Headlamp – “Day-by-day it looks more & more like ExxonMobil was right & the governor was wrong.”

“Day-by-day, it looks more and more like ExxonMobil was right and the governor was wrong.” Only a day after the Alaska Gasline Development Corporation blasted bad Alaska press as the problem threatening construction of the 49th state’s longest-lived pipe dream, a high-profile analyst of global markets dumped a bigger and equally negative assessment on the short-term prospects for construction of expensive, new natural gas projects. “Cheap, abundant US supplies of natural gas combined with forecasts of growing global LNG demand early next decade are not enough to ease the uncertainty facing the next wave of LNG,” reported S&P Global Ratings. The problem is simple micro-economics. Supply at the moment exceeds demand, and though demand is expected to grow significantly into the near future, it is going to have a hard time gobbling up all the surplus supply. The International Energy Administration doesn’t expect liquefied natural gas (LNG) prices to rise until sometime well into the 2020s. “We will see massive amounts of new LNG capacity coming to the market … so we will probably continue to have well-supplied markets into the middle of the 2020s,” Keisuke Sadamori, director of energy markets and security at the IEA, told Reuters last week. “It’s not good for us if you have a prayer for this decade,” said Larry Persily, the former director of Alaska Natural Gas Transportation Projects for the federal government and now a natural-gas consultant for the Kenai Peninsula Borough.

AGDC joins Trump in China. U.S. companies involved in the gas, oil and power industry dominate a provisional list of companies going to Beijing in November at the same time that U.S. President Donald Trump visits China for talks with Chinese President Xi Jinping. Alaska Gasline Development Corp (AGDC) said it had no information to release. The company is building a gas treatment plant, an 800-mile (1,287 kilometer) pipeline to south central Alaska for in-state use, and a natural gas liquefaction plant in Nikiski to produce up to 20 million tons of LNG per year for export. In April, Xi visited Anchorage where he met with Alaska Governor Bill Walker and AGDC president Keith Meyer on his way back to China from a visit to Trump’s Florida home. They discussed how Alaska and China are positioned for a long-term LNG trading relationship, according to the company’s website.

FERC is back in the game! Three new pipeline projects in the northeast received approval from the Federal Energy Regulatory Commission (FERC) in October, the first projects to be approved since February. FERC regained its quorum in August after the Senate confirmed two new commissioners. These confirmations ended a six-month period when FERC was unable to issue certificates to allow construction of interstate energy transmission infrastructure, including natural gas pipeline projects. FERC did not have a quorum beginning in February 2017 when the number of commissioners fell below the required minimum of three. The final two commissioners await a floor vote by the Senate. See map and read more…

Oregon lawyer guides Alaskan teens to sue state. Sixteen young Alaskans are suing the state, demanding Gov. Bill Walker’s administration take action on climate change. It’s the second such legal action in the last six years. In 2014, the Alaska Supreme Court dismissed a similar lawsuit, Kanuk v Alaska, from six young people asking the state to reduce carbon emissions, among other recommendations. The justices ruled then that it’s not for the courts to set climate policy and that those decisions must be made through the political process, by the Legislature and the governor. The new lawsuit says, essentially, the state has made its choice, and by encouraging oil development and permitting projects that emit greenhouse gases, Alaska is actively making climate change worse. The plaintiffs argue that violates their constitutional rights to, among other things, “a stable climate system that sustains human life and liberty.”

How far does $200,000 go? A dispute over the cost of cleaning up unused Cook Inlet hydrocarbon wells was settled by a bankruptcy court, which ordered state regulators to reconsider the $6 million clean-up bond they required of Aurora Exploration for its purchase of six gas wells from the bankrupt Aurora Gas. Aurora Exploration had originally offered a $200,000 bond for the six wells. Following Judge Gary Spraker’s order, the Alaska Oil and Gas Conservation Commission dropped the $6 million bond requirement to $3.6 million on Wednesday. Alaska law requires oil and gas operators to bond the cost of plugging their environmentally hazardous unused wells, a cost which may otherwise fall to the state if a bankrupt company can’t meet it. The three governor-appointed Alaska Oil and Gas Conservation Commissioners set bonds for subterranean cleanup — generally, plugging a well with cement. State law requires at least a $100,000 bond for a single well or $200,000 to cover all of a company’s wells.

Teach your children well – about mining! If you have thoughts about the future of mine training at the University of Alaska Southeast, the University of Alaska Board of Regents wants to hear from you. From 4 to 6 p.m. Monday, the Board of Regents will take public testimony on topics that will come up during its November budget meeting. Among those topics is the future of University of Alaska’s mine training program. The board is the university system’s governing body and must approve any changes suggested by the university president. The university is restructuring its programs statewide under the Strategic Pathways program, which is designed to cut costs while affecting classes as little as possible.

Whoops. If Sen. Bill Wielechowski is true to his word, we’ve heard the last from him about changing Alaska’s oil taxes. Back on June 10, 2014, Wielechowski and now-former Sen. Hollis French (who Gov. Bill Walker appointed to the Alaska Oil and Gas Conservation Commission last year) issued a “very simple challenge.” “If SB 21 produces new oil, even ONE additional barrel, and this production results in increased revenue to the state, even ONE more dollar we will drop our support for revising oil taxes,” Wielechowski said. The legislation proposed by Wielechowski and French called for the previous system known as ACES to be retroactively implemented in 2019 “if there is not one new barrel of oil produced compared to the 2013 TransAlaska Pipeline moving average of 531,000 (approx.) and total oil revenues from 2014 to 2018 are not any greater under SB 21 than they would have been under ACES.”

From One Alaska Update: Keeping up with Gov. Bill Walker:

This week, after months of effort and engagement with stakeholders, the Administration is preparing to release its Climate Change Strategy. We are excited about what this will do to create a durable framework that will help Alaska be a leader in the battle against climate change going forward. This summer, Governor Walker spent time in Kaktovik and Utqiagvik, and saw first-hand some of the impacts the changing climate is having on Alaskan communities.

First Reads:

FACTBOX-U.S. gas firms line up to join China trade delegation
Reuters, Reuters Staff, October 27, 2017

Pipe dream
Craig Medred News, Craig Medred, October 30, 2017

Federal Energy Regulatory Commission regains ability to certificate natural gas pipelines
US Energy Information Administration, October 30, 2017

Young Alaskans sue the state, demanding action on climate change
Alaska Public Media, Rachel Waldholz, October 27, 2017

Bankruptcy court strikes down $6 million oil and gas bond
Peninsula Clarion, Ben Boettger, October 29, 2017

UA takes public comment on proposal to change mine training program
Juneau Empire, James Brooks, October 30, 2017

AJOC EDITORIAL: Game over for Wielechowski
Alaska Journal of Commerce, Andrew Jensen, October 27, 2017