Eni strengthens Alaska position; Mack says “NO” to Chuitna Citizens Coalition

No favorite so far for competing Interior natural gas plans
Elwood Brehmer, Alaska Journal of Commerce, August 29, 2018
Interior Gas Utility leaders were largely measured in responding to a late pitch from Siemens Government Technologies on a new option for getting an additional natural gas supply to the Fairbanks area. Pamela Throop, chair of the startup utility’s board of directors and a longtime Fairbanks commercial real estate developer said the Siemens proposal is “neck and neck in some ways” with the Alaska Industrial Development and Export Authority’s $330 million comprehensive gas distribution and supply build out financing package. AIDEA’s plan also included IGU purchasing Fairbanks Natural Gas and its sister LNG supply chain companies for nearly $60 million — a purchase made predominantly with $42 million in state Interior Energy Project grant funds.

Our Take:  Good to see the private sector providing alternatives to a government run project.  Can someone get a gas contract?

Major oil company Eni buys ‘prime’ acreage in hunt for North Slope oil
Alex DeMarban, Anchorage Daily News, August 29, 2018

Italian oil major Eni announced on Wednesday it’s buying what it calls a promising chunk of North Slope acreage from Caelus Exploration Alaska, in a deal that moves exploration leases from a small oil company to a global producer. Eni will acquire 124 exploration leases in an area about 20 miles southeast of Deadhorse, the industrial support town serving giant Prudhoe Bay and other northern Alaska oil fields, Eni said in a statement. In Alaska, Caelus is perhaps best known for announcing a massive discovery in Smith Bay in 2016, an offshore site far from existing infrastructure. The Dallas-based company said in 2017 it was delaying additional drilling to confirm the discovery, citing difficulties linked to low oil prices  and some $75 million in tax credits the state owed the company.

Our Take: When the state doesn’t pay their bills – companies make tough decisions.   

Eni Builds up Alaskan Position
Natural Gas News, August 30, 2018

Italian explorer Eni has acquired 124 exploration leases for a total of 350,000 acres onshore in the eastern North Slope of Alaska from Caelus Alaska Exploration Company, it said late August 29. Eni will hold all the leases with a 100% working interest. The area is southeast of the giant Prudhoe Bay oil field, close to existing infrastructure, and is considered a “prime area with high potential and multiple proven plays, between two of the largest hydrocarbon discoveries in North America: Prudhoe Bay and Point Thompson.” These are among the sources of the gas that will be needed if Alaska LNG is ever developed.

Our Take:  This is the kind of activity that will strengthen our economy and create jobs.  “Eni will apply its business model and experience through a fast-track exploration with a short time to market of the potential new discoveries.”  Best wishes to Eni!!  

DNR commissioner reverses water reservation decision on Chuitna
Elizabeth Earl, Peninsula Clarion, August 29, 2018

A citizens’ group won’t receive a water reservation in a stream on the west side of Cook Inlet after all.  Alaska Department of Natural Resources Commissioner Andy Mack issued a decision Tuesday denying an application from the Chuitna Citizens Coalition for an instream flow reservation — essentially, the right to a minimum amount of water in a stream — on a tributary of the Chuitna River on the west side of Cook Inlet near Tyonek.

Our Take:  A good decision by Commissioner Mack. As Mack points out, with PacRIm no longer pursuing a project there “It is not in the public interest to grant a reservation that could completely preclude or significantly hinder a future potential use without full information on the potential use and options, especially where resources can be protected through DNR’ s other permitting and regulatory processes if an actual threat to such resources arises.”  

Hilcorp spuds Big Tex prospect
Josh Lewis, Upstream Online, August 30, 2018
US player Hilcorp Energy has spudded the first well as part of a multi-well drilling program in Texas and Louisiana. Australian company Otto Energy revealed Thursday drilling had started on the SL-192-PP-031 exploration well on the Big Tex prospect in Louisiana.  The well will be drilled to a total depth of 13,175 feet and target the Middle Miocene aged Tex W 16 and Tex W 18 sands which are productive at Hillcorp’s East Bay field to the east and the West Delta 30 field to the west. The Big Tex prospect has been estimated to hold 6.5 million barrels of oil equivalent in mean prospective resources, consisting of 5 million barrels of oil and 9.3 billion cubic feet of gas
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Insight: Is the US risking overuse of sanctions?
Meghan Gordon, S & P Global Platts, August 30, 2018
As the US government increasingly turns to energy-sector sanctions — or the threat of them — as a foreign policy tool, some have started to question whether the strategy carries long-term risks. Iran and Russia, the chief targets of US sanctions at the moment, would like the world to believe that the US is addicted to sanctions. Iranian Foreign Minister Javad Zarif tweeted this month that the US needs to “rehabilitate its addiction to sanctions.” A few days later, Russian Foreign Minister Sergey Lavrov said that US over-reliance on sanctions would eventually undermine the dollar as the global settlement currency. The statements are obviously self-serving, as both countries are staring down major new US sanctions. But as the US reaches over and over again for this foreign policy tool — and President Donald Trump flexes “maximum economic pressure” against countries he wants to behave differently — should policy makers pause to consider the long-term implications of overusing sanctions?