Headlamp – Don’t add bad policy to Alaska’s recession

Don’t add bad policy. While the American oil and gas sector was in the midst of its renaissance over the last decade, it was difficult to imagine a situation in which profits, jobs, and domestic energy production would slow down in any significant way. The energy industry, like any commodity producer, is accustomed to coping with business cycles and market price fluctuations. That resilience is threatened, though, by ill-conceived, counterproductive energy tax policies – like those on the table in Alaska.

Questions linger…The Alaska Gasline Development Corporation (AGDC) has committed to providing more information in January 2018 about its plans to relocate a Nikiski portion of the Kenai Spur Highway. They will analyze in October and November how this project may affect Cook Inlet commercial fisheries and examine other long-lingering questions of how the 807-mile natural gas pipeline it proposes to build from the North Slope to a liquefaction facility and export terminal in Nikiski could impact local employment, public services and industries.

Feige in the House! The Umiat oil field, now with a new owner after the previous one went broke, remains as promising yet as challenging as ever, with hopes to tap it facing daunting problems by its 100-mile distance from the nearest supply road. Even Umiat’s owner says the field will face “risks and challenges” never before encountered on the North Slope, or anywhere in the world for that matter. But Malamute Energy of Golden Valley, Minnesota, has one edge in developing the field that wouldn’t be apparent outside the industry — it’s got Corri Feige working for it.

A future so bright? Alaska, the final frontier, may be the next oil industry goldmine thanks to aggressive drilling, changing environmental policies, and a bullish administration. Not all Alaskans, however, are on board with the transition, and the issue is now more divisive than ever. In the past, Alaska has encouraged small companies to explore for oil within their state with incentives like a cashable oil tax credit program, implemented under Sarah Palin in 2007. However, just last month the state legislature voted to end the program, some voters citied that the program was, by any other name, a tax hike, and some stated that the incentive and its subsequent draw of prospectors in Alaska had gone too far. In fact, in the last few years after the bottoming out of oil prices, the state has made very minimal payments on outstanding tax credits. The State of Alaska owes almost $1 billion to oil companies, a staggering sum that comprises nearly a quarter of the entire state budget. Already this summer, two different oil companies announced that they’re freezing projects in Alaska because the state has failed to pay them for promised reimbursables. While Alaska has damaged its reputation as a worthy business partner in the oil industry, it’s likely that drilling won’t decline much. In fact, it will probably continue to boom. In May, Donald Trump announced that opening the vast Arctic National Wildlife Refuge to oil and gas drilling is among his top priorities, and was featured prominently in his 2018 budget proposal.

Ice, ice baby. On Monday, the Chinese icebreaker Xue Long was conducting research in the Norwegian Sea, sailing a back-and-forth path half-way between Bjørnøya and Jan Mayen. It is not known what specific research the vessel is doing in the Norwegian Sea. The vessel’s path can be tracked via the portal MarineTraffic.com. There are 96 crew members on board, including teams of Arctic and oceanographic researchers. This is the eighth Arctic expedition for Xue Long (which translates as Snow Dragon), but the first time the icebreaking research vessel has attempted to sail the Arctic rim, China’s state CGTN channel reports.

Mallot files with APOC. Lieutenant Governor Byron Mallott has officially filed a letter of intent to run for re-election. Mallott has previously said he intends to run as Governor Bill Walker’s running mate. Walker has still not officially filed his own letter of intent with the Alaska Public Offices Commission.

More than just names on the ballot. While Congress has debated repealing the Affordable Care Act, some doctors want to make sure that at least parts of the law remain in place in Alaska. They’re sponsoring two initiatives that could be on the ballot next year. One initiative would enshrine in state law the Medicaid expansion that Gov. Bill Walker executed. The other initiative would include several other provisions of the Affordable Care Act in state law. Anchorage Dr. Graham Glass is one of the sponsors of the Medicaid expansion initiative. His neurology and sleep medicine practice has seen a difference from the expansion.

Actions have consequences. An oil and gas company is suing the state over $5.3 million dollars in unpaid cash credits. Miller Energy Resources wants anything that happened before it went bankrupt in 2015 to be off-limits to state tax auditors, according to the lawsuit and the company’s bankruptcy filings. And, until the lawsuit is resolved, it wants the state to set aside a chunk of the cash credit payments it’s owed — so it won’t be paid to other companies in the meantime. The lawsuit is a new snarl in the complicated knot of the state’s controversial — and now disappearing — cashable oil and gas tax credits program.

First Reads:

Don’t add bad policy to oil industry headwinds
Washington Examiner, William F. Shughart II, August 21, 2017

AGDC to answer long-running questions
Peninsula Clarion, Ben Boettger, August 19, 2017

A big North Slope oil field remains alive despite bankruptcy, isolation
Alaska Dispatch News, Alex DeMarban, August 20, 2017

Alaska has a choice to make regarding its oil future
Investment Digest, August 19, 2017

Chinese icebreaker navigates across central Arctic
Arctic Now/The Barents Observer, Thomas Nilsen, August 21, 2017

Lieutenant Governor Byron Mallott files letter of intent for re-election
KTUU, Sean Maguire, August 20, 2017

Potential initiatives would enshrine Medicaid expansion, ACA provisions in state law
KTOO, Andrew Kitchenman, August 20, 2017

Oil company sues over Alaska’s beleaguered cash-for-credits program
KTOO, Rashah McChesney, August 18, 2017