Headlamp – Oil Search comes to Alaska in Search of Oil. Tweet of the Day Stand for Alaska

Tweet of the Day: Stand for Alaska @standforalaska:

“If this ballot measure passes, (YesforSalmon) we believe we should do a public education campaign to tell folks that weren’t needing permits before, that they will now need them. – Ron Benkert, ADF&G Regional Supervisor”

From the South Pacific to Alaska. Before getting in to who’s drilling there and why, let’s make one thing clear about this oil field: the state of Alaska thinks it’s a very big deal. “Literally, if you line up the big fields up on the North Slope, this probably ranks third behind Prudhoe Bay and Kuparuk,” Alaska Department of Natural Resources Commissioner Andy Mack said. Prudhoe Bay and Kuparuk, of course, are the giant oil fields responsible for making Alaska the oil state it is today. And on a chunk of state and native owned land west of Prudhoe Bay called the Pikka Unit, one company thinks there might be over a billion barrels of recoverable oil. Mack said the oil in this area alone could reverse the long-term decline in the amount of oil flowing down the trans-Alaska pipeline. “If all goes well, it could lead to not only flattened production, but also increased production,” Mack said. So last fall, when a company a lot of Alaskans hadn’t heard of moved to take over developing this oil field, it got people’s attention. Oil Search is a company based in Papua New Guinea, a country just south of the equator and just north of Australia, where it also has offices. An oil project in the Arctic may seem like an odd leap for a company from an island nation in the South Pacific. But in a recent interview, the newly-minted president of Oil Search Alaska, Keiran Wulff, said the company is serious about its new venture.

Big Banks bring big money to AGDC? The Alaska Gasline Development Corp. has secured two of the world’s largest banks to help raise funds for the $43 billion Alaska LNG Project. Goldman Sachs and the Bank of China will assist the corporation in raising multiple rounds of debt and equity investment, the Alaska Journal of Commerce reported Wednesday. Equity offerings will be made to Alaska municipalities, Native corporations and all Alaska residents in addition to more traditional private equity investors, as required by the Senate bill that in 2014 set up the initial framework for the project. Goldman Sachs Managing Director Kevin Willens said he is pleased the bank is working with the corporation and the Bank of China on the project. Meyer has said he hopes to have firm agreements in place with the Chinese companies by the middle of the year. The nationalized Bank of China is one of three large Chinese companies to sign a nonbinding framework deal with the corporation last November that in broad terms exchanges 75 percent of the project’s 20 million tons per annum of LNG capacity for financing 75 percent of the $43 billion Alaska LNG price tag. “Joint development agreement parties are advancing the economic analysis of the project in order to lay (a) more solid foundation for investment and financing,” the Bank of China said in a statement. The first rounds of equity solicitation will be used to provide working capital for the corporation until it has secured sufficient funding and regulatory approvals for full-scale development. The Legislature must first give the go-ahead before the corporation can accept any money from outside investors.

On the move – tax credit bill heads to Senate Finance. Gov. Bill Walker’s plan to end the state’s roughly $800 million obligation to small oil and gas industry companies is suddenly on the move. The Senate Resources Committee quickly moved Senate Bill 176 out of committee March 23 with little fanfare, particularly given the consternation the oil and gas tax credit program has stirred in the capitol the past couple years. SB 176, which authorizes the state Revenue Department to issue bonds to pay off the liability in a lump sum rather than continuing to pay it down incrementally over the coming years. It would also require credit holders to accept up to a 10 percent discount on the amount they’re owed to cover the cost of the state’s borrowing and avoid spending additional state money on the all-but defunct tax credit program. Credit holders could also opt for a lesser discount rate in the 5 percent range if they agree with the Department of Natural Resources to negotiate a higher state royalty in future oil and gas production or commit to reinvest a portion of the payment back in Alaska projects. The bonds would be paid off over 10 years. The annual debt payments would be up to $115 million, according to the Revenue Department, and would be smaller than the largest projected payments the state would make paying off the debt under the current statutory formula.

From today’s Washington Examiner, Daily on Energy:

INTERIOR SEEKS INDUSTRY INPUT INTO DRILLING OFF ALASKA’S COAST: The Interior Department on Wednesday asked for public comment about potential drilling in the Beaufort Sea off Alaska’s coast.

Open Sesame: The proposal is part of the agency’s offshore oil and gas leasing program announced in January, under which Interior proposed opening nearly all federal waters to drilling, including 19 sales off the Alaska coast.

The Trump plan has received bipartisan criticism, with almost all coastal governors expressing opposition to allowing drilling off their shores, for fear of spills and harm to tourism.

But local politicians support drilling off Alaska’s coast. The state is heavily dependent on oil and gas revenue to support its budget.

Balancing act: Interior’s proposal to drill in the Beaufort Sea asks companies to nominate areas where they might bid in a 2019 sale, and also mention areas too environmentally sensitive to drill.

The proposal will appear in Friday’s Federal Register, starting a 30-day comment period ending April 30.

‘Fast-track’ process: Environmental groups accused the Interior Department on Wednesday of acting prematurely in announcing the proposal, noting the agency has not finalized the 2019-2024 offshore leasing plan.

“Planning for a Beaufort lease sale this early in the process of crafting Trump’s five-year plan is a clear sign that the decision to include the Arctic has already been made,” said a coalition of environmental groups, including the Alaska Wilderness League, Center for Biological Diversity, Sierra Club, Natural Resources Defense Council and others. “This Beaufort sale is about giving a win to the Alaska delegation by starting the process to fast-track getting leases into the hands of the oil industry without full, fair and open debate.”

First Reads:

Why a Papua New Guinea company is taking over one of Alaska’s biggest oil fields
Alaska Public Media, Elizabeth Harball, March 28, 2018

Goldman Sachs, Bank of China to assist LNG project funding
AP News, March 29, 2018

Oil tax credit bill moves on to Senate Finance
Alaska Journal of Commerce, Elwood Brehmer, March 29, 2018