Headlamp – Are you ready to rumble? Annual energy outlook to stoke a fight.

Roads to Resources gets a re-fund. Alaska Gov. Bill Walker said he plans to re-fund the Ambler Road Project to the same point it was funded previously. The project lost its state funding in 2015 when Walker defunded several bond funded construction projects due to budgetary issues. The Ambler Road Project is a proposed 200-mile road that would connect the Ambler Mining District in Northwest Alaska with the Dalton Highway and Fairbanks. In a recent interview with the News-Miner, Walker confirmed that, if his FY19 budget proposal is passed, the project will be funded at the same level. “Our commitment to the Ambler Road was to get it up through the EIS process,” Walker said. “We are going to go ahead and advance that.” The Bureau of Land Management is working on an environmental impact statement for the project, identifying and analyzing concerns associated with the Alaska Industrial Development and Export Authority’s proposal. The EIS must be complete before the project can move to the permitting phase. The public comment period just ended after months of gathering input.

Groundhog day Part 2: Environmentalists sue to stop development. Two lawsuits filed Friday claim the federal government conducted petroleum lease sales without proper environmental review in a part of northern Alaska known for its wildlife. The Bureau of Land Management on Dec. 14 conducted the largest-ever lease offering within the National Petroleum Reserve-Alaska, putting out for bid 900 tracts covering 16,100 square miles (41,700 sq. kilometers), roughly the size of New Hampshire and Massachusetts combined. In the first lawsuit, five environmental groups said the BLM relied on an environmental review preceding a 2013 NPR-A management plan for the lease sale. Federal law for lease sales, the lawsuit said, required an updated environmental review of the specific land to be offered in a sale, and how wildlife and habitat would be affected. “The Trump Administration is in such a rush to sell off our public lands to the oil and gas industry that it isn’t even taking the time to comply with the law,” Suzanne Bostrom, an attorney for Trustees for Alaska, an environmental law firm representing the groups, said in a statement. In the second lawsuit, filed by environmental law firm Earthjustice, four other environmental groups claimed 2016 and 2017 lease sales in the reserve were illegal because the Interior Department failed to take a hard look at their effects on greenhouse gas emissions and climate change.

Bull or Bear? ConocoPhillips is pretty bullish about oil prospects on the North Slope. The company’s Alaska president, Joe Marushack, told a major business conference in Anchorage last week that he sees a possibility for up to 400,000 barrels a day of new oil coming into the Trans Alaska Pipeline System over the next few years. This would come from new oil projects that companies are working on including three by ConocoPhillips, Marushack said at an Anchorage Economic Development Corp.’s economic forecast luncheon held Feb. 1 at the Dena’ina convention center in Anchorage. Getting new oil into the oil pipeline is important because it is now carrying about 500,000 barrels per day, about one-fourth of its 2 million barrel-per-day design capacity, and if the oil “throughput” in TAPS drops further there would be operating problems, according to Alyeska Pipeline Service Co., the pipeline operator.

Small spill at Valdez Terminal. The Alaska Department of Environmental Conservation has reported a spill at the Valdez Marine Terminal. KTVA-TV reports that the department says the spill appears to be less than 200 gallons (757 liters) of crude oil from the Alaska North Slope. The spill was discovered Saturday morning by a worker who was doing routine rounds. The department says oil reached the water but “no sheen on water has been observed.” The cause of the spill is under investigation. But the department says the oil might have leaked from loading arms into containment. The department says there’s no impact to the Trans-Alaska Pipeline. The department will continue to monitor and clean the area. Skimming vessels have been deployed to the spill site.

 

 

 

 

 

 

China surpassed the United States in annual gross crude oil imports in 2017, importing 8.4 million barrels per day (b/d) compared with 7.9 million b/d for the United States. China had become the world’s largest net importer (imports minus exports) of total petroleum and other liquid fuels in 2013. New refinery capacity and strategic inventory stockpiling combined with declining domestic oil production were the major factors contributing to the recent increase in China’s crude oil imports.

One fish, two fish…Local fishermen and mining companies are picking sides this week over stringent new rules for construction on Alaska salmon habitat. One group did it through letters to a legislator. The other, with paper of a different sort: a $200,000 contribution. The Stand for Salmon initiative and a similar bill known as House Bill 199 establish a new procedure for construction permits on fish habitat issued by Alaska Department of Fish and Game. It’s more complicated than existing permitting, mining companies say, and would be prohibitively expensive for construction projects across the state. But fishermen say they simply want construction done responsibly. Without updates to a decades-old permitting law, commercial salmon fishing is put at risk by large oil, gas and mining projects. Flanked by the group of seven other Juneau fishermen, gillnetter Sommers Cole gave HB 199 a stamp of approval Thursday when he delivered a letter to bill author Rep. Louise Stutes, R-Kodiak, on behalf of 200 fishermen. About 30 of the signers are Juneau fishermen, Cole told the Empire before his meeting with Stutes at the Capitol.

From today’s Washington Examiner, Daily on Energy:

ANNUAL ENERGY OUTLOOK TO STOKE A FIGHT: The Energy Information Administration is set to release its annual outlook for 2018 Tuesday morning, which is expected to play up the effects of the oil and natural gas revolution, which in turn helps Trump’s energy dominance agenda. But that sort of reporting, even though it is factual, does not sit well with climate change groups who want to see renewable energy advances played up by the federal government over fossil fuels. Ahead of the report’s release, the Post Carbon Institute released a report Monday that looks to poke a hole in the EIA’s “rosy” projections. The report details how the government’s projections are not feasible out to 2050. “There is no doubt that the U.S. can produce substantial amounts of shale gas and tight oil over the short- and medium-term,” said David Hughes, the report’s lead author. “Unrealistic long-term forecasts, however, are a disservice to planning a viable long-term energy strategy. The very high to extremely optimistic EIA projections impart an unjustified level of comfort for long-term energy sustainability.”   The EIA outlook will provide projections of U.S. energy supply, demand, and prices. The projections also will include alternative assumptions that take into account changing economic growth rates, domestic energy resources, and other technologies, along with world oil prices.

 

First Reads:

Walker re-funds Ambler Road Project to EIS process
Fairbanks Daily News-Miner, Erin Granger, February 5, 2018

Groups sue to overturn Alaska petroleum reserve lease sale
AP News, Dan Joling, February 2, 2018

ConocoPhillips fired up about Alaska prospects in 2018
Mat-Su Valley Frontiersman, Tim Bradner, February 3, 2018

Alaska officials report oil spill at Valdez Marine Terminal
AP News, February 5, 2018

China surpassed the United States as the world’s largest crude oil importer in 2017
U.S. Energy Information Administration, February 5, 2018

Local fishermen, mining companies divided over fish habitat
Peninsula Clarion, Kevin Gullufsen, February 4, 2018

Morning Headlamp – When you lose 3000, $135,000/yr. jobs – everyone in Alaska loses.

The average wage in Alaska fell last year for the first time since the mid-1990s. Recently released state data demonstrated that the average wage in Alaska went down in the first time in twenty years following the elimination of thousands of jobs in oil and gas. An economist at the Institute of Social and Economic Research at the University of Alaska Anchorage, Mouhcine Guettabi, explained that, “It’s certainly a metric that matters because the economy depends on people spending to a great extent and wages comprise a significant portion of total income.”

Headlamp would emphasize that losing more than 3000 jobs with an average wage of $135,000/year impacts every sector of our economy. The governor and the legislature could take action to stop the hemorrhaging – the question is, will they? 

This is not sustainable. U.S. shale oil pioneer Harold Hamm on Wednesday warned that sub-$40 crude would cause many U.S. producers to stop drilling and warned fellow CEOs to exercise discipline. “This price … is not sustainable,” Hamm, CEO and chairman of Continental Resources, told CNBC’s “Squawk Box.” “It needs to be north of $50 for sure to be sustainable in the world.”

Murkowski ally nominated to FERC. U.S. President Donald Trump intends to nominate Senate aide Richard Glick to be a member of the Federal Energy Regulatory Commission, the White House said in a statement on Wednesday. Glick, who is general counsel of the Senate Energy and Natural Resources Committee, would serve the remainder of a five-year term expiring in June 2022, the statement said.

More oil in the pipeline!!! Brooks Range says Mustang will produce in ’17. Anchorage-based Brooks Range Petroleum Corp. is set to receive $70 million from the State of Alaska in order to bring its Mustang project to fruition this winter. It is expected to produce up to 15,000 barrels of oil a day at its peak, drawing from around 22 million barrels of “proven reserves.”

Headlamp is thrilled with the news that Brooks Range can move forward with their project and put more oil in the pipeline. This is the type of ingenuity between the private sector and the state that can get our economy back on track. 

Sun hasn’t set yet on ANWR. After Interior Secretary Zinke directed “federal agencies to reevaluate the oil and gas potential within the National Petroleum Reserve-Alaska and the coastal plain of the Arctic National Wildlife Refuge,” Alaska oil advocates applauded.

Discoveries boost hopes for Alaska oil output. Oil discoveries in the past couple years in the North Slope of Alaska have improved conditions for the “economy of the region and the state.” These developments appease concerns over the Trans-Alaska Pipeline, termed North Slope’s oil lifeline.  The resource is there, the companies are there, the federal government is there – is the state of Alaska there?   

First Reads

The Average Wage in Alaska Fell Last Year for the First Time Since the Mid-1990s

Alaska Dispatch News, Jeannette Lee Falsey, June 29, 2017

Despite Delays, Brooks Range Says Mustang Will Produce in ‘17

Alaska Journal of Commerce, Elwood Brehmer, June 28, 2017

Sun Hasn’t Set Yet on ANWR.

Alaska Journal of Commerce, Elwood Brehmer, June 28, 2017

Discoveries Boost Hopes for Alaska Oil Output.

Bloomberg BNA, Alan Kovski, June 28, 2017

Harold Hamm warns oil prices below $40 will idle US drilling, cautions producers to be ‘prudent’

CNBC, To DiChristopher, June 28, 2017

Trump to nominate Senate aide for Federal Energy Regulatory Commission

Reuters, Eric Beech, June 29, 2017

 

Legislative Week in Review: Week 4

Key Messages of the Week:

  • The House Resources Committee rolled out HB 111 – if passed it would be the 7th change to oil & gas taxes in Alaska in 12 years. This bill would fundamentally change SB 21 (the voter approved oil/gas tax regime). The fiscal note reflects a small impact on the FY 2018 budget.
  • As reported by Northern Economics we have at least one full year left of the recession no matter what policy comes out of Juneau.
  • Legislators held few hearings on Friday, and of those meetings the subject matter focused little on the budget/fiscal crisis/economic recovery/strengthening the private sector.

February 6, 2017

  • Senate Majority held its weekly press conference – reiterating its position to not entertain oil and gas legislation that doesn’t increase production and attract investment. Hopes to have the budget done by mid-March.
  • Legislative Finance Director David Teal gave a presentation to House Finance on ways to analyze different fiscal plan options like a spending cap, POMV payout from the Permanent Fund and how big dividends should be.

February 7, 2017

  • Senate Finance received a rundown on the Governor’s new $53 million supplemental budget – mostly comprised of payments to Medicaid service providers.
  • House Transportation continued to hear public testimony on HB 60, Gov. Walker’s legislation to triple the motor fuel tax – thus far the public seems opposed to the proposal.
  • Senate State Affairs listened to DOR Commissioner Randy Hoffbeck discuss SB 26, Governor Walker’s bill to restructure the Permanent Fund/Dividend program. Sen. Dunleavy had real concerns regarding the discrepancy in modeling the Administration was presenting vs. what Sen. Dunleavy had himself received from the Permanent Fund.

February 8, 2017

  • House Floor session – highlight of the week. Lots of controversy over the introduction of HB 111, the oil tax bill from the House Resources Committee. House Minority members objected to the introduction of the bill as a Committee bill.
    • The bill was leaked to the press before House Minority members saw the bill.
    • Objection was made by Rep. Talerico – who believed the bill couldn’t be introduced as a committee bill because not enough committee members had signed off on it.
    • Took nearly an hour to introduce the bill.
    • Minority Resource Committee members wanted their names removed from the bill.
    • Major indication of fight to come over actual substance of the bill.
  • Press conference by Reps. Geran Tarr and Andy Josephson to discuss the policy changes in HB 111.
  • Tarr then introduced the bill to the House Resources Committee and confrontations continued between her, Co-Chair Josephson and Minority members.

February 9, 2017

  • Senate Finance reviewed a report on state employee contracts and the work that has been done to curtail state employee pay/benefits under the Walker administration.
  • The Boston Consulting Group presented its report to the Senate Labor and Commerce Committee regarding A.O. 281 – Walker’s order to find ways AEA, AIDEA and AHFC could be streamlined/consolidated.
  • Senate State Affairs passed SB 5 out of committee – the bill which would close the loophole allowing legislators to form PACs and receive contributions from lobbyists outside of their district.

February 10, 2017

  • House Finance heard from Jonathan King of Northern Economics regarding Alaska’s ongoing recession. Mr. King discussed how the state got into this recession and how different policy mechanisms could get Alaska out.

Morning Headlamp — AGDC Moves to…Japan?

Kon’nichiwa. The state gasline agency has opened an office in Tokyo and hired a former employee of the giant Mitsubushi Corp. who got to know Bill Walker before he became Alaska’s governor. The gasline agency and Gov. Bill Walker have made trips to Japan and other Asian countries over the past year trying to secure commitments from potential gas buyers and attract investors and financing for the costly project.

Since July, the gasline agency has publicly discussed efforts to open a marketing office in Houston, Texas, a process that is still underway. Plans there have called for a small staff and office space for meetings with potential gas buyers in a city known as America’s energy center.

Minority House Republicans have laid out their priorities for this session, which include further budget cuts, a spending limit and defending state oil tax policies. House Minority Leader Charisse Millett credits existing tax and tax credit policies with increased oil production and spurring exploratory work that led to recent North Slope finds.

While the iron is hot. Alaska Sen. Lisa Murkowski nudged energy secretary nominee Rick Perry toward advancing scientific research to help meet Alaska’s high energy needs at his confirmation hearing Thursday. Murkowski chairs the Energy and Natural Resources Committee and oversaw the hearing for the former Texas governor, who once said he would like to eliminate the agency he now hopes to oversee. Perry said Thursday he regrets those words and has changed his mind after learning more about the scope of the agency’s work. The Energy Department is largely focused on energy research and managing the nation’s stockpile of nuclear weapons and waste.

Republicans push to allow oil exploration in ANWR buoyed by Donald Trump’s election to the Presidency. Prospects for the industry look better than they have in recent years with Republican control of the White House and of the Congress.

 

First Reads

State gasline agency opens Tokyo office, replaces state’s representative in Japan

Alaska Dispatch News, Alex DeMarban, January 19, 2017

Cuts, defending oil tax policies among Alaska House minority goals

Associated Press, Becky Bohrer, January 19, 2017

Huge Discovery Changes Alaska Into A Potential Growth Asset For ConocoPhillips

Seeking Alpha, Callum Turcan, January 19, 2017

Murkowski nudges energy nominee Rick Perry toward Arctic and Alaska interests

Alaska Dispatch News, Erica Martinson, January 19, 2017

In State of the State address, Gov. Walker admonishes Legislature’s budget inaction

Fairbanks News Daily News Miner, Matt Buston, January 19, 2017

Republicans step up push for Arctic drilling in wildlife refuge

Reuters, Alex Nussbaum, January 20, 2017

Morning Headlamp: Is AKLNG the only project that will revitalize Alaska’s economy? Governor Walker thinks so…

Crisis Mode. Gov. Bill Walker delivered his State of the State last night, touching on similar themes and receiving familiar skepticism. With 15 new legislators in Juneau, Walker pitched a stripped-down version of his budget package from last year and left room for adaptation — all while ratcheting up his rhetoric and telling lawmakers that “denial doesn’t make the problem go away.” In last year’s speech, Walker referred to Alaska’s “cash flow problem.” Now, he says the state is in a full-blown “crisis” — a word he’d previously avoided, but used seven times Wednesday night. “Whatever your plan may be, put it out there,” Walker said, “and let’s get to work to find a solution. But if your plan does not close the fiscal gap, be sure to also identify the amount from our dwindling savings it’ll take each year to cover the gap under your plan.”

Andrew Jensen of the Alaska Journal of Commerce penned an editorial on the recent spate of big oil discoveries and tax policy discussion sure to dominate this legislative session. According to Jensen, “When the Legislature inevitably takes up oil tax policy this session, it is important to remember who was completely wrong about SB 21. All of the current developments and the 2016 increase in production would have been at risk if the Democrats and Walker had their way in 2014.” In his state of the state last night, Governor Walker said “I’m a fan of a stable fiscal foundation.” Headlamp hopes that is true. 

The editorial comes just days after ConocoPhillips Alaska President Joe Marushack described how the company’s process for allocating capital in Alaska is contingent on consistent financial policy.

The first week of the 30th Alaska Legislature is going…fine. With an abundance of new lawmakers, particularly in the House of Representatives, lawmakers are feeling each other out and coping with the implications of a new House Majority coalition that includes Democrats, a few Independents and three moderate Republicans. “There’s so many new people,” said Rep. Scott Kawasaki, D-Fairbanks, and a veteran returning for his sixth session. “The leadership in the House and the Senate is composed of individuals who have longstanding personal and legislative relationships,” he said. “I think that’s going to be a critical element as we go forward.”

Since late November, major oil companies have announced 11 deals worth more than $500 million each with a combined value of $31 billion, the clearest sign yet that oil executives are more confident a recovery is underway. “You’re seeing the majors sharpening their pencils after a long while and actually flipping around from disposals to acquisitions,” said Tony Durrant, chief executive of British energy firm Premier Oil (PMO.L), which is looking to sell several stakes in its North Sea operations. Total acquisitions of oil and gas fields, known as upstream assets, tripled to $31 billion in December from a month earlier, when the Organization of the Petroleum Exporting Countries agreed to cut output for the first time in eight years, according to data from consultancy Energy Market Square.

 

First Reads

Walker renews call for budget reforms: ‘Denial doesn’t make the problem go away’

Alaska Dispatch News, Nathaniel Herz, January 18, 2017

Gov. Walker hits on same budget themes with new Legislature

KTOO, Andrew Kitchenman, January 18, 2017

Big Oil back on the acquisition trail as outlook brightens

Reuters, Ron Bousso, January 19, 2017

AJOC EDITORIAL: The discoveries that almost didn’t happen

Alaska Journal of Commerce, Andrew Jensen, January 18, 2017

Session opens with smiles amid deficit cloud

Alaska Journal of Commerce, James Brooks, January 18, 2017

Without Pipelines the U.S. Could Go Dark

Our good friends at the Consumer Energy Alliance (CEA) have produced an excellent report on the critical need for infrastructure development, specifically pipelines for oil and gas.

Their report found that by 2030, 31 percent of U.S. electricity generation capacity would be removed should the rejection of pipeline infrastructure projects continue at its current pace and if baseload generation options go offline unnecessarily.

Alaskan policy makers, at the state and federal level, along with the public should recognize this alarming trend. Without responsible resource development, and building out the critical infrastructure that goes along with it, the energy needs of Alaskans will be threatened. Delaying projects for political gain, endangers Alaskans and American jobs, could force utility rates higher and undermines U.S. security.

Poor policies focused on perceived short term gains, will generate negative consequences over the long run. Policy makers must correct the current track we are on to enable a sound energy sector, which translates into a healthy Alaskan economy.

Click here to read the full report.

Morning Headlamp – Drill, baby, Drill returns…

Luck be legislation tonight. Alaska’s congressional delegation is hoping the 13th time will be the lucky one for legislation to open the Arctic National Wildlife Refuge to oil and natural gas development. Specifically, Rep. Don Young introduced the American Energy Independence and Job Creation Act just hours after being sworn in to the new Congress Jan. 3. With Republicans controlling both the House and the Senate and President-elect Donald Trump’s seemingly oil-friendly administration set to take office, there is renewed hope for “opening” ANWR.

Moreover … Sen. Lisa Murkowski, who chairs the Senate Energy and Natural Resources Committee, co-sponsored a similar bill with a slightly more straightforward title: the Alaska Oil and Gas Production Act. The Senator said in a release from the committee’s Republican office that Alaska has proven it can dually develop resources and protect the environment through the 40 years of oil production that has taken place on the North Slope. The last time the refuge was on the national radar was during the 2008 presidential campaign when Republican Sen. John McCain’s running mate, Alaska Gov. Sarah Palin, coined the slogan “Drill, Baby, Drill.”

Here in Alaska, among Alaska’s newest legislators, there is optimism and an eagerness to get to work on addressing the state’s multibillion-dollar budget deficit. Representative-elect George Rauscher of Sutton, who upset incumbent Rep. Jim Colver in last year’s Republican primary, said he’s “pretty jazzed” about the legislative session, which starts Tuesday. He has already proposed legislation, including revisiting a constitutional spending limit. Republican Rep.-elect Chuck Kopp of Anchorage said reductions, reforms and revenue all should be up for discussion. Kopp won the seat held by Republican Rep. Craig Johnson, who last year made an unsuccessful bid for state Senate.

President-Elect Trump’s pick for Secretary of the Interior is likely to focus on the balance between development and conservation during his confirmation hearing in Washington today. Congressman Ryan Zinke (R-MT), a former Navy SEAL and avid outdoorsman, will face questions from the Senate Energy and Natural Resources Committee.

 

First Reads

Delegation revs up for another ANWR fight

Alaska Journal of Commerce, Elwood Brehmer, January 16, 2017

Optimism, eagerness among Alaska’s newest legislators

Associated Press, Becky Bohrer, January 16, 2017

Alaska Greater Mooses Tooth Unit Project Panorama Oil and Gas Upstream Analysis Report 201

BusinessWire, January 16, 2017

‘Drill, baby, drill’ returns to the new Congress

Washington Examienr, John Siciliano, January 16, 2017

ConocoPhillips announces oil discovery

KTOO, January 16, 2017

Trump’s Interior pick to clarify stance on developing federal land, including in Arctic

Reuters, Valerie Volcovici, January 17, 2017

 

Morning Headlamp — Hopkins to leave AGDC & big price tag for extended session

Shades of gray. Former Fairbanks North Star Borough mayor Luke Hopkins has left his position on the Alaska Gasline Development Corp., saying he wants to avoid politicizing the board while he runs for state Senate. Lawmakers had repeatedly called on Hopkins to step down before running for office. Hopkins cited a legal “gray area” for his hesitation to act on lawmakers’ requests. “AGDC has lots of work to do — I didn’t want them tied up in responding back and forth,” Hopkins said in a phone interview Wednesday, the same day he sent a resignation letter to Gov. Bill Walker. “I regret that I had to step down.” Headlamp would point out that it wasn’t a “gray area.” According to law, he would be classified as an employee for the state, receiving money for his board activities. Too bad Mr. Hopkins wasted an enormous amount of legislative time during his confirmation hearings and the final vote on his confirmation. 

Down the drain. According to the Associated Press, the recently ended extended legislative session has so far cost about $520,000. The biggest piece of that was for the daily allowance lawmakers receive, known as per diem, totaling nearly $407,800.  Headlamp wonders if Juneau legislators Kito, Egan, and Munoz are collecting per diem while they live at home? 

A horizontal well in 88 Energy ltd’s Alaskan shale discovery will flow oil at high rates, according to Aussie broker Hartleys. According to analysts, “Especially important was confirmation that the northern part of Project Icewine sits in the volatile oil window. Other important factors such as matrix permeability and porosity exceeded known levels in plays such as the Eagle Ford.”

 

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First Reads

Alaska gas line board member quits for state Senate run, blaming legislative dysfunction
Alaska Dispatch News, Nathaniel Herz, May 25, 2016

Extended legislative session cost Alaska $520,000
Associated Press, Becky Bohrer, May 25, 2016

State oil and gas regulators propose record high safety, environmental fines
Alaska Public Radio News, Rachel Waldholz, May 24, 2016

88 Energy’s Alaska shale could flow at high rates, analyst says
Proactive Investors, May 26, 2016

Lack of leadership got Alaska here, and it’s not going to save us now
Alaska Dispatch News, Mike Dingman, May 25, 2016

 

Walker wants deficit fixed by 2019

Peninsula Clarion, James Brooks, April 28, 2016
Even as members of the Alaska Legislature promote a slow-and-steady approach to fixing Alaska’s $4 billion annual deficit, Gov. Bill Walker said he wants to see fast action on the state’s oil-driven financial woes. [Read More]