed they were designing a bill to avoid a conference committee.  Headlamp supposes shutting down the government by increasing the deficit to almost $4 billion dollars does avoid a conference committee…

Thumbs Up to Representatives Gara, Grenn, Josephson, Kito, Kreiss-Tomkins and Ortiz for voting against their caucus on such a significant policy reversal. Thumbs Down for their vote to pass the bloated capital budget anyway, adding close to a billion dollars to the deficit.     

Thumbs Down to Representatives Eastman, Johnson, Millett, Neuman, Rauscher, Reinbold, Saddler, Sullivan-Leonard, Talerico, Tilton and Wilson for casting a vote that doesn’t get them any closer to restoring the PFD, but gives the House Majority a pandering win with the public. 

Two Thumbs Up to Representatives Birch, Chenault, Johnston, Knopp, Kopp, Pruitt and Thompson for holding the line and voting no on the amendment to double the PFD. 

FILL THE PIPELINE. By 2030, Wood Mackenzie predicts that 40% of oil production from the North Slope will be from fields not yet in production. Source: Wood Mackenzie. The discoveries come at a critical time for the North Slope, whose link to export markets has been the Trans-Alaska Pipeline System. Without the volumes from these fields coming on line in the next decade, the flow through the aging line was expected to drop below the level needed to justify the cost of keeping it operating. “We will see what happens,” said Alison Wolters, a research analyst for Wood Mackenzie adding, “It could be difficult to plan development and secure capital when there is so much volatility in the fiscal environment.”

America can see Russia from Norway…Spy toys abound for the US in Norway in response to President Vladimir Putin of Russia strengthening his country’s military and economic role in the Arctic. He has vowed to make Russia the dominant player in the high north as climate change opens up new shipping routes from Asia to Europe, new gas and oil prospects and a new arena for great power rivalry. The bedrock of Russia’s Arctic ambitions, said Katarzyna Zysk, an associate professor at the Norwegian Institute of Defense Studies, is the role of the region in Russia’s nuclear deterrence and naval strategies. At the center of these is the Borei submarine, a new generation of strategic weaponry that can carry at least 12 ballistic missiles, each armed with multiple nuclear warheads.

Educated into imbecility. Controversy now a “scientific” consideration in resource development? US District Judge James Boasberg on Wednesday instructed the US Army Corps of Engineers to conduct a new environmental review of the Dakota Access Pipeline but did not suspend the pipeline’s operations. He ruled that the US Army Corps’ review “did not adequately consider the impacts of an oil spill on fishing rights, hunting rights, or environmental justice, or the degree to which the pipeline’s effects are likely to be highly controversial.”

Business group runs ads against income tax proposal. Prosperity Alaska spent over $10,000 on anti-income tax advertisements that ran in Anchorage on Wednesday. The ads, from Prosperity Alaska, hit KTUU’s airwaves Tuesday and KTVA’s on Wednesday, according to filings with the Federal Communications Commission. The 30-second commercial features Scott Hawkins, the chair of the group’s board, petting a dog in a kitchen, where he argues “big-spending House liberals are crying wolf. But there is no wolf. Alaska has plenty of money to fund essential state services and pay a healthy dividend,” Hawkins says in the commercial. House majority members want to raise $700 million for the state budget with an income tax, which would ask higher income Alaskans to pay higher rates.

ReadlID extension. Alaskans will receive another extension on the Readl ID Act to allow access to military bases and federal facilities through early October. Leslie Ridle, deputy commissioner of the Alaska Department of Administration, said the state received news Wednesday that Homeland Secretary John Kelly would sign off on the extension. That extends the grace period for non-compliant Alaska IDs through Oct. 10, 2017.

Legislative action imperative for energy industry in Alaska. HuffPost contributor John Burnett called for lawmakers to arrive at a budget solution in order to “avoid cutting the legs out from under a sector that has, for generations, served as the lifeblood of Alaska’s economy.” At the heart of resolving differences, a fair and optimized tax structure that addresses the realities of today’s market but is not driven by cyclical price dynamics. The House bill, HB 111, represents a significant tax hike on the oil industry that would darken the future of the sector in Alaska with a “massively significant” change to the way that taxes are assessed. By 2026, the tax hike will amount to nearly $500 million, and the bill will increase the cost of producing oil in Alaska by $7 per barrel. If it’s not cutting off the legs, at minimum it would be hamstringing any hope for recovery.

 

First Reads

Alaska business-backed group spends more than $10,000 on last-minute anti-income tax television ads
Alaska Dispatch News, Nathaniel Herz, June 15, 2017

Alaskans get another extension as state prepares to implement Real ID
Alaska Dispatch News, Suzanna Caldwell, June 15, 2017

Budget standoff continues as House votes to double Permanent Fund dividends
Alaska Dispatch News, Nathaniel Herz, June 15, 2017

Encouraging American Energy Independence
Huffington Post, John Burnett, June 15, 2017

On a tiny Norwegian island, America keeps an eye on Russia
The New York Times, Andrew Higgins, June 13, 2017

Judge: Dakota Access Pipeline needs further environmental review
The Hill, Devin Henry, June 14, 2017

Major Alaskan Discoveries Promote Great Expectations
Journal of Petroleum Technology, Stephen Rassenfoss, April 21, 2017