Headlamp – “The State of Alaska has become Animal House.” Helping Victims of Hurricane Harvey.

“The State of Alaska has become Animal House.” Oil companies owed hundreds of millions of dollars in tax credits from the State of Alaska are canceling projects, protesting publicly, and in one case, suing the state to force it to set aside some $5 million in unpaid cash it claims to be owed. But some say the companies should have known the potential consequences before they signed up for the state’s generous tax credit program. State law shows they risked a slowdown in payments if oil prices crashed and the state’s economy tanked. And that’s exactly what happened. But industry representatives and company executives say small independent companies that the credits were meant to attract sunk hundreds of millions of dollars into projects, after getting the impression from the state that it would make timely payments. “It’s not what companies who invested in resource development in Alaska planned on happening,” said Carl Giesler, chief executive of Cook Inlet Energy. Headlamp would refer to the quote below, from the comment section of the paper:

The State of Alaska becomes Animal House: “You f’ed up. You trusted us.” Heck of a way to do   business. Even a better way to make sure there is no more business afterward. And commenters cheerlead this malfeasance. There is an old HL Mencken quote: “Democracy is the theory that the common people know what they want and deserve to get it good and hard.” Those of you who elected Walker and the House majority are about to get it good and hard. Unfortunately so are the rest of us. Cheers.”

Oil and Water don’t mix. US energy companies were forced to shut-in about 22%, or 378,633 barrels of oil per day, of Gulf of Mexico oil production due to Tropical Storm Harvey, according to the Bureau of Safety and Environmental Enforcement. Roughly 26% of Gulf natural gas production was also down as of Sunday.

Wolverines and Buckeyes. The Federal Energy Regulatory Commission on Friday cleared the way for construction of the $2 billion NEXUS Gas Transmission project to begin despite strong opposition from landowners and residents. The 255-mile-long pipeline will move 1.5 billion cubic feet of gas per day from Ohio to Michigan and Canada.

Survey Says: 86% of voters are concerned about infrastructure. Earlier last week, the president signed an Executive Order to refine our environmental review and permitting process for infrastructure. But in order for this infrastructure revitalization to succeed, we need timely access to the minerals that make it all possible. For example, minerals like copper, molybdenum, zinc, iron ore and kyanite are the foundation of U.S. infrastructure projects—from the development of railways and subway lines to the building of powerlines and phone lines.

High interest rates passed on to Alaska municipalities. October’s round of municipal elections will ask Alaskans for permission to borrow money for critical infrastructure in local communities. Thanks to the Alaska Legislature’s failure to erase a multibillion-dollar deficit, that infrastructure will cost more. In some cases, it might be a lot more. The issue is the state’s municipal bond bank, which cities and boroughs use to borrow money. That bank relies on the state’s credit rating, and as the state’s credit has fallen, the cost of borrowing money has gone up. “Certainly, the bond bank program, as the state has been downgraded, has been similarly downgraded,” said Deven Mitchell, the state’s debt manager and executive director of the bond bank.

Hilcorp’s plans for more oil in TAPS. Hilcorp Alaska’s plan for developing the Liberty oil field in the Beaufort Sea is spelled out in the draft environmental impact statement that the Bureau of Ocean Energy Management issued on Aug. 17. The Liberty field is on the federal outer continental shelf, in Foggy Island Bay, about 15 miles east of Prudhoe Bay. The development plan proposed in the EIS involves the construction of an artificial gravel production island about five miles offshore and the laying of a buried subsea pipe-in-pipe pipeline to carry crude oil to shore. The pipeline would connect with the existing Badami pipeline for transporting the Liberty oil to the trans-Alaska pipeline.

Headlamp is keeping our Texas friends in their thoughts. If you are interested in helping victims of Hurricane Harvey – a few options below:

  • Hurricane Harvey Relief Fund.Houston Mayor Sylvester Turner has established the Hurricane Harvey Relief Fund that will accept tax deductible donations. The fund is administered by the Greater Houston Community Foundation, a 501(c)(3) public charity.To make a financial donation, visit the GHCF website.
  • American Red Cross. To make a financial donation, visit their website, call 1.800.RED CROSS or text HARVEY to 90999 to make a $10 donation for those in need.

First Reads:

About 22 percent of U.S. Gulf oil output offline due to Harvey
Reuters, Reuters Staff, August 27, 2017

Oil companies owed hundred of millions of dollars by state should have known risk, some say
Alaska Dispatch News, Alex DeMarban, August 27, 2017

Federal agency OKs gas pipeline project fought by residents
The Associated Press, Mark Gillispie, August 28, 2017

New Poll Shows Overwhelming Majority of Voters are Concerned About the State of American Infrastructure
National Mining Association, August 15, 2017

State’s credit trouble trickles to street level
The Juneau Empire, James Brooks, August 27, 2017

Hilcorp’s plan proposed
Petroleum News, Alan Bailey, August 27, 2017