Headlamp – Six new wells on the North Slope. Funding still needed for AK LNG project.  

North, the rush is on. ConocoPhillips says it was able to drill six new wells, including an additional Willow appraisal well, at Alaska’s Western North Slope, with all six encountering oil and verifying the potential of the play. COP says its original plan was to drill five wells comprising two appraisal wells of the Willow discovery announced in January 2017 plus three exploration wells, but improved drilling efficiencies allowed it to drill six wells. COP says the three Willow appraisal wells support its previously announced estimate of a recoverable resource potential of at least 300M barrels of oil, and the three exploration wells represent new discoveries for the company.

Funding unresolved as agreement expiration date nears. State officials leading the $43 billion Alaska LNG Project touted a productive visit from potential Chinese partners in the project while funding for the effort remains unresolved in the Legislature. Alaska Gasline Development Corp. President Keith Meyer told reporters during a Thursday press briefing that a six-day trip to Alaska from March 25-30 by leaders of the state-owned Chinese companies Sinopec, Bank of China and China Investment Corp. was the foreign contingent’s opportunity to see for themselves that the Arctic-sourced LNG export plan is as achievable and real as Gov. Bill Walker’s administration has insisted. Meyer said he expected the three companies to send “a couple handfuls of people” across the Pacific; 38 arrived. “We had a pretty large group,” he said. “It really shows their level of interest, activity, commitment to the project so we were really happy to see that.” Among other activities, the group toured the proposed pipeline route from the North Slope to Nikiski. The development agreement, signed last November, calls for AGDC to have the framework of final deals with the three in place by the end of May, with firm commitments signed before the agreement expires at the end of the year.

Deadlines are made to be…ignored? Early last week legislative leaders had realistic hopes of adjourning on the 90th day, on Sunday, April 15, but as of Saturday it appeared there was still too much work to do. A few more days is all, House and Senate leaders promise. Fundamentally, there appears to be agreement on major issues and that a long, drawn-out session that happened last year will be avoided. The differences between the House and Senate budgets will likely be worked out quickly. The operating budget is marginally up from the current year, with higher costs this year due mainly to rising health costs. Finding money for a state capital budget is a continuing problem, however. This year’s proposed capital budget is bare bones, paying the required state match to federal transportation funds and for a few urgent state needs. The state fiscal gap is the most serious problem confronting the Legislature and there is now consensus that some of the Permanent Fund’s ample earnings can be used this year to fund next year’s budget. The state has been running back-to-back multi-billion dollar deficits. Significantly, there’s now agreement that the draw on the Fund’s earnings must be done in a structured way, and the plan now agreed between the House and Senate is that a percent-of-market-value draw, or POMV, of 5.25 percent can be made from the Permanent Fund’s earnings reserve account.

From today’s Washington Examiner, Daily on Energy:

CANADA’S TRUDEAU PROMISES TO ENSURE CONSTRUCTION OF DISPUTED PIPELINE: Canadian Prime Minister Justin Trudeau has instructed his finance minister to begin talks with Kinder Morgan to “remove the uncertainty” of the controversial Trans Mountain pipeline expansion, according to the Associated Press. Trudeau, who is a global leader in fighting climate change, is preparing legislation that says the federal government can approve the project over the protests of leaders in British Columbia.

Uncertain future: Texas-based company Kinder Morgan threatened this month to halt its proposed $7.4 billion expansion of the Trans Mountain pipeline because of opposition from the provincial government of British Columbia, which fears potential spills along a coastline that attracts tourists. The company said British Columbia must drop its opposition to the project by the end of May or it will pull out from the project. The Trans Mountain expansion would nearly triple the amount of crude flowing from Alberta’s oil sands to a port near Vancouver.

 

First Reads:

ConocoPhillips announces promising results in Alaska exploration
Seeking Alpha, Carl Surran, April 16, 2018

AGDC chief recaps visit from Chinese delegation as funding unresolved
Alaska Journal of Commerce, Elwood Brehmer, April 15, 2018

Hopes for a 90-day session go by the wayside
Frontiersman, Tim Bradner, April 14, 2018