Headlamp – Alaska take note: The ability to borrow attracts new investment!

Unpaid credits have harmed companies ability to borrow. Currently, Alaska owes nearly $900 million to companies in the form of oil tax credits. A bill that would have the state issue bonds to pay those companies is on the move in the legislature. Gov. Bill Walker introduced companion bills in the House and Senate this session. Each lays out of a plan for the state to issue bonds to quickly pay down the debt it owes to oil and gas companies. The House Resources committee voted Tuesday morning to pass its version of the bill along to the next committee. But, the committee’s co-chair Rep. Geran Tarr, D-Anchorage, said she doesn’t support it. She said the state would be swapping one type of interest-free debt for another that could have less favorable repayment terms. If the state issues bonds and then fails to make payments, that could affect its credit rating. “It means that we would have to prioritize it over other important state needs like public safety, if there were such a time as everything falls out from under us. So that’s difficult for me,” Tarr said. The state’s tax credit bill stems from a program that was designed to encourage companies to explore and develop new oil fields in the state. The state used to pay off the balance of the credits each year, but as oil prices sank the Walker administration pulled back and made minimum payments on what the state owes. For three years, oil and gas companies — and some banks — have repeatedly told lawmakers that the unpaid credits are hurting development in Alaska. Pat Galvin, Chief Commercial Officer of Great Bear Petroleum, said the unpaid credits harmed companies’ ability to get financing for exploration and development. Great Bear has exploration wells on the North Slope that are on hold.

BP batteries. BP has teamed up with Tesla to build its first battery storage project at one of its U.S. windfarms as part of a strategy to expand its renewable energy business, the energy group said on Tuesday. Tesla will supply the 212 kilowatt (KW)/840 kilowatt hour battery at BP’s Titan 1 windfarm in South Dakota in the second half of this year. It operates 12 other windfarms in the United States. Providing large-scale battery power to windfarms allows them to store energy when wind is ample and make electricity available when demand is high, offering a crucial commercial advantage to an otherwise volatile energy source. “Lessons from the project will enable BP to make better informed decisions when evaluating and developing battery applications in the future,” BP said in a statement. “The project also supports BP’s broader strategy to invest half a billion dollars annually into low-carbon technologies, including projects within its established renewables portfolio as well as in new low-carbon businesses.”

Friends in high places. President Trump on Tuesday nominated an Anchorage attorney to serve as a U.S. District Court judge in Alaska. Jonathan Katchen works in commercial and natural resource law at the firm Holland & Hart. He previously worked for the state of Alaska, as senior counsel for Dan Sullivan, the current U.S. senator, when Sullivan was Alaska’s natural resources commissioner. He also worked for Sullivan as a special assistant when Sullivan was Alaska’s attorney general. And Katchen is a former law clerk of U.S. Court of Appeals Judge Maryanne Trump Barry, sister of the president. If confirmed by the Senate, Katchen would replace Judge Ralph Beistline of Fairbanks. Beistline went into “senior status,” or semi-retirement, at the end of 2015.

Ability to borrow promotes investment. U.S. oil and gas producers expect their borrowing ability to increase over the next few months, leaving them open to invest in new shale assets, particularly the Eagle Ford in Texas. That’s the conclusion of Haynes & Boone LLP, which found that more than 80 percent of respondents predict their borrowing bases, or credit availability backed by collateral, will likely increase as banks conduct their biannual reviews. That may benefit the Eagle Ford and Austin Chalk as the “next big play,” the study said. The Eagle Ford is already an established shale play, generating about 12 percent of U.S. oil, but it’s been receiving more attention of late. While the formation produces only about a third as much crude as the Permian Basin, the country’s most prolific field, the Eagle Ford is closer to the Gulf Coast’s network of refineries and pipelines, and drilling rights are cheaper.

From today’s Washington Examiner, Daily on Energy:

BOB MURRAY SAYS EMERGENCY ORDER ‘ONLY OPTION’ TO SAVE COAL: The CEO of coal giant Murray Energy, an ally of President Trump, said Tuesday that Energy Secretary Rick Perry “has to” approve an emergency order to save nuclear and coal power plants across the Midwest, warning of impending “disaster” if the government doesn’t act.

“It’s probably the only option right now,” Bob Murray said in remarks at the Bloomberg New Energy Finance’s Future of Energy conference in New York. “It’s absolutely needed. It can be for a specific time frame to stop these nuclear and coal closures until we get our house in order to ensure the resilience, reliability and security of the grid. It doesn’t have to be permanent. It must be done.”

Coal contract: Perry is expected to make a decision soon on whether to approve a emergency petition from Ohio-based utility FirstEnergy to require PJM Interconnection, the nation’s largest federally overseen grid operator, to enter into contracts with coal and nuclear plants across the Midwest to use their electricity.

The Murray connection: Murray Energy, America’s largest privately owned coal company, is uniquely set up to benefit from an emergency order benefiting FirstEnergy’s power plants.

FirstEnergy is a customer of Murray’s, using the company’s coal to produce power.


First Reads:

Walker’s bills to swap oil tax credit debt for bond debt making progress
KTOO Public Media, Rashah McChesney, April 10, 2018

BP Teams Up with Tesla to Venture into Battery Storage for Windfarm
Rigzone, Shadia Nasralla and Justin Varghese, April 10, 2018

Trump picks Anchorage attorney for District Court
Alaska Public Media, Liz Ruskin, April 10, 2018

U.S. Oil Debt Eases, Meaning Drillers Target Next Shale Play
Bloomberg Markets, Kevin Crowley, April 10, 2018