And the winner is…Congratulations to Hecla Greens Creek Mine and Lynden Air Cargo for receiving the 2017 North Star Awards for International Excellence. The award is given to companies that engage in successful international business and activities and connect our state to the rest of the world.
Oil industry focus on efficiency, not price. The rebound in the price of crude oil in recent months that has helped producers will be temporary, and the industry must prepare for competition from energy sources elsewhere, the head of the Alaska operations of BP Plc said at an industry conference on Friday. “We might be enjoying prices today that are over $70 a barrel. But when you look at the fundamentals, at BP anyway, we still think lower for even longer. And staying competitive is very important,” Janet Weiss, president of BP Exploration (Alaska) Inc., said in a speech to the Alaska Support Industry Alliance. “When you look at the fundamentals – and you take a look at supply and demand out in time and what is going on with renewables and what is going on with electric cars – and yes, there’s a demand for oil, but there’s a whole lot more of it out there,” she said. “So, it’s the low-cost basins that will get to produce. Not all the barrels in Alaska are going to be produced if we don’t make them competitive.”
From today’s Washington Examiner Daily on Energy:
ZINKE ANNOUNCES LAND SWAP DEAL FOR ROAD THROUGH ALASKA WILDLIFE REFUGE: Zinke on Monday morning signed a land swap deal to allow a tiny Alaska village to build a long-sought road through the federally protected Izembek National Wildlife Refuge, which residents say will provide a route for medical evacuations to the closest regional airport. Zinke, Alaska Gov. Bill Walker and members of the state’s congressional delegation plan to announce the deal in a ceremony Monday morning in the office of Sen. Lisa Murkowski, R-Alaska, the chairwoman of the Senate Energy and Natural Resource Committee. Serving medical needs: King Cove, a village with roughly 925 residents, has lobbied the Interior Department for decades to build the 12-mile, single-lane gravel road to connect to the neighboring town of Cold Bay. King Cove is in the Aleutian Islands between two massive volcanoes on the edge of a bay off the Pacific Ocean. There are no roads connecting King Cove to any other Alaskan city, and the nearest medical facilities are in Anchorage, about 625 miles northeast. That means King Cove residents with medical emergencies must fly to Cold Bay and then to Anchorage for treatment. Flights can be delayed hours or even days by bad weather.
When less is more. Governor Walker’s “decrease” is really a $1.1 billion increase. As the 30th Alaska Legislature begins its second session to approve 2019 operating and capital budgets, we can review state revenues and expenditures well by reading the Empire. In the Dec. 12 Empire, Sen. Shelley Hughes, R-Parmer, carefully explained that claims of double-digit reductions in state spending are false. Changes in operational spending amounted to a 3 percent reduction over the past three years — hardly a reduction at all. Claims of a 44 percent reduction over five years and 27 percent over three years were made by Gov. Bill Walker’s OMB Director and Revenue Commissioner in the Dec. 14 Empire, accompanied by plenty of abjuration. To show later years as having less spending they included earlier year oil tax credits with expenditures. Changing income from General Fund to fee increases and other sources allowed claiming reductions without reducing spending. Scheduled debt service reduction was claimed as reduced operations and supplementals became a shell game. Counting both spending of bond proceeds and debt service is double-counting of earlier expenditures. Counting departures from the PFD formula is not reducing the cost of state government. Adjusting for these misstatements affirms the Senator Hughes numbers. In its Dec. 15 review of the 2019 budget released that day, the Empire reported that Walker proposed a $400 million increase over the current year and a simultaneous, retroactive increase of $700 million for the current year, a total of $1.1 billion. Increasing current year spending now, at the end of the fiscal year, is dishonest in two ways. It humbugs the claims that the 2018 spending was a decrease, and it hides a huge part of the 2019 increase.
Market Constraints and Unpaid Tax Credits = Default. A Cook Inlet natural gas extractor that relied heavily on state tax credits — and which partially blamed undrilled wells over the past two years on the state’s lack of funding for those credits — is now in default of its state lease for its failures to drill. In a default notice to Furie Operating Alaska on Dec. 26, 2017, Alaska Department of Natural Resources Commissioner Andrew Mack wrote that Furie’s operation of Cook Inlet’s largest state lease area — the 83,394-acre offshore Kitchen Lights Unit — “reflects a history of committing to drilling activities, but then delaying or changing those work commitments.”
Alaska oil producers focus on efficiencies, not $70 oil
Reuters, Yereth Rosen, January 19, 2018
Walker recession is longest in Alaska history
Juneau Empire, Tomas Boutin, January 19, 2018
Lack of drilling leads to lease default for Furie
Peninsula Clarion, Ben Boettger, January 21, 2018