Headlamp – Enemy #1 for Alaska – Cantwell ignores record of responsible drilling in Arctic.

Enemy #1 for Alaska – Cantwell ignores record of responsible drilling in Arctic. Democrats in Congress are sounding the alarm about the Interior Department’s efforts to hold an offshore oil lease sale in the Beaufort Sea next year. Sens. Maria Cantwell of Washington and Jeff Merkley of Oregon, as well as Reps. Raul Grijalva of Arizona and Jared Huffman of California, wrote a letter to Interior Sec. Ryan Zinke Tuesday, urging the department to cease plans to schedule leases in the Beaufort in 2019. Their letter says drilling there would be risky and unpopular and that there’s no effective way to clean up if a spill occurs in Arctic waters. The Bureau of Ocean Energy Management last month issued a formal call for information on which parts of the Beaufort should be open to drilling and which areas are sensitive or important to subsistence activities. That comment period ends Monday. The government has received more than 1,200 comments so far, many of them opposed to Arctic offshore drilling in general. Drilling advocates say the outer continental shelf can be safely explored and that hundreds of wells have already been drilled in Arctic waters since the 1960s.

Strong performance for oilfield service sector predicted. Rystad Energy expects a strong performance from the oilfield service sector based on the first-quarter reports of the top three players in this field, which featured an average increase in income from oilfield services sales of 21 percent. Schlumberger, Halliburton and GE Baker Hughes also reported combined revenue growth of 15 percent, in tune with Rystad’s expectations for the period. The consultancy expects the rest of the year to be strong as well, with improvement in oilfield equipment sales slower but present. “With the great surge of activity in short cycle businesses – like U.S. shale and the slower-to-respond equipment market, typically in offshore – this will also be directionally in line with what we expect the trend to be in 2018 as a whole,” said Rystad’s vice president of oilfield service research, Audun Martinsen. Rystad’s researchers are particularly upbeat about oilfield service providers with a presence in the U.S. shale patch for obvious reasons, and despite some delays in frac sand deliveries over the first quarter of the year. In fact, Rystad’s VP said, frac jobs are growing in number, hitting a high of 44 per day in February.

“Even if you’re not in oil and gas, you’re in oil and gas.” A hundred-foot oil rig pushes up amid acres of irrigated cotton fields and long dirt roads on this oil patch between Midland and Odessa, the two main towns in the Permian Basin in West Texas. Both have about 150,000 people. Tommy Taylor, director of oil and gas development at Fasken Oil and Ranch, seems to know most of them. Taylor has worked at Fasken for 33 years. He jokes that the oil business isn’t just on his resume, it’s in his blood. “My dad was a petroleum engineer, my oldest brother is a petroleum engineer, my middle brother’s a mechanical engineer,” Taylor said as he scaled the oil rig his team. “My sister’s a schoolteacher, but she married a petroleum engineer. You know, it’s just kind of in the family.” Oil prices are hovering close to a three-year high, above $68 a barrel. Much of that oil comes from the United States, which will overtake Russia as the world’s top oil producer by year’s end, according to the International Energy Agency. That trend is thanks, in large part, to production in the Permian Basin, where output has tripled in the past three years. The basin towns of Midland and Odessa depend heavily on the oil and gas industry. For families here, the price of oil makes the difference between hard times and high times.   About six months ago, oil started creeping above $50 a barrel. Eighteen months earlier, it had been about half that. Taylor said Fasken went down to operating just one rig and stopped hiring. The drillers and roughnecks drifted away and found jobs elsewhere. But when oil prices fall, there are repercussions for those outside the oil industry, too. As they say in these parts, “even if you’re not in oil and gas, you’re in oil and gas.”

Shale-setting records in the Permian. The Permian shale play is all about setting records. Now, the region may even become the world’s largest oil patch over the next decade. Output in the basin is forecast to reach 3.18 million barrels a day in May, according to the Energy Information Administration. That’s the highest since the agency began compiling records in 2007. By 2023, the basin may produce 4 million barrels a day, according to the International Energy Agency. The Ghawar field in Saudi Arabia is currently the world’s biggest oil field, with capacity of 5.8 million barrels a day, according to a 2017 EIA report. This is all thanks to the size of the oil deposits, coupled with increased technology and efficiencies. “The technology is the biggest driver,” said Rob Thummel, managing director at Tortoise, which handles $16 billion in energy-related assets. “The basin in and of itself could end up being the largest oil field in the world, even bigger than Ghawar in Saudi Arabia.”

Equipment shortage for shale wells. The intensity of oilfield equipment used in hydraulic fracturing of shale wells is wearing out parts and machinery faster than ever today and should keep the pressure pumping market tight for the rest of 2018, Halliburton’s top executive said Monday. Even as companies move to bulk up the North American pressure pumping fleet used in well completions, a large chunk of the reported additions are believed to simply replace degraded equipment, rather than expanding the overall size of the fracking fleet capacity, Jeff Miller, CEO of the giant oilfield services and equipment provider, said during the company’s first-quarter 2018 earnings conference call. Roughly 50% of additional horsepower announced does not translate into new crews, said Miller, who projected a market shortage of about 1 million to 1.5 million horsepower. “Despite incremental horsepower coming into the market, I believe this undersupply will persist as wear and tear continues to degrade equipment,” he said. “We’ve analyzed the difference between horsepower additions announced and the related number of crews produced. It means about half the newbuild equipment is being used to replace or add to crews already in the field.”

EPA working on self-reporting policy. The Environmental Protection Agency’s (EPA) office of enforcement will announce a new policy aimed specifically at helping polluters in the oil and gas industry, The Hill has learned. The new policy, which has not been finalized, will focus on offering more flexibility to oil and gas companies that choose to self-audit their emissions and report any failures to meet EPA’s regulations, according to an EPA employee with knowledge of the plan. EPA’s head of the Office of Enforcement and Compliance Assurance (OECA), Susan Bodine, has plans to announce the policy Friday at the EarthX Law and Policy symposium in Dallas. The announcement is timed with Earth Day, which is Sunday. Bodine will be speaking on a panel focused on sustainable and ethical corporate decision-making.

 

First Reads:

Rystad Upbeat About Oilfield Service Providers
Oil Price.com, Irina Slav, April 24, 2018

Midland, Texas, is booming as oil prices rise
Marketplace, Andy Uhler, April 24, 2018

Permian Basin Is Growing Into the Largest Oil Patch in the World
Bloomberg Markets, Jessica Summers and Sheela Tobben, April 24, 2018

Offshore lease schedule for Beaufort draws flak
Alaska Public Media, Liz Ruskin, April 24, 2018

‘Frac’ intensity in shale wells wears out equipment faster: Halliburton
S&P Global Platts, Starr Spencer, April 23, 2018

EPA to unveil policy aimed at avoiding legal action over oil and gas polluters: source
The Hill, Miranda Green, April 20, 2018

Headlamp – Get the facts on the Pebble Project.

Army Corps of Engineers describes Pebble Project in this video:

 

 

Years of underinvestment in the oil industry has led to weak production. The oil and gas industry may need a significant amount of new investments to offset a looming supply shortage, the head of oil services firm Schlumberger said. Companies like Schlumberger that cater to the exploration and production, or upstream, side of the industry are still evolving after the historic slump in crude oil prices two years ago. That forced major energy companies to cut costs, improve efficiencies and join forces in order to survive. Schlumberger last year formed several ventures with its industry partners. Extending a six-year relationship, the company in July spent $1.7 billion to acquire a 51 percent stake in Eurasia Drilling Co. Ltd., which holds one of the largest fleets of onshore drilling units globally. In February, it formed a joint venture partnership with Subsea 7 that built on a 2015 arrangement to coordinate broad offshore development work under one umbrella.

U.S. still has 49% fewer rigs than in October 2014. West Texas’ Permian Basin single-handedly accounted for another jump in the number of rigs actively drilling for petroleum in the U.S. The overall rig count increased by five rigs this week, while the Permian alone grew by eight rigs. Small declines in Colorado, North Dakota and Oklahoma partially offset the gains in Texas, according to the weekly data collected by Houston-based Baker Hughes, a GE company. The total U.S. rig count is now up to 1,013. Oil drilling currently accounts for 820 rigs of the total. The rest are seeking natural gas. U.S. oil was selling at about $68 a barrel in early afternoon trading in New York. West Texas’ Permian Basin now accounts for 453 rigs, which is 55 percent of all the nation’s oil rigs. The next most active area is South Texas’ Eagle Ford shale with 76 rigs. Texas is home to 509 rigs overall, while Oklahoma is second with 127 rigs. New Mexico is next with 90 rigs. Despite this week’s jump, the oil rig count is down 49 percent from its peak of 1,609 in October 2014, before oil prices began plummeting.

From today’s Washington Examiner, Daily on Energy:

15 REPUBLICAN ATTORNEYS GENERAL OPPOSE CALIFORNIA CLIMATE SUIT: The climate change court fight between California cities and big energy companies such as Exxon Mobil is widening as Republican attorneys general from 15 states filed a court brief Friday opposing the cities’ climate lawsuits. The attorneys general argue that the cities and municipalities suing the companies in federal court are overreaching in using local “nuisance” ordinances as a way to find a court remedy to the complex issue of global warming. Fossil energy producer and consumer states: The 15 states filing the amicus brief opposing the lawsuit include Texas, Louisiana, Wyoming, Colorado, West Virginia, Indiana, Alabama, Arkansas, Georgia, Kansas, Nebraska, Oklahoma, South Carolina, Utah, and Wisconsin.

 

First View:

The Pebble Project: Project Description and Summary Information
U.S. Army Corps of Engineers

First Reads:

Schlumberger sees growing supply challenges
UPI, Daniel J. Graeber, April 20, 2018

Permian Basin dominates another rig count jump
Chron, Jordan Blum, April 20, 2018

Headlamp – FYI Legislators, the stability of fiscal terms important to companies looking to invest in Alaska.

“Clearly one of the most important things when a company looks at an area is stability of fiscal terms…” A Papua New Guinea oil company that’s new to Alaska is hiring workers to appraise and develop a large North Slope discovery — bucking a trend that’s seen the state’s industry workforce slashed and companies leaving. Oil Search last year acquired a $400 million stake in the Nanushuk field, a discovery announced by Armstrong Oil and Gas and Repsol in 2015. Geologists estimate the discovery is one of the largest in Alaska. Oil Search plans to find out just how big it is. The company operates oil and gas fields in Papua New Guinea. Its partners include ExxonMobil and Total. In late March, Oil Search officially took over as the Nanushuk operator. The company’s work could provide a big economic boost to the state, said Keiran Wulff, head of Oil Search in Alaska. The Anchorage Daily News spoke with Wulff last week at the downtown Anchorage building, Peterson Tower, where the company is retrofitting an entire floor to house a large staff. “We like the fact that in Alaska there was a lot of opportunity, despite the oil majors being up here a long time. There’s been some significant oil fields discovered, but also, relative to other parts of the world, the drilling density in Alaska is not significant.” “Once we commit to the development fully, hopefully in the second half of next year, that would provide significant impetus for employment opportunities for people in the state. Clearly one of the most important things when a company looks at an area is stability of fiscal terms because you spend a lot of money on projects and a lot of time and there are a lot of opportunities around the world.”

Unpredicted drop in crude inventories. Crude rose to its highest level since 2014 in New York as the drop in U.S. inventories reported by an industry group helped to sustain a rally spurred by geopolitical risks. Futures in New York rose as much as 2 percent, extending their gain beyond last week’s three-year high. U.S. crude and gasoline inventories fell last week, the American Petroleum Institute was said to report on Tuesday, in contrast to forecasts for a build in U.S. government data later. OPEC and Russia will probably look at ways to prolong their cooperation on cuts when they meet in Saudi Arabia this week. Oil had fallen earlier this week from the highest in more than three years as geopolitical risks surrounding Syria eased, with Russian President Vladimir Putin now seeking to reduce tensions with the U.S., according to people familiar. The U.S. has started talking to North Korea directly, President Donald Trump said on Tuesday, helping to buoy some equity markets. “The product draws were a bit surprising,” Tamas Varga, analyst at PVM Oil Associates, said, referring to the drop in gasoline and distillate inventories reported by the API. “As long as the geopolitical premium is here with us we should not sell off.”

The charity state of Alaska. The Alaska Legislature is already cutting into the amount of the yearly oil-wealth fund check given to residents to help pay for state government. Now, lawmakers are looking at other ways for residents to spend more of their check — to help pay for state government. One proposal would set up a raffle to benefit schools, with a minimum buy-in of $100 from a resident’s Alaska Permanent Fund dividend. Twenty-five percent of entry dollars would go toward the prize fund. Another bill, which passed the Senate, would let residents donate all or part of their Alaska Permanent Fund dividend to the state treasury to help pay Alaska’s bills. All this comes as lawmakers, deadlocked on taxes, look for alternatives to bolster state coffers in response to a persistent state budget deficit. It also comes amid a roiling political debate over the future of the dividend. Alaska has no state sales or personal income tax. The size of the yearly check paid to residents has been capped at $1,022 and $1,100 the past two years, and lawmakers propose limiting it again this year as they prepare to use earnings from the oil-wealth fund for the first time to help fill the deficit.

From today’s Washington Examiner, Daily on Energy:

ZINKE WON’T REDUCE AMOUNT COMPANIES PAY TO DRILL OFFSHORE: Interior Secretary Ryan Zinke on Tuesday declined to cut the amount that oil and gas companies pay for offshore drilling deep in federal waters. Zinke rejected the advice of the Interior Department’s Royalty Policy Committee, an advisory board that unanimously recommended that he lower the royalty rate companies pay on offshore drilling from 18.75 percent to 12.5 percent in federal waters deeper than 200 meters.

Low down: The proposed amount was the lowest rate the government can charge for offshore leases. Zinke said lowering the rate is not necessary to attract industry interest in drilling deep offshore.

 

First Reads:

Papua New Guinea oil company moves to develop big Alaska prospect
Anchorage Daily News, Alex DeMarban, April 17, 2018

Crude rises to highest since 2014
Chron, Alex Longley, April 18, 2018

Alaska looks at ways for residents to give to government
Daily News-Miner, Becky Bohrer, April 17, 2018

Headlamp – Saudi Arabia, India and the Arctic.

Pick your number. Saudi Arabia wants to get oil prices near $80 a barrel to pay for the government’s crowded policy agenda and support the valuation of state energy giant Aramco before an initial public offering. In conversations with OPEC delegates and oil market participants, Saudi officials had been careful to avoid pinpointing an exact price target. Yet people who have spoken to them said the inescapable conclusion from the conversations was that Riyadh is aiming for $80. The private discussions, relayed by several people who met the Saudis over the last month and asked not to be named to protect their relationship with the kingdom, chimes with the hawkish tone in public from Saudi officials. Oil extended gains. London’s benchmark Brent crude futures rose as much as 2.3 percent to $70.21 a barrel. In an interview with Time magazine last week, Saudi Crown Prince Mohammed bin Salman made the first public statement linking his expectation of higher oil prices with the timing of the initial public offering of Saudi Aramco. “We believe oil prices will get higher in this year and also get higher in 2019, so we are trying to pick the right time,” he told the magazine in reference to the IPO. Riyadh, which initially targeted the second half of 2018 for the listing, is now aiming for next year.

Temperatures are rising in the Arctic. In both the literal and geopolitical senses. As global warming melts sea ice across the far north, the region is becoming a development hot spot, with major powers like Russia and China seeking control of resources and transport routes. This creates a potential security flashpoint, too. In March, a large ship carrying liquefied natural gas left Russia’s Yamal Peninsula, which juts out from northwestern Siberia and contains some of the world’s biggest gas reserves. The vessel was carrying the first India-bound shipment of LNG from the peninsula through Arctic waters via the Bering Strait. Russian energy giant Novatek is producing LNG in Yamal. “The first cargo delivered to the growing Indian market is an important development step,” Lev Feodosyev, Novatek’s first deputy chairman, said of the shipment. Climate change made it possible. Arctic sea ice has been steadily shrinking due to our planet’s rising average temperatures. The maximum ice coverage hit the lowest level on record in 2017. By as early as 2030, the Arctic Ocean could be largely free of ice in the summer, according to the Arctic Monitoring and Assessment Program, a working group under the intergovernmental Arctic Council.

If you wait until the last minute…it only takes a minute. Alaska’s Legislature could finish the legislative session within a few days of its scheduled 90-day length. But it’s not clear which bills lawmakers will pass in the remaining days, other than those related to the budget. Senate President Pete Kelly said Senate leaders are optimistic about ending the session shortly after Sunday, the last day under the schedule set by state law. Kelly, a Fairbanks Republican, said there’s been less disagreement between the two chambers this year. “Last year, it was a full-on war between the House and the Senate,” Kelly said Monday. By comparison, Kelly describes “high-level cooperation” this year on the budget. Still, only six bills have passed both chambers. That number is much lower than the current record for the fewest bills passed in the state’s history – 32, set last year. The Senate passed the sixth bill today – House Bill 168, a measure that repealed the Administrative Regulation Review Committee, which hasn’t done anything in 15 years. Kelly said the slow pace is the result of differences between the Senate and House. “It’s just going to be the natural outcome of having two bodies that are philosophically different,” Kelly said. “And we haven’t had that for a long time.” Eagle River Republican Sen. Anna MacKinnon said there will be opportunities to pass several more bills before the session ends. “There are many things we agree on and you’ll see those coming to fruition in the last seven days,” MacKinnon said.

From today’s Washington Examiner, Daily on Energy:

PERRY TRAVELS TO INDIA FOR HIGH-LEVEL ENERGY TALKS: Rick Perry will travel to India next week to discuss the future of the U.S. energy relationship with high-level officials on the subcontinent.

LNG arrives in India: The meeting comes as the first shipments of U.S.-produced liquefied natural gas begin to arrive in India this month, an administration official pointed out to the Washington Examiner.

Lots of meetings: Perry will be having “multiple bilateral meetings” during the trip, Energy Department spokeswoman Shaylyn Hynes said.

 

First Reads:

Are Saudis pushing OPEC for $80 a barrel oil?
Chron, Javier Blas, April 10, 2018

China and Russia go to ends of the earth for Arctic control
Asian Review, Nikkei, April 10, 2018

Slow-paced session could end with a sprint
Alaska Public Media, Andrew Kitchenman, April 9, 2018

Headlamp – Pruitt takes over all big decisions on America’s Waterways

Bellwether lease sales cause worry. The Trump administration heralded the government’s sale last month of U.S. drilling leases in the Gulf of Mexico as a bellwether. If that is the case, a Reuters analysis of the sale’s results shows reason to worry about demand in future offshore auctions. The sale brought in $124.8 million, as just 1 percent of the 77 million acres (31.2 million hectares) offered, found bidders. Reuters examined the acreage offered and leased, and nearly all the purchases show big drillers stuck closest to existing infrastructure, shunning the most far-flung areas. While U.S. crude oil production reached a record last year at more than 10 million barrels a day, most new development is in onshore shale regions. The U.S. Interior Department has said it wants to open all U.S. coasts for drilling, including the Atlantic and Pacific. But the Gulf result indicates limited interest even in already-developed areas, never mind unexplored coasts. The March auction included 9,088 deepwater blocks, each comprising roughly nine square miles. Only 105 of these blocks received bids and all but three of these were close to existing infrastructure and leases. “It kind of looks like they’re just shoring up their existing prospects right now,” said John Filostrat, a spokesman for the U.S. Bureau of Ocean Energy Management, the division of Interior that manages the auctions. Filostrat said the administration is still optimistic about future auctions and believes more auctions are needed to show the current trends.

From today’s Washington Examiner, Daily on Energy:

PRUITT TAKES OVER ALL BIG DECISIONS ON AMERICA’S WATERWAYS: The EPA chief has placed himself in charge of all decisions regarding the nation’s waterways, throwing to the wayside the agency’s regional offices that used to have some say on the matters, according to a leaked memo. In the new directive, Pruitt states he will be making all final critical decisions when it comes to the preservation of streams, ponds and wetlands. The group Public Employees for Environmental Responsibility provided CNN with a copy of the memo, which was dated March 30. The memo states: “With this revised delegation, authority previously delegated to regional administrators to make final determinations of geographic jurisdiction shall be retained by the administrator.”

First Reads:

Oil giants stay in their own backyards in U.S. auction
Reuters, Jessica Resnick-Ault, April 3, 2018

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