Headlamp – “Clear the decks” and end the “saga of cashable oil and gas tax credits.”

Sheldon Fisher: “clear the decks” on tax credits. This week, the Walker Administration introduced a bill to pay off up to $1 billion of outstanding oil and gas tax credits by issuing bonds to pay for them at a fair discount. By purchasing these tax credits held by small oil and gas exploration companies, the bill will free up frozen credit markets to allow new exploration and development to continue. This bill is part of Gov. Bill Walker’s economic stimulus plan calculated to put Alaskans back to work, and will ultimately result in increased production, leading to increased revenue for the benefit of all Alaskans. Some Alaskans are asking hard but good questions about why we are doing this. First some background. Last year, we worked with the Legislature to end the cashable oil and gas tax credits program. In many cases the program had worked — it brought small oil and gas exploration companies to Alaska to look for new fields. In Cook Inlet, the tax credit program largely solved the serious problem of disappearing gas supplies — gas that Alaskans need for electricity to light and heat their homes. And there have been new large oil discoveries on the North Slope, like the Pikka field, that have promise to put substantial volumes into the pipeline and bring new revenues to the State. With the passage of House Bill 111 last year, we have ended the program of cashable oil and gas tax credits. The tax credits had quickly added up to a huge sum, and given the collapse in oil prices, the state was simply unable to continue paying them immediately. The point of this bill is to be able to “clear the decks” and put the saga of cashable oil and gas tax credits behind us. Alaskans are asking, why provide a bail-out to large oil and gas companies? We aren’t. The point of the tax credits was to encourage small oil and gas companies to explore for new oil and gas reserves. We promised cash and they came. Not only that, they employed Alaskans. They borrowed hundreds of millions from banks and attracted capital from investors. They spent this money and hired Alaskans. In many cases they found new oil and gas. The production from these new finds will create new revenues for all Alaskans. We need to fulfill our side of the bargain.

Surprise! Unexpected decline in US crude supply. The American Petroleum Institute reported Tuesday that U.S. crude supplies fell by 1.1 million barrels for the week ending Feb. 2, according to sources. The API data also showed a decline of 227,000 barrels in gasoline stockpiles, while inventories of distillates saw a surprise climb of 4.6 million barrels, sources said. Supply data from the Energy Information Administration will be released Wednesday morning. Analysts polled by S&P Global Platts expect the EIA to report a climb of 2.8 million barrels for crude inventories. They also forecast a rise of 200,000 barrels for gasoline, but a decline of 800,000 barrels for distillate supplies. March crude CLH8, -2.43% was at $63.80 a barrel in electronic trading, up from the settlement of $63.39 on the New York Mercantile Exchange.

We’ll see you in court! Washington Attorney General Bob Ferguson (D) warned Interior Secretary Ryan Zinke that he will sue the Trump administration if the state isn’t removed from a plan to expand offshore drilling. Ferguson in a letter sent to Zinke on Monday demanded that Washington be exempt from the plan to expand oil and gas drilling off the U.S., including off the state’s coast. The attorney general argued that the plan would damage the state’s economy, including the fishing and shipping industries, and that it could hurt ecosystems on Washington’s coast. “The proposal to open the Pacific Region Outer Continental Shelf to oil and gas leasing is unlawful, unsafe, and harmful to the economy and natural beauty of Washington’s coastline. As Attorney General, my job is to enforce the law and protect the people, natural resources, and environment of my state, and I will use every tool at my disposal to do so,” Ferguson wrote.

First Reads:

GUEST COMMENTARY: Bill to pay off credits fulfills state side of bargain
Alaska Journal of Commerce, Sheldon Fisher, February, 7 2018

API data reportedly show an unexpected weekly decline in U.S. crude supplies
Market Watch, Myra P. Saefong, February 6, 2018

Washington state threatens to sue over Zinke offshore drilling plan
The Hill, Jacqueline Thomsen, February 6, 2018